Budget 2011: Government’s green announcements receive a mixed response.

23 March 2011

 

 

The Government’s Budget announcements on environmental and green policy spending have been met with a mixed response from both businesses and the third sector. Chancellor George Osborne used the Budget on Wednesday to make several key announcements for the sustainability agenda, including an extra £2bn in funding for the Green Investment Bank (GIB) with borrowing facilities from 2015, dependant on government debt, and the introduction of a carbon floor price at £16 a tonne from 2013. Whilst the announcement of additional funding for the GIB has received widespread support, the decision to delay borrowing facilities to 2015 has been met with criticism from organisations like the CBI and Friends of the Earth. Speaking about the announcements on the Green Investment Bank, CBI Director for Business Environment, Rhian Kelly said, "While we're pleased there has finally been a decision on 'borrow or lend', we believe that if it is to borrow, then it should do so from the beginning. Why dribble out the borrowing?” 

 

The Government’s second big ‘green’ announcement on the budget was the introduction of the carbon floor price, whilst this provides greater certainty for business as to the long term price of carbon, PwC partner, Richard Gledhill, has pointed out “the current price of EU Allowances for delivery in 2013 is around €19, which is just above the starting point for the floor, and the £30 price at 2020 is in line with brokers’ forecasts, though clearly that far out, the outlook is much less certain”. Therefore whilst providing price certainty the floor price fails to introduce any new incentive for investment in renewable energy generation, with the CBI raising further questions about the certainty of government revenues from the scheme, "The question then is: how does the Treasury continue to maintain the revenue it is proposing to get from the carbon floor price? It seems to me there is a potential political risk there”. Where the Government has come in for the greatest level of criticism is on changes to taxes on fuel. The reduction in fuel tax for vehicles, scrapping the fuel duty escalator and failure to set out a clear plan for reforming aviation taxes, has led to criticisms of failure to show joined up thinking on sustainability policy and a weak commitment to ending dependency on fossil fuels. The Financial Times reported that although these may be good moves “if the aim is to help out the poor motorist struggling under the weight of £1.30-a-litre petrol” it will of course “take some deft spin to dress them up as part of being “the greenest government ever”.

 

Read more responses to the sustainability and environmental announcements in the Budget 2011: