Greenest Budget yet? £7.8 billion green boost for low carbon energy
This practical, green budget clearly acknowledges that the government has a central role to play in turning the UK into a competitive low carbon economy. The Government has shown that it wants an energy revolution, cutting our carbon by 34% by 2020, on a scale that the market on its own cannot deliver.
The Budget adds up to £1.365 billion for new green energy supply and energy efficiency, about £6.5 billion in capital support through the European Investment Bank and other means, plus an unspecified ‘funding mechanism’ for up to four carbon capture demonstration projects. Each CCS plant won’t give much change out of £1billion.
We called for a £500m investment in energy efficiency for home insulation and other measures – the Government has promised £375 million to support energy and resource efficiency in businesses, public buildings households over the next two years. Plus £70 million for decentralised small-scale community low-carbon energy. A job-rich total of £435m of extra support to deliver energy efficiency measures – for homes, businesses and public buildings.
To decarbonise our energy supply, in our Budget submission we called for ‘immediate financial support for large scale renewables – such as the London Array, known to be facing difficulties’. The Chancellor acknowledged the key contribution these major renewables will make to our future energy mix. We welcome the £525m of new financial support over the next two years for off-shore wind, funded through the renewables obligation. This is being carried out by raising the subsidy levels for offshore wind from for new orders. This is expected to support £9 billion of investment and provide power for up to 2.8 million homes. Projects like the London Array are hopefully now ready to go.
The ‘new funding mechanism’ for up to four carbon capture demonstration projects shows the Government recognises its leading role in the development of this vital technology through targeted public investment. £90 million was announced to fund detailed preparatory studies.
A further boost to green jobs should follow with the Chancellor’s other announcements:
- £4bn of new capital signalled from the European Investment Bank.
- Encouraging Combined Heat and Power technology by exempt those projects from the Climate Change Levy from 2013 – bringing forward over £2.5 billion in investment.
- £405m of new funding for to encourage low carbon energy and advanced green manufacturing in Britain – to drive the application of new technology and invest in small scale projects.
The new five-year Carbon Budgets also announced by the Chancellor mean that future Chancellors will be counting the carbon as well as the pounds in their annual Budget statements. All sectors of the economy will need to play a part in meeting carbon budgets, through decarbonising electricity generation, improving energy efficiency in buildings and industry, and improving the fuel efficiency of road vehicles.
It’s not that we think that this ‘Greenest Budget Yet’ goes far enough – we called for a £16.8 billion green stimulus. But the announcements offer practical steps for businesses to get on with delivery in all the carbon priority areas.