Budget 2014 response round-up: Who said what
Today's Budget saw the Chancellor cap carbon tax and once again favour economic recovery over environmental resilience. Stirring up mixed reaction across industry, here's a rundown of who said what.
The most notable decision from the Chancellor today was a cap on the Carbon Price Floor at £18 per ton of CO2 from 2016-2017 to the end of the decade – a move that unsurprisingly angered environmental groups but one that industry welcomed.
Reacting to this, REA chief executive Nina Skorupska said: “By freezing the Carbon Price Floor, the Chancellor is rowing back on his own policy and once again moving the goalposts for investors in green energy.
“Government must explain in black and white how investment in renewables is protected from the freeze, or risk undermining the investment required to replace ageing coal power stations with technologies that can keep the lights on without damaging the climate,” she added.
Environmental Industries Commission’s (EIC) executive director, Matthew Farrow, agreed by calling the decision a “mistake”. “The policy was doing just what was intended by providing some forward certainty for all energy providers and investors. Giving some direct compensation to genuinely energy-intensive industries who are at risk of offshoring is one thing – emasculating a key component of the carbon policy framework is quite another,” said Farrow.
Further disproval came from Martin Baxter, executive director-policy at the Institute of Environmental Management (IEMA), who said: “If the Government is committed to delivering a sustainable economy, it must provide consistent long-term policies that enable businesses to invest with confidence. The decision to freeze the Carbon Floor Price undermines the Government’s approach to tackling climate change”.
“Companies that have invested based on the Government’s long-term price signal will be unfairly penalised. Long-term certainty is vital for business to secure investment in measures such as low carbon technology and energy efficiency. By freezing the Carbon Floor Price, the Government risks failing to achieve its climate change policy objectives, or shifting the additional effort that will be required to other sectors of the economy.”
On the other side, manufacturers and energy intensive industry welcomed the Chancellor’s moves to reduce their energy bills through environmental tax breaks.
The Energy Intensive Users Group’s (EIUG) director Jeremy Nicholson said: “Unilateral measures like the Carbon Price Floor simply damage competitiveness for no environmental benefit. Compensation for the impact of the Renewables Obligation will help level the playing field for British industries with respect to their European competitors. Unfortunately, climate policies have already caused lasting damage in terms of investment in Britain’s energy intensive industries, and even after these reforms electricity prices will continue to be inflated by a carbon price four times as expensive than in the rest of Europe.”
However, UK Steel director Ian Rodgers said the Budget didn’t go far enough in helping the steel industry recover from the economic crisis. Rodgers said: “While we are pleased that the Chancellor has recognised the crippling effect that the cost of the Renewables Obligation and Feed in Tariffs has on the steel sector, we are disappointed that he has failed to realise the urgency of the situation. The Renewables Obligation and Feed in Tariffs is equivalent to 22% of wholesale prices, rising to 27% next month. The steel industry needs help with this burden now, not in two years’ time.”
The UK’s largest manufacturing sector, food and drink, also welcomed the Chancellor’s focus on manufacturing. Food and Drink Federation director general Melanie Leech, said: “The Chancellor has listened to our growing concerns on the impact of increasing energy prices on the competitiveness of food and drink. The adoption of our recommendation for Carbon Price Support (CPS) to be frozen will help all manufacturers in our sector while the exemption of industrial Combined Heat and Power (CHP) plants from CPS for the on-site generation of electricity will benefit existing and new users of the technology which is in widespread use throughout our sector. These changes will provide welcome relief to businesses large and small throughout the UK’s largest manufacturing sector and reward those who invest in energy efficient technologies.”
A mixed reaction was announced by the CBI, who welcomed Osborne’s attention to business but also reaffirmed its call for the EU to set a 2030 carbon reductions target. “The CBI has pushed hard for this significant and much-needed energy package that will help keep manufacturing jobs in the UK, while underpinning vital investment in new energy.
“Our energy intensive industries are crucial to building a low-carbon economy and it’s right the Government is taking action to mitigate the cost for these firms. But many more businesses across the country are struggling with high energy costs and these measures will help support key sectors against tough international competition.
“We now need to see action from ministers to secure an ambitious EU-wide 2030 emissions reductions target to drive investment in our low carbon future,” the organisation added.
Leigh Stringer is the energy and sustainability editor for edie
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