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Wednesday, 16 March 2016 18:37

Praise and complaint about green aspects of the Treasury's Budget

Environment Times has received a mixed bag of comment responding to the environmental aspects of the UK Government's Budget announced by Chancellor George Osborne yesterday. 

budget1Greenpeace responds to new tax breaks for North Seal Oil and Gas industry
George Osborne announced a series of tax breaks and abolished the Petroleum Revenue tax for the North Sea Oil and Gas Industry, Greenpeace Policy Director said: “It makes no economic or environmental sense that the government is cutting support for renewable energy whilst seeking to prop up a North Sea oil and gas sector. Clean energy could power the UK in the future if they were given a sliver of the financial and political backing that is given to the nuclear or fossil industries. Rather than hoping to extract more North Sea oil and gas, the government should be looking at a transition plan for the communities impacted by a declining industry including expanding offshore wind.”

Green Alliance reaction to Budget 2016: low carbon destination clear but insufficient resource to reach it
Matthew Spencer, director of Green Alliance said: "It's fantastic that, this morning, the Prime Minister put us on the road to a largely carbon free energy system by 2030, but the Chancellor hasn't put enough fuel in the tank to get us there. Funding less than 1 GW a year of offshore wind in the 2020s, with nothing for mature renewables, will leave a big gap in power generation, however fast we pursue nuclear and gas. This is another example of the government being strong on climate targets and weak on driving the necessary investment."

Budget 2016 - Friends of the Earth reaction: 'What happened in Paris, appears to have stayed in Paris'
Friends of the Earth campaigner Liz Hutchins said: "The Chancellor's Budget was full of 'next generation rhetoric', but tax breaks for the climate-wrecking oil and gas industry pose a real threat to the security of people, the economy and planet. It's almost as if the recent UN climate agreement never occurred. What happened in Paris, appears to have stayed in Paris.

"Air pollution kills tens of thousands of people prematurely every year and costs the economy billions of pounds, as the Prime Minister admitted shortly before the Chancellor spoke - so why did this Budget do so little to clean up transport and wean the nation off dirty fossil fuels? This Government should do far more to develop the UK's huge renewable energy potential – creating jobs and putting us at the forefront of building an economy fit for the challenges of the future."

IEMA Response to Budget 2016: "Concerns about long-term effectiveness"
Nick Blyth, Policy & Engagement Lead at IEMA, said: "IEMA welcomes aspects of the Chancellors budget but at the same time has concerns about long-term effectiveness of the Government's approach to the environment and sustainability. He mentioned that this Budget was one which aims to 'pay now so we don't pay later' but I think some opportunities have been missed.

"As IEMA has previously encouraged, we are pleased to see Government retain Mandatory Carbon Reporting. In scrapping the Carbon Reduction Committeemen, the Chancellor's approach to replacing the revenue raised from CRC allowances in a 'fiscally neutral way' by simultaneously increasing the Climate Change Levy could be a concern as that such a tax may be difficult to make effective. The timeline for these changes feels positive - the expected consultation has been announced - and indication that the new simplified policy regime will be in place from 2019 is also a welcome move.

"This budget is interesting as that longer term issues are being addressed in some areas, such as a new sugar levy and an increase in insurance tax that will raise revenue to improve flood resilience. However, some opportunities around environmental taxation are not being maximised and freezing fuel duty could be seen in this context. Where taxation is applied there is a concern that the impact and visibility of the increased Climate Change Levy might be very low as the tax will be spread over such a wide number of businesses."

budget2Ecotricity Budget Response: "The chancellor forgot to mention a little thing called climate change"
Dale Vince, Ecotricity founder, said: "The budget is remarkable not so much for what's in it, but for what's not; the chancellor forgot to mention a little thing called climate change – and in the same week that NASA called February's global temperatures 'stunning' and scientists from around the world declared a climate emergency.

"Only two days ago, our own government promised to set a net zero emissions target into law, as agreed by the whole world in Paris just a couple of months ago. What is this budget, and this Chancellor, doing on this front? Very little it seems."

