From the TUC

Budget 2012 – 5 Green markers

21 Mar 2012, by in Economics, Environment

The fairground noise of pre-Budget publicity has masked a number of shifts in the greenest government ever. Like announcements slipped out over the weekend about new long-term support for fossil fuel power stations. So here are 5 green markers for today’s Budget:

  • No more anti-green rhetoric.
  • Boost support for renewable power industries.
  • Put the £billions in new green taxes to create jobs.
  • Recommit support for 4 carbon capture projects.
  • Tackle our rising carbon emissions.

First, some fresh and substantial commitments to the green economy. At the very least this means none of the damaging rhetoric that featured in the Chancellor’s Autumn Statement, about burdening businesses “with endless social and environmental goals – however worthy in their own right – then not only will we not achieve those goals, but businesses will fail, jobs will be lost, and our country will be poorer.” Or this one: “We are not going to save the planet by shutting down our steel mills, aluminum smelters and paper manufacturers. All we will be doing is exporting valuable jobs out of Britain.”

Second, boost support for investment in renewable energy. We haven’t got the balance right between renewables and fossil fuels. Fossil fuels received a subsidy of £3.63bn in 2010, according to a new OECD study, compared with £1.4bn for renewables. Gas, which dominates home heating and electricity generation in the UK, received about £3bn in subsidy, with oil getting £500m and coal £72m. Almost 90% of the fossil fuel subsidy comes from the reduced rate of VAT paid by households. If such price cuts were intended to reduce energy costs for poorer households, they are a blunt tool, with many better-off people also gaining.

The Chancellor should renew support for solar power systems by lifting the funding cap in Budget 2012 and let the industry to grow its many thousands of new, green jobs. But, we suspect that we will be told about further support for oil and gas companies.

Thirdly, commit to putting the billions in new green taxes to useful purposes: tackle
fuel poverty, create thousands of jobs in homes insulation, and support our
energy intensive industries. The Chancellor will pull in £740m from the new
carbon tax in 2013-2014. This plus sales of emissions allowances to heavy
industry and energy companies will raise over £3bn a year from 2014. Put that
money to work.

  2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

Total

EU
ETS receipts

0.4

0.3

0.7

2.0

2.1

2.2

7.7

Carbon
floor price

0

0

0

0.74

1.07

1.41

3.22

Fourth, recommit support for the UK’s four carbon capture & storage projects. This has to include a not just a clear commitment to allocating the first £1bn this year for a project to replace the cancelled Longannet scheme, but clear commitments in this Spending review period to the other three projects which feature in the Coalition’s manifesto: “We will continue public sector investment in carbon capture and storage (CCS) technology for four coal-fired power stations.”

Finally, recommit to tackling our rising carbon emissions. Budget may well announce further support from oil & gas exploration, in the form of enhanced capital allowances or tax reliefs. The UK’s greenhouse gas emissions rose by 3.1% in 2010 , the first in almost a decade, due to increased home heating during a cold winter and shutdowns at nuclear power stations. We relied heavily on electricity from coal and gas fired power stations. Yet the new Environment Secretary has just this week guaranteed that investors in new gas-fired power stations can sustain their emissions at the current levels until 2045.