Chancellor says government is committed to COP21 Paris deal, but offers more help to flagging oil and gas sector
(Pic: George Osborne/Flickr)
By Ed King
Climate change was largely ignored by UK chancellor George Osborne as he presented a rare summer budget, announcing £17 billion of tax and spending savings.
Highlights included more taxes for green energy sources, tax breaks for fossil fuels and a pledge to expand the country’s road network.
The country’s defence spending would stay at 2% of GDP, he said, with changes to the country’s welfare system expected to save £12 billion.
Osborne confirmed plans for the UK’s flagship Green Investment Bank to move into private ownership would continue, ensuring its “future sustainability” he said.
On this year’s UN climate summit in Paris, the chancellor said the government would push for a deal “that keeps the goal of limiting global warming to 2 degrees firmly within reach.”
Osborne said removal of a tax exemption for clean energy under the Climate Change Levy – a business rate on energy use – was justified as there were better ways to encourage renewables.
Environmental taxes did not always “reflect the success of government policy in achieving environmental outcomes” he added.
The removal of the Climate Change Levy exemption will reduce the level of support for renewable projects. CCL is paid by business and public sector customers but can be offset by a Levy Exempt Certificate (LEC) earned by renewable energy projects. This will prevent non – UK renewable projects earning earning LEC revenue from selling their renewable energy in the UK. It will also impact existing UK renewable energy generators reducing their revenues today.
Ronan O’Regan, director, PwC energy and utilities
North Sea oil and gas extraction and the fracking industry also received welcome news, with plans to expand “cluster area” tax allowances to “maximise economic recovery”.
Green groups expressed disappointment at the chancellor’s plans to review taxes designed to promote energy efficiency and low carbon sources of electricity.
WWF-UK CEO David Nussbaum said Osborne was in danger of “pulling the rug” from the clean energy industry, questioning a “spectacular failure of vision”.
“To secure the private sector investment we need in renewables for our energy security and resilience, at lowest cost, requires consistent long-term policies from the Treasury – not sporadic fiddling with previously announced support,” he said.
Nick Molho, executive director of the Aldersgate Group – a green business coalition – called on the government to show its “commitment” to energy efficiency and low carbon infrastructure.
“With the global low carbon goods and services sector already worth US$5.5 trillion and international momentum building to accelerate cuts in carbon emissions, the UK economy can’t afford to drop out of the low carbon race,” he said.