EEF comment on Budget Energy & Environment issues
Commenting on the Government's response to the Business Energy Efficiency Taxation Review EEF's Senior Energy Policy advisor, Richard Warren, said; "Manufacturers will be enormously pleased to finally see the back of the CRC energy efficiency scheme, a vastly overcomplicated tax that has had a negligible effect on energy efficiency improvements in industry. We would have liked to see the government go further, however, and relinquish the revenue stream attached to this scheme, but do at least welcome the government's clear commitment to make changes to the Climate Change Levy in a genuinely revenue neutral manner.

"Continuation of the Climate Change Agreements for all sectors is extremely welcome. The scheme strikes the correct balance between penalty and reward, working with the grain of business to drive investments in energy efficiency. Just as importantly, the scheme is an essential element of the package of measures protecting our most energy intensive industry from uncompetitive energy prices. Government is to be congratulated on listening to the concerns of industry and refraining from unhelpful reform."

Commenting on the Government's announcement on the Carbon Price Support rates, EEF's Senior Energy Policy advisor, Richard Warren, said; "Whilst we had been hoping for something more radical on the Carbon Price Floor itself, today's commitment to continue the current freeze to the support rates beyond 2019/20 is welcome. With UK electricity consumers currently saddled with a carbon price some four to five times higher than consumers elsewhere in Europe, there can be little justification for a resumption of its original trajectory. We will continue to call for its phasing out but today's announcement at least provides manufacturers with some certainty on cost stability for the remainder of this parliament."

Grantham Research Institute on Climate Change and the Environment - The Budget will have a mixed impact on the fight against climate change
Professor Sam Fankhauser, Co-Director of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, said: "This Budget will have a mixed impact on the fight against climate change. The announcement of a new round of auctions for contracts to be awarded to offshore wind and other less established renewables is very welcome, although it is not clear if this will be sufficient to ensure the UK meets its targets for reducing greenhouse gas emissions over the next ten years. But it is disappointing that the Government will proceed with its decision, announced in the last Autumn Statement, to extend the Climate Change Levy to renewable energy.

"By making renewable energy more expensive, this move will hinder efforts to reduce emissions. However, this move has been slightly mitigated by this Budget, which will increase the Climate Change Levy rate on natural gas compared with electricity.

"The extension of the freeze on the Carbon Price Support Rate is disappointing, but it is to be hoped that the Treasury's review of this carbon tax over the next few months will mean a significant long-term rise can be announced in the next Autumn Statement.

"The additional expenditure on flood defences is helpful, but the Government should carry out a fundamental review of its investments after the National Flood Resilience Review is completed later this year."

budget3Reaction from WSP | Parsons Brinckerhoff
Commenting on abolition of the Carbon Reduction commitment, David Symons, WSP | Parsons Brinckerhoff environmental director said: "Simplifying energy taxes is welcome – abolishing CRC helps business cut bureaucracy and energy use at the same time. CRC lost much of its interest to senior managers once the revenue recycling elements of the scheme was removed. Abolishing it is the right thing to do, although the only surprise is that it's still around until 2019.

"We were never expecting green-friendly policies to dominate - but seeing so little so soon after the Paris agreement still feels like a missed opportunity. Once again, this Budget shows it's difficult to balance climate leadership, protect UK oil and gas jobs, and eliminate the deficit."

Solar Trade Association - VAT Silence Raises Hopes for Domestic Solar
The decision on a Government proposed increase in VAT rates for domestic solar systems was absent from the Budget. The welcome silence has raised hopes of a Treasury rethink, which the STA has been strongly pushing for. The Solar Trade Association has been told that Treasury has delayed its decision, but will make a decision by Autumn. Just last week the European Commission mooted fundamental reform of EU VAT rules, which have weakened the already poor justifications given for raising VAT on solar. If enacted, Treasury's proposals would see UK families paying more VAT for going solar than for buying power off the grid, or for heating their homes with fossil fuels – a perverse outcome given climate change and OECD promises to end distorting subsidies for fossil fuels.

