Budget 2015: 10 hopes for energy & environment
Elections are not won on environmental policy. That is the accepted wisdom. But sustainability professionals are, by their nature, an optimistic bunch, and have been vocal in laying out their demands for Wednesday's budget - the last of the current Parliament.
In George Osborne’s last major Treasury announcement – the Autumn Statement – the Chancellor threw his weight behind fracking and fossil fuels with a North Sea oil tax cut and a Shale Gas Sovereign Wealth Fund.
Friends of the Earth described it as “plenty of environmental gloom – with precious little silver lining“, and with the Chancellor expected to announce further tax cuts for North Sea oil alongside subsidies for energy-intensive industries, green groups could be once again be disappointed.
It is important to remember that the Budget is limited in the sense that it cannot introduce legislation. Rather, it can give or remove financial support, change tax rates and structures, drive fiscal reforms and introduce regulatory measures.
So, here are seven things that industry players want to hear and also what they expect to hear from the Chancellor. Warning: they are two very different things…
1) Put long-term prosperity over party politics
Aldersgate Group executive director Nick Molho told edie: “With increasing evidence that ambitious environmental policies can have positive long-lasting impacts on the economy and make it more able to deal with future resource shocks, the 2015 budget is an opportunity to put the environment above party politics and at the centre of the UK’s economic policy.
“Doing so is in the UK’s national interest and we hope the Budget will recognise that.”
2) Waste: Please, no unpleasant surprises
Environmental Services Association (ESA) executive director Jacob Hayler said: “In the past few years, the Budget hasn’t contained too much to get the waste and recycling industry excited. Funding support to fight waste crime last year was as good as it’s been for our sector. We hope that this support is maintained going forward and that, at the very least, there are no unpleasant surprises.
“The recycling sector in particular is facing severe challenges at the moment and immediate interventions to help the industry get through the short-term pain caused by falling oil and other commodity prices would be hugely welcomed (if not anticipated).”
3) Environmental tax reform
Environmental tax reform (ETR) is the systematic changing of taxation, so that a greater proportion of revenues comes from pollution and the use of scarce resources, thereby giving a price signal for their reduction.
Professor Paul Ekins of the UCL Institute for Sustainable Resources argued this week that a Budget prioritising ETR can lead to increased employment, and sometimes small positive impacts on GDP, while reducing waste and pollution. It can also stimulate green innovation and new industries.
The UK has had some success in this area with the landfill tax which has raised £10bn since 1998 and helped cut landfill waste by around 25%.
IEMA CEO Tim Balcon echoed that sentiment, saying: “As the general election looms, this budget provides the Chancellor with a final opportunity to make progress on the coalition’s agreement to “increase the proportion of tax revenue accounted for by environmental taxes”.
“There is still time for the Chancellor to take action that will truly begin a transformation in the UK’s taxation system that will help drive the country’s transition to a sustainable economy.”
4) Help manufacturers overcome low-carbon energy policies
The manufacturers organisation EEF called for Osborne to fast-track subsidies for energy-intensive industries (EII) – especially steel – that are at a competitive disadvantage internationally, thanks to Government efforts to decarbonise energy.
EEF wrote in its budget preview: “The biggest single step that can be taken in the 2015 Budget will be to commit to introducing the final element of the EII compensation package, which relates to the costs of supporting renewable electricity generation.”
However EEF is not just lobbying for subsidies for vast energy users, head of environment Susanne Baker recently told edie that the steel industry was trying to organise secto agremeements whereby the whol industry shares the cost of finding new less energy-intensive methods of production.
5) North Sea support
The North Sea oil sector could have its tax rate cut by up to 10% according to the BBC. Chief secretary to the Treasury Danny Alexander told the Corporation: “We’ve been very clear that the direction of travel for tax in the North Sea needs to be downwards.”
“And that needs to be even stronger given the low oil price we see at the moment. We want people to have the confidence to invest for the long term future of the North Sea.
6) More shale support?
Tim Yeo, the chairman of Parliament’s energy and climate committee, said last week that the time had come to make the “green” case in favour of fracking.
“There is an opportunity now, and it might not exist in a few years [when other European countries have developed fracking],” he told the Guardian. “People who think fracking is an environmental problem are mistaken.”
“I yield to no one in my desire to [tackle climate change] but the fact is we will not get by without consuming a lot of gas between now and the 2030s, so better to have a domestic source than to import it,” he said.”
Osborne has made no bones about his support for fracking and there is speculation he could contine to push the case for shale gas
7) Boost GIB powers
The Green Investment Bank may have opened under George Osborne, but according to Friends of the Earth: “He’s not let it borrow, so it isn’t yet a real bank.”
Broadening the remit of the Green Investment Bank and giving it borrowing powers could help reduce the perceived risk of new types of environmental projects, thereby boosting investments in such projects and ultimately reducing their cost.
The £5bn investment in 37 UK green energy projects in the first two years of the GIB has aided the uptake in renewables, with £3 being invested by private firms for every £1 by the GIB.
8) ‘Meaningful’ carbon price to drive energy efficiency improvements
Chief operating officer of the Carbon Trust, Michael Rea, told edie:“At the Carbon Trust we know that the energy efficiency opportunity for the UK is enormous. And the case for supporting it is compelling, providing quick wins for the economy and the environment. A lot more could and should be done to encourage its uptake.”
“For example a meaningful carbon price alongside well-designed incentives and advice programmes to support SMEs and the public sector would create demand for energy efficiency, delivering hundreds of millions in energy savings across the economy every year. Unlocking the energy efficiency opportunity should be a top priority for UK policy and a major focus area for an incoming government in May.”
9) Support AD
Anaerobic Digestion & Bioresource Association’s (ADBA) head of policy Matt Hindle said: “The next government will have major decisions to take on the future of renewable energy support, which will have a significant impact on the future potential for anaerobic digestion.
“On budget day, we are therefore looking for positive signals from the political parties about their commitment to renewables, and the benefits that home-made energy can bring to the whole economy.”
10) Mention renewables!
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