Budget 2017: Chancellor confirms electric vehicle funding, announces new recycling targets

“We reaffirm our commitment to invest in Britain’s future”, declared Hammond as he delivered his first – and last – Spring Budget to a jubilant House of Commons this afternoon. (Scroll down for full 2017 Budget document).

But the future of Britain’s green economy was given hardly any mention by Hammond. The Chancellor failed to deliver good news in several key areas of green policy – such as the controversial solar tax hike, the Emissions Reduction Plan and the 25-Year Environment Plan.

In fact, the words “energy”, “environment”, “climate change” and “air quality” were not mentioned at all by Hammond in his hour-long speech, which has been condemned by green groups and politicians alike.

The full Budget 2017 document does offer some more information on the future of carbon price support – which it says will be continued beyond the year 2020-21 – along with the Levy Control Framework – which it says will be scrapped and replaced “by a new set of controls”.

Additionally, the Budget document details a set of new packaging recycling and recovery targets in line with the Packaging Directive. 

Budget 2017: At a glance… https://t.co/iBAl7w4VCo pic.twitter.com/adOsvhSu7r

— edie.net (@edie) March 8, 2017

Industrial Strategy Challenge Fund launched

In his 2016 Autumn Statement, Hammond announced the development of the Industrial Strategy Challenge Fund – a new cross-disciplinary fund to support collaborations between business and the UK’s science base. The fund will be managed by Innovate UK and research councils, and will cover a broad range of technologies, to be decided by an evidence-based process.

Today, Hammond said he wanted to “enhance the UK’s position as a world-leader in science and innovation”. 

Specifically, Hammond confirmed that £270m will be put towards the first challenges to be addressed through this fund: electric cars, robotics and AI, and drug discovery. This will help to keep the UK “at the forefront of disruptive technologies like biotech, robotic systems and driverless cars”, Hammond said. 

Levy Control Framework scrapped

As reported this week by edie’s sister title Utility Week, The Department for Business, Energy and Industrial Strategy (BEIS) and the Treasury have conducted a joint review of the future of the LCF, which sets annual spending caps on the renewables obligation, feed-in tariffs and contracts for difference costs.

But the Budget offers little additional information. The document does state: “The Government recognises the need to limit costs to businesses and households as the UK decarbonises its energy supplies.

“The existing Levy Control Framework has helped to control the costs of low carbon subsidies in recent years, and will be replaced by a new set of controls. These will be set out later in the year.”

Carbon pricing decision delayed

In the 2016 Autumn Statement, Hammond confirmed that the Carbon Price Floor – which works in conjunction with the EU ETS scheme to underpin the price of carbon at a level that drives low-carbon investment – will remain frozen at a maximum of £18 per tonne of CO2 until 2020, as originally announced by Hammond’s predecessor George Osborne in the 2016 Budget. 

Today’s Budget 2017 document states: “The Government remains committed to carbon pricing to help decarbonise the power sector. Currently, UK prices are determined by the EU Emissions Trading System and Carbon Price Support.

“Starting in 2021-22, the government will target a total carbon price and set the specific tax rate at a later date, giving businesses greater clarity on the total price they will pay. Further details on carbon prices for the 2020s will be set out at Autumn Budget 2017.” 

Air quality plan imminent

Thanks to a successful court battle by ClientEarth, ministers have been forced to come up with a new, more ambitious plan to tackle air quality, which currently causes tens of thousands of early deaths in the UK and as much as £27.5bn in costs every year.

“The Government is committed to improving air quality,” according to today’s Budget 2017 document. It states that it will consult on “a detailed draft plan” in the spring which will set out how the UK’s air quality goals will be achieved.

Alongside this, the Government will continue to explore the appropriate tax treatment for diesel vehicles, and will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017.

Oil & gas support increased

During his speech, the Chancellor said he has heard calls to provide further support for Britain’s oil and gas sector. It is “essential” to maximise asset recovery from the North Sea, Hammond said, as he pledged a discussion paper on the topic which will be published “in due course”.

The Budget document states: “To determine the best approach, the Government will publish a formal discussion paper alongside the Finance Bill on the case for allowing transfers of tax history between buyers and sellers.

“The Government will also establish a new advisory panel of industry experts to ensure appropriate scrutiny of the options. The review will report at Autumn Budget 2017.”

Landfill Tax extended

On landfill tax, the Budget 2017 document states that the value of the Landfill Communities Fund (LCF) for 2017-18 will remain unchanged at £39.3m and the cap on contributions by landfill operators will be increased to 5.3%.

“This cap will be maintained, subject to consideration of Landfill Tax receipts, continued progress in reducing the level of unspent funds held by environmental bodies and the proportion of LCF funds spent on administration costs,” the document states.

“The Government will also consult on extending the scope of Landfill Tax to illegal disposals of waste made without the required permit or licence.”

New recycling targets unveiled

According to the full document, the Government will legislate to set new statutory packaging recycling targets for 2018 to 2020, to ensure compliance with the EU’s Packaging Directive.

“By 2020, the Government will increase recycling targets for paper to 75.0%, aluminium to 64.0%, steel to 85.0% and for wood packaging to 48.0%,” the document states. “Targets for overall packaging recycling will increase to 75.4% [from 72.7%] and for recovery to 82.0% [from 79.0%] by 2020.”

What wasn’t mentioned?

Solar tax hike

On the UK’s controversial business rate reforms, Hammond insisted that business rates cannot be axed as they are crucial for funding the Government. 

Despite a confirmation of caps for businesses facing the largest rate increases, Hammond today gave no mention of the solar tax hike. This will come as a big disappointment for the renewable energy industry, with solar PV installers now facing a potential 800% hike in business rates.

Emissions Reduction Plan

The long-awaited Emissions Reduction Plan has suffered a series of delays in recent months, and today’s Budget avoids the Plan entirely. The big spending decisions on how to deliver the Plan is now likely to be deferred to the Autumn Budget. 

25-Year Environment Plan

The Government has consistently promised to become the first “to leave the environment in a better state than it found it”. But again, constant delays to the publication of a white paper for the 25-year plan has cast these claims into doubt.

The Chancellor’s Budget gives no mention of the Environment Plan, meaning the spending decisions behind the plan are also likely to be deferred until the Autumn. 

Other things that were missed from the 2017 Budget

• Actions to boost energy efficiency
• First-year tax on diesel vehicles
• Reinvigorating the renewable heat market
• Green Investment Bank privatisation
• Future of the Swansea Bay Tidal Lagoon

Spring Budget 2017: Full document by edienews on Scribd

Luke Nicholls