Summer Budget: 8 things green business wants to see
Chancellor George Osborne will deliver his second Budget in four months on Wednesday, and the first all-Conservative budget in nearly 20 years.
The sustainability industry is rightly nervous about the Chancellor’s speech. In just two months since the election, the Tories have overseen a subsidy cut for onshore wind, a budget cut for DECC and the sale of the Green Investment Bank.
edie has reached out to various green groups and industry professionals to find out what they want to hear from Osborne on Wednesday.
However, as Friends of the Earth’s David Powell noted: “What we want and what we expect are two very different things.”
1) Subsidy certainty
Overwhelmingly, the top response from the industry was a call for some form of subsidy certainty.
The Renewable Energy Association (REA) called for a renewed commitment to the Renewable Heat Incentive (RHI) which only has its budget confirmed to April 2016.
It also called for the Levy Control Framework to be extended out to 2025, with the budget boosted to cope with uncertainties over the timing of any possible new nuclear deployment.
Richard Black, director of the Energy and Climate Intelligence Unit, added: “As the government reviews support mechanisms for renewable energy, it’s worth bearing in mind that renewables in the UK are more expensive than in many other European countries largely because of endless tinkering with policies.
“In Germany and Denmark for example, citizens get better value for money from renewables because stable policies give investors confidence over the long term.”
2) Support for SMEs
The Institute of Environmental Management and Assessment (IEMA) told edie that some of its members felt the Government’s carbon reduction policies have over-focused on the very largest companies.
As many as 63% of IEMA members believe there is a need for the Government to rationalise the number of energy and carbon schemes affecting the very largest organisations, while 53% recognise a case for more financial support to smaller businesses.
IEMA urged the chancellor to consider offering tax breaks or loans for SMEs implementing energy savings measures.
3) Lock in low-carbon
Friends of the Earth senior economics campaigner David Powell said Osborne had the ability to choose the type of economic growth that Britain will pursue.
He said: “Mr Osborne will focus on productivity and exports. As always, he has to choose: of what colour? At such a relatively delicate stage in their development, nervous green businesses need his specific backing. This must be rhetorical and financial, like continuing to help renewables fall in price, and R&D support to bolster the UK’s innovation.
“And he’ll probably redouble efforts on infrastructure – so let’s see him choose what kind. This Parliament needs new ideas; he should give up on polluting roads and airports, instead levering in cash from everyday savers to cutting-edge and future-proof low-carbon transport and energy systems.”
4) Energy efficiency
The Conservative pre-election manifesto contained plans to ‘insulate one million homes’, but little detail on tangible energy efficiency policies. Buildings are responsible for 37% of all carbon emissions in the UK and yet the building insulation market contracted by 22% last year.
A spokesperson for the UK Green Building Council (UKGBC) told edie: “We’d like to see energy efficiency recognised as a national infrastructure priority and for Government infrastructure funds to be allocated to retrofit low income households as part of a national home retrofit programme.”
5) VAT certainty
On Monday, edie reported on a group of businesses who have written to George Osborne calling for a clear statement on whether he will change VAT rates for solar panels, insulation, and other energy-saving equipment.
The current rate of 5% is in doubt after the European Court of Justice ruled in June that it was unlawful under EU VAT directives.
The Solar Trade Association, the Sustainable Energy Association and the UKGBC and Friends of the Earth have all backed calls for a clear statement on the topic.
6) Clear targets
In an Aldersgate Group report covered by edie on Tuesday, Matthew Knight, the director of strategy and government affairs at Siemens, called for the Government to set specific build rates for the various renewable technologies.
He said: “This is not about setting targets or picking winners but simply recognising that, for example, we are going to need around 15GW of new offshore wind in the next decade.
“Telling the industry at the outset that the market will be around 1.5GW each year for a decade delivers offshore wind at a lower cost than if the government announced building 1.5GW one year, but giving no indication whether there will be more next year.
“So our message to government is simple: be clearer about what you want and the industry will deliver at lower cost and with more local jobs.”
Wind and marine energy representatives RenewableUK warned that the Government’s current “short-sighted” policy risked tens of thousands of jobs and billions of pounds of investment.
7) Simplify and clarify the energy system
Also talking to the Aldersgate Group, BT chief sustainability office Niall Dunne said that the Government could simplify its low carbon policies and drive uptake of renewable energy using market incentives.
He said: “The administrative burden passed on to businesses is hefty. It can also be unfair. For example, BT still pays a substantial amount of tax despite buying 100% of its UK electricity from renewable sources.
“The idea of labelling electricity according to its carbon content is an initiative that will add clarity to the market. It makes sense for businesses to know what type of electricity they are paying for and using, in the same way that consumers understand a great deal about domestic appliances by looking at a sticker.”
8) Encourage investment
The influential Green Alliance think-tank warned that the Chancellor will have to show how he plans to keep capital investment rising, at the same time as cutting the deficit.
Green Alliance director Matthew Spencer said: “One of the most successful routes to investment has been low carbon infrastructure, which accounted for a big £40 billion slice of the growth in business investment in the last parliament.
“Announcing an extension of the Levy Control Framework to 2025 would be a first step to raising investor confidence, but giving DECC a decent departmental budget will also be crucial to protecting the expertise we need to get a good deal for consumers.”