Is the Chancellor’s Budget end of the road for a sustainable economy?

Yesterday's budget provided little assurance to the green sector after the Chancellor announced further cuts to the Department of Energy and Climate Change's (DECC) spending and increased support for the exploration of shale gas, Leigh Stringer reports.

As a blow to Secretary of State for Energy and Climate Change, Ed Davey, Osborne told DECC that it will have to deliver a 1% cut to its budgets in 2013-14 and 2014-15 on top of last year’s reductions when the Chancellor slashed all department budgets by around 3%, except for the Cabinet Office.

As well as department spending cuts, the Chancellor announced that there will be a “generous new tax regime” to encourage investment in the controversial exploration of shale gas. “Shale gas is part of the future,” he stressed.

Green groups were unsurprisingly discouraged by Osborne’s continued support for shale gas but it was the previous day’s announcement, when Davey approved plans for the Hinkley nuclear power station, which disheartened the renewable energy sector, as it confirmed a level playing field for renewables, nuclear and shale.

However, despite no mention of the role renewables will play in this year’s budget, Osborne did highlight the Government’s intentions to achieve a low-carbon economy but added that “creating a low carbon economy must be done in a way that creates jobs, not costs them”.

In response to the Budget, Andrew Raingold, executive director of the Aldersgate Group, an alliance of leaders from business, politics and society that drive action for a sustainable economy, said: “Rather than tax breaks for shale gas, the UK needs a clear regulatory framework that will drive investment and export opportunities for low carbon technologies.”

Raingold told edie that he was not expecting announcements on renewables as “that’s tied up to the energy bill” but added that it would be vital to see the bill strengthened as it goes through Parliament over the next few months.

In October 2012, the Aldersgate Group wrote to the Chancellor stating that a 2030 carbon target for the power sector is essential for stimulating new growth in the economy.

“Particularly, we need to see more clarity on the policy landscape beyond 2020, through, for example, a decarbonisation target for 2030. It’s not surprising that there weren’t further announcements on renewables in the budget itself because the process is already underway,” he added.

Aldersgate argued that only greater clarity from Government can unleash the £110bn investment required to transform the UK’s electricity infrastructure and drive wider economic benefits.

One area Osborne will be investing is infrastructure. The Chancellor announced that he will be pumping £3bn into infrastructure projects, through cuts to department spending, which could be an opportunity to incorporate sustainability and energy efficiency into the construction phase.

Environmental and planning consultancy, Temple Group technical director, Chris Ferrary, told edie: “In terms of infrastructure, the key thing about the budget statement is that this is a financial rather than policy change. The 2011 National Infrastructure Plan consolidated the deep cuts in spending on local infrastructure that followed the last election when the coalition announced its 5-year spending plans.

“The budget statement may mean that finance is available to deliver planned infrastructure faster, but won’t give an impetus to new schemes necessarily. Of itself, this is a good thing for the economy, as the gap between current and planned growth could be bridged by better performance in the construction sector alone. However, it doesn’t necessarily do much to help deliver more sustainable development.”

One issue highlighted was the country’s struggling property sector and the announcement that the Government would consult on relaxation of planning rules to convert retail to residential.

Head of sustainability at independent property and building consultancy Tuffin Ferraby Taylor (TFT), Mat Lown, said: “If town centres are to survive, the property sector must take the lead. It is not just a question of how to regenerate the high street to save a town’s retail offer or addressing the challenges of internet shopping, it’s about how we build sustainable communities and how we adapt the fabric of our towns to suit those communities.

Lown stressed that converting properties into residential could help rejuvenate struggling town centres, while also providing an opportunity to address the pressing need to improve the energy efficiency of existing buildings, which is essential in meeting medium and long term carbon reduction targets.

Leigh Stringer

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