Banking on a Just Transition
The Chancellor’s Budget speech was hugely welcome for its positive narrative about energy security, jobs and prosperity. With its firm focus on low carbon energy, the GIB is likely to emerge over the next few years as the funding arm for the Just Transition to a low carbon economy.
Hopefully, the GIB will therefore enjoy the same broad spectrum stakeholder representation of the new Forum for a Just Transition. The BIS/DECC-led stakeholder body involves the CBI, TUC, Energy Intensive Users, the regions and other partners in advising and strategizing on what a fair, low carbon future would look like.
The bank will be busy. As Budget 2010 acknowledges, investment levels will need to reach £120bn by 2020 in the energy infrastructure alone. Ofgem put the figure at £200bn for energy supplies as a whole. Of course, not all of this funding will flow through the GIB. But by 2050, “every unit of economic output will need to be produced using an average one-tenth of the carbon used today” (Budget 2010, para. 7.3). This means massive new funding commitments, from renovating inefficient building stock and large and small scale renewable and low carbon energy to public transport.
Budget 2010 had other low carbon offers, including cutting emissions from government department by 30% by 2020 – a challenge for unions across the public sector. Halving company car tax for ultra-low-carbon vehicles provides a further boost top Nissan’s plans for electric vehicle manufacture in the North east. And biomass installations will benefit from further support under the Renewables Obligation.
Budget 2009 and the 2009 Pre-Budget Report have so far announced £1.8 billion in support for low-carbon sectors:
- £30 million for Mitsubishi to locate a new £100 million offshore wind R&D facility in the UK, and £18.5 million for developing offshore wind test sites in the North East.
- £50 million for marine energy, establishing the South West as a marine energy hub.
- £80 million for the UK’s nuclear supply chain, through a loan offer to Sheffield Forgemasters.
- £45 million to date of loans to SMEs to install energy efficiency technologies, with 1,400 firms receiving assistance so far.
- Up to £60 million has helped support a further 1,400 projects in a range of institutions such as hospitals, universities and local authorities.
- £20 million for the Low Carbon Technology Programme.
- £45 million for R&D for low-carbon aircraft engines.
Energy and climate change policy have entered the mainstream of Government industrial policy. It’s inevitable that successive Budgets and PBR would follow suite. Four years ago, when the PM was Chancellor, he spoke of future Budgets “counting the pounds as well as the carbon.” We’re not quite there yet. But the new bank is among a set of initiatives in Budget 2010 credited with saving up to 51 million tonnes of CO2 emissions.