Paul Barwell, CEO of the Solar Trade Association commented: "No VAT news is good news on Budget Day. This delay means we can continue to make the very strong case for Treasury to abandon plans to hike up VAT on solar. It makes no sense to penalise British families that want to take meaningful action on climate. The Energy Department is on the record saying they will look again at support levels for domestic solar if VAT rates are increased so households should be assured it will still pay to go solar whatever happens. However, the VAT increase should not go ahead; it would delay the point at which solar will not need public support in the UK and that would be an own goal."

The FT reported today that there was anger from some Tory MPs in relation to the proposed solar VAT hike. The Solar Trade Association has escalated its advocacy efforts in recent days following news of the major European Commission tax moves.

Chancellor's Smart Power backing welcome                
The STA has given a warm welcome to the Chancellor's acceptance of the National Infrastructure Commission's recommendations on Smart Power. Lord Adonis's report shows that a flexible power system, incorporating storage, could save consumers £8billion per annum by 2030. It also showed that a more flexible system combined with renewables could deliver power more cheaply than nuclear power. A smart power system requires active management of local networks – essential for the effective connection and management of solar on the grid. The Solar Trade Association has long been pushing for a clear, strategic steer on network development to ensure better support for distributed power and Lord Adonis has recommended this should be a government priority.

Paul Barwell said: "There is strong consensus across the energy sector on the way forward for our electricity system – decentralised solar, storage and flexibility feature strongly. There has been widespread concern that this global technological shift has not been understood by the Government. Much more needs to be done to get solar power back on track in the UK, but accepting Lord Adonis's recommendation for a smart power system is actually a very strategically important announcement by the Chancellor. It means the UK will start laying the foundation for a solar future."

The National Infrastructure Commission also recommend that the UK becomes a world leader in electricity storage – a technology that works hand-in-glove with solar power at all scales.

budget4Lack of certainty for cheapest renewables continues, while fossil boosted
Large-scale solar power was set to match new gas generation on a levelised-cost-of-energy basis next year, but has thus far been prevented from competing not only with other renewables, but with nuclear power and even with gas for support. The STA is disappointed that there was no news on future CfD rounds for solar power leaving the sector facing massive uncertainty.

Paul Barwell said: "The Government will spend just 1% of its clean energy support on solar power over the next three years, through one remaining support scheme. That is very unwise given near global recognition that solar power sits at the heart of a clean and modern electricity system - and given its affordability. It is also unfair to leave the industry and investors with no future certainty. It is disappointing to hear of yet more tax breaks for oil and gas while much of the solar power industry is still left in limbo."

Perverse treatment of renewables under Climate Change Levy should end
The Chancellor today mentioned aspects of the Energy Efficiency Tax Review which will overhaul business carbon reporting and taxation. The measures will be consulted on in greater detail later this year, following a broad-brush consultation last year. The Review is important to the solar industry because current carbon taxation rules have perverse outcomes for companies that invest in renewable power. Contracts for renewable power had their exemption from the Climate Change Levy removed suddenly last year, penalising progressive companies. The CCL will be increased from April 2019, potentially increasing taxes on renewables. The Carbon Reduction Commitment, which will be scrapped, has also required firms to wrongly report their carbon impact. The new scheme is expected to be implemented in 2019.

Paul Barwell said: "It is vital that regulatory measures support solar investment as strongly as possible. While onsite solar is rightly exempt from the Climate Change Levy, it is perverse that renewables supplying clean power via the grid are taxed on the carbon they do not emit - this situation surely cannot continue until 2019.

"Businesses understand the climate threat and many want to go solar. Government has an opportunity to align the new business carbon tax to support investment in solar. This will give a much needed boost to solar deployment and help to get solar cost reductions back on track at no cost to domestic bill-payers. Business investment in solar and storage will also boost the smart power agenda which the chancellor has given his backing to today."

