The UK Government has promised to put the “fuel in the tank” of the nation's economy with a series of new measures in its “Plan for Growth” – but without the focus on a green, low-carbon future many were calling for.
Chancellor George Osborne used his first full Budget to announce details of an increase in capital available to the Green Investment Bank to £3 billion and the introduction of a carbon price floor starting at £16 per tonne of carbon from 1 April 2013 to drive investment in green infrastructure and low-carbon electricity generation.
He also unveiled steps to kick-start the sluggish property market by offering first time buyers interest free loans to help them get a foot on the housing ladder.
Up to 10,000 people will receive loans of up to 20 per cent of the value of new properties. The scheme will be funded by an increased levy on banks and, it is hoped, will provide a boost to the construction industry.
More details were released of the UK's new Green Investment Bank, aimed at supporting private sector investment into low-carbon technologies.
The scheme will function as a real bank, but won't be able to borrow until 2015.
Disappointed investors in green technologies had hoped the bank would have the borrowing capability from the start, and the move could potentially create a shortfall in the billions of pounds investment required over the next decade to meet climate change targets.
Osborne told Parliament he was committing an additional £2 billion to the bank, on top of the £1 billion already pledged, enabling it to start operating in 2012.
The Government wants the Green Investment Bank to create confidence in the sector by taking on risks the market can't adequately finance, to catalyse further private investment into the sector and facilitate the entry of new investors into green technologies such as wave and tidal power and wind energy.
The bank is a key part of government plans to shift the economy to a low-carbon system that will drive economic growth and jobs, cut emissions and reduce the nation's growing dependence on imported natural gas as North Sea supplies dry up.
Private-sector investment of around £200 billion is required over the next decade if the UK is to meet binding European Union climate change targets for 2020.
But traditional sources of private-sector capital are likely to deliver only £50 billion to £80 billion of investment in green energy technologies and related by 2025, Ernst & Young accountants told a recent inquiry by the UK parliamentary Environmental Audit Committee.
Osborne also revealed the Government would set the world's first-ever carbon floor price to pay for investment in new energy infrastructure.
After telling the Commons he wanted the nation to become a world leader in green energy, he said the carbon tax would be set at £16 per tonne in 2013, rising to £30 per tonne by 2020.
The Chancellor also announced plans to introduce tax breaks for microgeneration equipment.
He said a consultation will start in May to determine the appropriate level of capital allowances that can be attached to the renewable energy technology that attracts tariffs under the FiT and Renewable Heating Incentives schemes .
It is hoped the proposed tax relief will create a further financial incentive to encourage more households to take-up the installation of microgeneration power.
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