The chancellor’s announcements last week were focused on supporting the wrong things
The good news in last week’s budget was confined to growth, pensioners and increases in the income tax thresholds; it certainly did not hold good news for reducing the UK’s reliance on energy and increasing long-term efficiency through supported investment in energy reduction and efficiency measures.
Yet again the only green element of the Budget is the colour of the font of the sub titles, in many regards this could be termed the emitters Budget as it has reduced the cost of emissions but has done nothing to reduce emissions themselves.
The main headline was that the chancellor was “cutting energy costs for business by £7bn”, at the start of the Budget he also mentioned that he was looking to support investment so perhaps this would be to encourage businesses to invest in reducing the amount of energy they consume and being more efficient…no, sadly not. The package focuses around the capping of the carbon price support rate to £18 until the end of the decade, perhaps signalling that the CRC costs will not go above £18/tonne before 2020 either?
There was also an announcement of investment of £60m in carbon capture and storage (CCS), so the chancellor is making it cheaper to emit and then investing in trying to catch the emissions at the top of the flue, (surely it is better not to emit in the first place). The development in the CCS innovation though should be cautiously welcomed as the UK could gain a world leading advantage and export this technology if it develops it first, it is just disappointing not to see this go hand in hand with reduction measures.
The reduction of the risk of under capacity by reducing the demand does not feature.
With £140m in flood defences and £200m in pothole repairs after the flooding one has to question whether the costs of externalities (from man-made climate change) of cutting the costs of energy rather than reducing the consumption has been taken into account. As a suggestion he should read Lord Stern’s A Blue Print for a Green Economy, (perhaps I will send him a copy for this birthday on 23 May).
There is continued acknowledgement of the risk of the lights going out with an “introduction of a capacity market to ensure security of supply”. The reduction of the risk of under capacity by reducing the demand does not feature.
The two highest rates of air passenger duty have been abolished cutting the cost of emissions from air travel but Enhanced Capital Allowance for zero emission goods vehicles has been extended until 2018.
There is an announcement for a consultation on household fuel poverty and a suggestion that this will be targeted at those who are off gas grid, this may help to support biomass conversion from oil.
There is also an announcement that the Enhanced Capital Allowances list for energy and water saving technologies will be updated, one hopes that this will include new innovations as well as correct failings in the existing system where technologies such as voltage optimisation are not include as they do not fit into any existing categories.
So, a lot to help to reduce the cost of carbon emissions, a little investment in trying to capture these and more investment in mopping up the consequences of them, a 0 out of 10 for a sustainable and efficient budget from me.
Matt Fulford is the director of Inspired Efficiency