The Solar Trade Association has been advocating for accurate carbon reporting under the new scheme, so that the carbon reductions provided by onsite and PPA-contracted solar power are accurately accounted for in the commercial sector. The Review is particularly important given Government support for solar over 50kW in size (about the size of a modest office), only allows for around 60MW of capacity per year – a fraction of the previous market.

Budget 2016: ESA pleased that Budget saves Landfill Communities Fund
The Environmental Services Association (ESA), the voice for the UK's resource and waste management industry, expressed its pleasure at the Chancellor of the Exchequers announcement that it has chosen to retain third party contribution options under the Landfill Communities Fund.

ESA's Executive Director, Jacob Hayler said: "ESA is pleased that HM Treasury has listened to the industry and chosen to retain the option of using contributing third parties under the Landfill Communities Fund scheme.

"Removal of this option would have stung landfill operators with a sudden and unforeseen £4 million burden, which would have left them with no option but to cease contributing to the fund. This would have been a crying shame for local community and biodiversity projects which rely on this source of funding in an otherwise challenging climate for fund raising, and also for the environmental bodies administering the scheme which would have been forced to wind down and lay off jobs.

"Today's announcement that Entrust will instead publish guidance for landfill operators to increase their contributions to the fund is a preferable and more flexible alternative which means that communities will continue to benefit from this invaluable scheme going forward."

EIC reacts to a lacklustre budget for the environmental sector
The Chancellor, George Osborne announced his financial plans which left plenty to be desired by the UK's environmental technology and services sector.

Commenting on the 2016 Budget, EIC's Executive Director Matthew Farrow said: "Lobbying by EIC and others has averted the abolition of mandatory carbon reporting, but there is little else for green entrepreneurs to cheer in the Budget. The £1bn brownfield fund was announced last year and needs tax reform to support it but is welcome as far as it goes, as is the additional money for flood defences. The freezing of fuel duty meanwhile will not help air quality."

budget5Budget response - Philip Simpson, Commercial Director, ReFood
"Today's Budget is another signal that the environment and renewable energy is far from the top of this government's agenda. It was thoroughly disappointing to see that renewable energy generators are hit once more as the Chancellor announces rises to the Climate Change Levy, which became applicable to such businesses for the first time in 2015.

"To compound this, there have been further tax breaks offered to the oil and gas industry, demonstrating ongoing subsidy support to the fossil fuel sector. Adding salt to the wound, the renewable energy industry continues to be decimated by the ongoing policy uncertainty and swathing subsidy cuts around RHI, FiTs etc.

"While £730m of funding for new renewable energy project can be welcomed, it is really only a drop in the ocean, this isn't enough to allow the sector to really achieve its potential."

SMMT BUDGET RESPONSE (Motor Manufacturers)
Mike Hawes, SMMT Chief Executive, said, "The 2016 Budget contained some positive measures and we were pleased to see the Chancellor recognise SMMT's call for greater support for energy efficient technologies, through both the extension of Climate Change Agreements and a forthcoming consultation on the future Company Car Tax treatment of ultra low emission vehicles. However, we were disappointed that the Chancellor has not done more on business rate reform. The removal of plant and machinery from business rates valuation would have encouraged investment in innovative manufacturing technologies, improving still further UK automotive industry productivity and safeguarding our competitiveness."

COUNCILS RESPOND TO EXTRA £700 MILLION FUNDING FOR FLOOD DEFENCES IN BUDGET 2016Responding to the Chancellor's announcement of an extra £700 million for flood defences as part of the Budget, Cllr Peter Box, Environment spokesman at the Local Government Association, said: "Government funding has been important in enabling local authorities and their communities to recover from the winter's flooding havoc and the additional £700 million by 2020/21 is another significant step in the right direction. However, councils will almost certainly need more financial help from the Government as the full cost of the winter's horrendous flooding damage emerges.

"Crucially, new flood defence funding must be devolved by the Government to local areas, with councils working with communities and businesses to ensure money is directed towards projects that best reflect local needs. Councils know their local areas and are best placed to help families get back on their feet."

THE FULL BUDGET 2016 can be seen at: