Shale gas isn’t low carbon, Mr Chancellor
If yesterday’s Budget contained some solid good news for energy industries and the energy sector, why did it seem so last century? High energy users like steel and ceramics gained important new support, reflecting the concerted and evidence-based arguments that industry and trade unions have presented to government over the past three years. Two carbon capture pilot projects – one each for coal and gas – made it to the next stage. The answer lies in the new shale gas subsidy – and the Chancellor’s irresistable green dig: “Creating a low carbon economy should be done in a way that creates jobs rather than costing them.”
This is the third Budget that has lacked a consistent narrative joining progressive initiatives like carbon capture and support for heavy energy users to the the need to meet our climate chnage objectives. Taken on their own, support for sectors like steel and ceramics draw the cynical comment that the Chancellor is supporting “heavy polluters.”
Understandably so. For this Chancellor announced a new and as yet unpriced fossil fuel subsidy for shale gas extraction, adding to the £1 billion worth of tax breaks he has provided for oil and gas producers in the last ten months alone. “I am introducing a generous new tax regime, including a shale gas field allowance, to promote early investment. Shale gas is part of the future. And we will make it happen.” He announced that by the summer, new planning guidance will be available alongside specific proposals to allow local communities to benefit. Just how far this will draw the fire of community concerns over the fracking process and the disposal of millions of gallons of polluted and toxic water used in gas extraction remains to be seen. Similarly, the lack of decision on nuclear waste storage will dog the planning permission granted for Hinckley Point.
In our pre-Budget submission, the TUC called on the Chancellor to set a carbon reduction target for the Energy Bill in line with the advice from the independent Committee on Climate Change. This didn’t happen.
We asked him to strengthen access to energy project finance. But the Green Investment Bank cannot borrow until national debt is falling, so the GIB wont now be released from its borrowing handcuffs until 2017-2018.
But we also asked for the release of the £1bn carbon capture and storage (CCS) demonstration fund this year, to get four projects underway with no further delay. The government could have backed all four pilot projects, instead, we have one each for coal and gas. The timescale stretches out to 2015 before either or both get full support, and where is the £1bn, of which a fraction will be laid out in this Spending Review period. Rather than “costing jobs” as the Chancellor would have it, CCS has huge economic and employment potential, as the CCSA said yesterday.
TUC General Secretary Frances O’Grady commented:
“The government has reached another vital milestone in the development of the UK’s carbon capture infrastructure. Carbon capture and storage technology (CCS) is capable of safely storing the huge volume of carbon emissions that come from our coal and gas power stations and heavy industries like steel and chemicals. Now the Chancellor must safeguard the £1bn CCS fund so that we can get going with the carbon capture projects as quickly as possible.”
And the TUC called on the Chancellor to back our core industries by extending the £250m support package for energy intensive manufacturers like steel, cement, chemicals and ceramics onward from 2015 (when it expires) to at least 2020. Gladly, the government has extended the support package for a further year. And, to the delight of the Ceramics Confederation, the Chancellor will exempt from next year the industrial processes for that industry and some others from the Climate Change Levy. “And in the Spending Round we will provide support for energy intensive industries beyond 2015,” an important step forward for the work that industry and unions towards a strategy for the energy intensive industries.
With the Green Investment Bank tied to the nation’s ailing economy rather than helping to set it free, the overall feel is a package of energy measures that is much less than the sum of its parts.