According to campaign group Friends of the Earth, today's Budget will do little to help people cope with long-term rising fossil fuel prices, capitalise on the UK's huge green job potential or tackle climate change.
Friends of the Earth's Executive Director Andy Atkins said: "In the face of a global oil crisis this Budget will increase the UK's oil addiction - and people across the UK will be forced to pay the price.
"The Government talks about ending our fossil-fuel dependency, but like a 40- year-old smoker pledging to give up in ten years' time, the Chancellor is taking a reckless gamble."
And plans for a green investment bank are only scratching the surface of the UK’s low carbon problem – and it needs to invest hundreds of billions not an additional £2billion to solve it, according to Inenco, the UK’s largest independent energy analyst.
Inenco said that the cash announced in today’s budget to kick start small and medium scale green energy schemes had to be followed up quickly with another £3-£4billion from the government in order to generate the required response.
Inenco analyst Rebecca Seabury said that the current scheme failed to address the massive issue of nuclear new build, which would require around £200billion of investment.
She said: “The money announced today for the green investment bank is an encouraging start but is a drop in the ocean compared to the £200billion plus we need to find to spark investment in the new nuclear power plants we require.
“The £2billion announced today is only a fraction of the money which will be required to drive a low-carbon economy and the question must be: where is the other 99 per cent going to come from?
“The required figure we are looking at is more than £200 billion – meaning that £2billion equates to less than one per cent – and could be as high as £400 billion.
“£2billion will only buy two-thirds of a nuclear power station and we cannot rely on private sector investment at a time when the economics of nuclear, wind and clean coal do not add up and the financial markets are still fragile. The government really needs to drive this – as nobody else is in a position to do it.”
Redpoint Energy undertook supporting analysis for HM Treasury and the Department for Energy and Climate Change (DECC) on the Carbon Price Support. Director, Duncan Sinclair, said: “We estimate that wholesale electricity prices may be around £5-£6/MWh or 10% higher by 2020 given the levels of carbon price floor announced today.
“This will have a significant impact on the earnings of power generators; with renewables and nuclear generators benefitting from the higher prices, while coal and older, less efficient gas plant will be hit by higher carbon costs, potentially accelerating closure.”
Sinclair added: “The Carbon Price Support may stimulate more investment in low carbon generation, although we expect the Feed-in Tariffs with Contracts for Difference as announced in DECC’s December consultation to be a more significant factor.”
On the Green Investment Bank, James Cameron, Vice-Chairman of Climate Change Capital, said: “The Budget is a pivotal moment in the evolution of the Green Investment Bank concept into a real and enduring institution. The Coalition is creating something that can make a positive difference to the entrepreneurial enterprises we need to deliver sustainable growth and the green transformation of our economy.”
“In the current fiscal environment committing £3bn is an achievement and by allowing the GIB to borrow mid-decade, its lending can ramp up quickly when the country’s low carbon capital requirements reach a critical point. But, this mustn’t be a question of “fire and forget”. It is also important that as the Bank develops, its capital base is regularly reinforced with pollution permit auction proceeds and newly announced UK carbon tax revenues.”
“And for the Bank to make a material difference with its initial capitalisation, it simply can’t do everything straight away. In the near term it must be focused on specific financing challenges. For example, attracting the deep pools of low cost capital held by institutional investors to finance mission critical green infrastructure, such as offshore wind and energy efficiency.”
On the carbon price floor, Rupert Edwards, Head of Research and Market Analysis at Climate Change Capital, said: "The UK Government's carbon price floor proposals demonstrate that the UK has the ambition to take a leadership role on climate policy at a time when the EU as a whole seems to be losing its nerve. Investors will, however, have serious doubts about the long-term credibility of the carbon price floor policy as it is currently conceived. This is because it is a tax-based mechanism subject to annual votes in Parliament."
"A policy to reduce uncertainty must itself be certain. To ensure that certainty a contractual obligation could be created with no costs to Government if the Treasury keeps to its carbon price floor commitments. If the carbon price support was actually guaranteed, it would increase certainty, reduce the incentive for investors to 'wait and see', and lower costs for investors and the economy."
And according to the influential Aldersgate Group, the Budget failed to include a comprehensive green growth strategy to drive a dynamic economic recovery. It claims Green Investment Bank that can borrow from the start should be at the heart of the growth plan to ensure that the UK is a more balanced economy that 'makes things' and not imports them.
