Budget 2012: The edie angle

Changes to or a complete replacement of the Carbon Reduction Commitment scheme could come as early as the autumn the Chancellor has announced in today’s budget – what those changes are, or how a possible replacement might work have not been addressed.

“The CRC reduction commitment is cumbersome, bureaucratic and places unnecessary costs on businesses,” the Chancellor told parliament today.

“So, we will seek major savings in the administrative costs for the commitment of business to CRC and, if those savings cannot be found, I will bring forward proposals this autumn to replace the revenues with an alternative environmental tax.”

Emphasising that he wanted to see renewed investment in the UK as a ‘world leading energy sector’ the Chancellor pointed to the launch of the Green Investment Bank and the introduction of the Carbon Tax Floor as key measures to encourage investment and development.  He also sought to strike a careful balance between the value and costs of renewable energy investments.

The Chancellor has also said that renewable energy will play a “crucial part in Britain’s energy mix” but said that they needed to be both ‘environmentally sustainable’ and ‘fiscally sustainable’. However, it is gas that will receive the biggest investment as the largest single source of energy in the coming years. The sector will be boosted by a “major package of tax changes” for North Sea oil and gas extraction and a new gas generation strategy to be set out this autumn.

Industry and key environmental figures who called for clarity and certainty to be at the forefront of today’s announcement are likely to have been disappointed by what Greenpeace is already describing as “the worst for the environment in recent memory”.

The clear commitment to the green economy does not appear to have materialised and the idea that carbon reduction and resource security will be key in delivering a ‘credible’ green growth strategy has been largely ignored by Budget.

For all the industry comment, reaction and feedback click here.