Alistair Darling yesterday pledged £1 billion to tackle climate change in the world’s first “carbon budget”, committing the UK to a cut in carbon emissions of over a third by the end of the next decade.
Measures to support stalled offshore wind schemes, energy saving initiatives for households and businesses and a commitment on up to four new “clean coal” carbon capture and storage demonstration projects all featured.
Outlining the first of three new carbon budgets, which are legally required under the Climate Change Act and commit to a cut in UK emissions of 34 per cent by the end of the next decade, the Chancellor said the measures would “give industry the certainty needed to develop and use low carbon technology – cutting emissions, creating new businesses and jobs”.
Mr Darling pledged £525 million in new funds and support for offshore wind projects which have stalled because of the credit crunch, with the cash to be raised through the renewables obligation which funds clean energy through a levy on electricity supply firms.
As well as £405 million in new funding to encourage the development of low carbon energy and advanced green manufacturing in the UK there was also £435 million of extra support to deliver energy efficiency measures in homes, businesses and public buildings.
And in a bid to tackle the emissions from coal and gas-fired plants, the Chancellor said a new funding mechanism would finance between two and four projects which tested the use of carbon capture and storage (CSS) technology which captures carbon dioxide from power plants and buries it deep underground.
Lord Kumar Bhattacharyya, head of Warwick Manufacturing Group, praised the Budget’s “green agenda” including extra money to boost low carbon energy. And he hailed the Government’s emphasis on advanced manufacturing and its potential to create new jobs.
He said: “It was a very prudent Budget with help for both the poor and pensioners. But it also looked to the future – sustainability, climate change and the green environment.”
Andrew Whitehead, partner and head of energy at law firm Martineau, also picked out the support directed at green manufacturing as an important point for the region.
“Perhaps the most significant measures for the West Midlands is the financial stimulus offered by £405 million of funding designed to help UK plc in the development of new low carbon industries, including green manufacturing.
“This cash will be delivered through existing funding mechanisms and should help kick start the various ‘Cleantech’ initiatives already underway across the Midlands, supported by the many universities in the region.
“As always with these sorts of announcements, there remains the question of how quickly and efficiently this funding can be made available and the conditions for accessing it.
“These announcements are far more significant, from a green perspective, than the recent much reported car scrappage grant scheme, which is much more about stimulating consumer demand to assist the automotive industry than it is about getting emission intensive cars off the road.”
David Middleton, the Midland-based chief executive of the sustainable development business network Business Council for Sustainable Development, said the fact the Budget had a low-carbon element was a major step forwards but described it as “watered down” when set against the expectations for the world’s first carbon budget.
He said: “The commitments to expenditure in the areas of offshore energy generation and CCS are welcomed but we must ensure that the commitment is real and fast. Dithering has already lost us the potential of being a world leader in CCS and the Chancellors’ reference to CCS demonstration projects must be developed with speed.
“£405 million expenditure in advanced green manufacturing as a promise is fine but where is the detail and how fast is the delivery?” he asked. “And while the commitment of £500 million to help stimulate the building of new environmentally friendly homes is welcomed it does nothing to tackle the bigger challenge of making more energy efficient old, often single-skinned, homes.”
He also questioned the impact of the car scrappage scheme on the UK’s climate targets.
“Equally there seems something wrong in stimulating markets and moving towards a low carbon economy by creating more waste – as with the car scrapping scheme. What I think we need is stimulants to the auto industry to create radically different products that will contribute to a low carbon society.”
Jim Fitzgerald, a director at Ernst & Young, said the Government’s announcement for support of up to four Carbon Capture and Storage (CSS) demonstrators sent an encouraging signal to investors.
“The decision to impose a levy on consumers to support CCS technology will pile pressure on government to make sure that CCS projects are delivered on time, to budget and are of direct benefit to the UK consumer. The possibility to support more than one CCS technology type will add to the potential for the creation of UK green jobs and exports.
“It is now critical that details of how and when the levy will be collected and dispersed are quickly decided. Any further delay in selecting the projects to receive the funding means other countries will gain a head start on the UK.
“Strong competition from countries such as Germany the US and China means the UK government risks losing the race to win green jobs and investment from CCS technology.”
Mr Darling also announced an extension of support for combined heat and power installations by making them exempt from the climate change levy, which should help bring forward £2.5 billion of investment and 3 GW of capacity by 2015.
David Jewkes, tax partner at Grant Thornton in Birmingham, who specialises in advising companies on renewable energy tax matters, said the Chancellor’s announcements offered a “glimmer of light on the horizon.”
But he said the announcement of £405 million to support the development of a world-leading low carbon energy and advanced green manufacturing sector was UK is welcome although it was much less than is required to make any material difference.
“Areas of particular interest include further support for offshore wind projects, many of which have recently been shelved due to the economic crisis and lower oil prices, worth £3.5 billion over the lifetime of the projects, protecting up to £9 billion of investment.
“It is to be hoped these will be resurrected to some extent. The Government will also extend the climate change levy exemption for indirect sales of electricity from Combined Heat and Power installations. These are to be welcomed.“
But the environmental lobby cast doubts on the Budget’s green credentials, with West Midlands Friends of the Earth campaigner Chris Crean saying the Government had “squandered” an opportunity to kick-start a green industrial revolution.
“The green sheen on this year’s budget will do little to disguise the fact yet again the Government has merely applied a sticking plaster to a low-carbon industry on life support. The Government should be sprinting towards a low carbon future – instead it’s limping along.
“The social, environmental and economic costs of failing to rapidly cut emissions will dwarf the current financial problems we face – Ministers must urgently re-think their approach to climate change ahead of crucial UN talks in Copenhagen later this year.”