Andrew Raingold, Executive Director of the Aldersgate Group, said: "Public banks are driving the economic recovery around the world. This is leading to growth in jobs and not deficits."
"We welcome the additional finance for the Green Investment Bank but it must have the power to borrow from day one. This would put the bank at the heart of Chancellor's plan for growth and not wait until the UK is overtaken in key green industries by competitors."
But Plumb Center has welcomed the announcement by George Osborne of an additional £2bn for the Green Investment Bank - a big advance on the £1bn initial figure being proposed last year.
It does however have concerns that delaying the bank's right to borrow money until 2015 to raise the capital it needs could impact on the speed at which new renewable energy projects get off the ground.
Simon Allan, Renewables Director Plumb Center, said: “Overall, the budget has a number of positives for the industry including the creation of the Green Investment Bank, a commitment to promote the Green Deal in advance of its introduction to householders, businesses and prospective householders alike and changes to the planning system to include a new presumption in favour of sustainable development.
“The government has pledged to be the ‘greenest’ ever which is certainly a positive step for our industry, the economy as a whole, not to mention the planet.”
And according to the Federation of Master Builders (FMB), today's Budget failed to ignite the forthcoming Green Deal programme to retrofit the nation’s homes. It claims additional incentives such as a cut in VAT for energy efficient repairs, stamp duty or council tax were announced to make Britain’s homes greener and more energy efficient.
Richard Diment, Director General of the FMB said:“The Chancellor missed an opportunity today to support the Green Deal and kick start consumer demand to make our homes greener. Without creating demand in the market for energy efficient improvement it is difficult to see how the Green Deal will succeed when it starts in the autumn of 2012.”
The Campaign to Protect Rural England labelled the Budget, “a massive threat to the environment”, claiming the triple whammy of scrapping national brownfield targets, introducing a default yes to development, and pursuing half-baked proposals for land auctions could be devastating to treasured countryside.
Commenting on the Chancellor’s proposals, Neil Sinden, CPRE’s Director of Policy, said: "The planning measures present a potentially devastating threat to the countryside and are unlikely to boost long-term economic growth. To suggest, as successive Governments have done, that planning is a key impediment to growth is just wrong. It is disappointing that George Osborne is repeating the mistaken assertions made by Gordon Brown.
“The planning system exists to prevent unsustainable, unwanted and environmentally damaging development. Today’s Budget is likely to undermine its ability to do this.
“Without national brownfield targets for housing we could have lost twice as much greenfield land to development over the last decade – equivalent to an area almost twice the size of Manchester. This move puts green fields unnecessarily in the path of the bulldozers.
“The Chancellor’s default ‘yes to development’ threatens both the environment and sound planning. The proposed land auctions are hugely risky and have failed to get backing from developers, local government or campaigners. In this context, his reassurances on protection of the Green Belt are nothing more than a fig leaf.”
The Aviation Environment Federation(AEF) welcomed plans to tax private and business jets.
AEF Director, Tim Johnson, said: “When ordinary people on business or leisure trips have to pay tax, it is clearly unfair and inequitable that exclusive and highly polluting private and business jets are not taxed. We therefore welcome the plan to tax them.”
However, the Chancellor announced that the government would not be replacing Air Passenger Duty with a per-plane tax, despite having pledged to do so in the Coalition Agreement in May 2010.
Tim Johnson said: “We are disappointed that the very public commitment made by the Government to replace APD with an aircraft-based tax has been dropped without any consultation on how obstacles to its implementation could be overcome.
“This means that freight transport and transfer passengers will continue to escape paying any tax. We are calling on the Government to find a way to close these loopholes.”
Although it was widely expected that APD would not be replaced by a per-plane tax, a rise in APD rates had been forecast in some quarters. However, the Chancellor deferred any increase.
Tim Johnson continued: “In the absence of reform, an increase in APD rates is urgently needed. This would be a step towards making the aviation industry pay for the environmental costs such as noise and CO2 emissions that it imposes and to make a fair contribution to the nation’s finances. The present tax – around £2.3 billion pa - is well short of what would be required to equalise aviation taxes with other sectors of the economy. For instance, if aviation fuel were taxed at the same rate as petrol, this would raise £10 billion pa.”
Post a comment