Green lite budget for UK

The UK's most critical – and controversial – budget of recent times got a mixed reception for its green merits and shortcomings.

At issue was how the country could best navigate the global economic crisis and emerge from recession in better shape for a low carbon future. Within the limits imposed by the state of the public finances, Chancellor of the Exchequer Alistair Darling's chosen overall strategy could be summarised as stimulate a bit now, then pay with a squeeze – later.  

On the green front, the highlights are the setting of a legally binding carbon budget – a world first, as mandated by the Climate Change Act – and some £1.4 billion in funding for carbon-cutting initiatives. The former was widely welcomed, although we must wait to see the details. Darling backed up the announcement with a target of cutting 34% off greenhouse gas emissions by 2020 (compared to 1990 levels). Again, this was generally welcomed – although critics pointed out that the latest science on climate change suggests deeper cuts are called for.
 
But there was more scepticism on the Chancellor’s strategies for getting us there. That £1.4 billion green stimulus spend, for instance, was widely seen as woefully insufficient: "a fistful of pennies", in the words of Greenpeace's John Sauven. For his part, Lord Stern (author of the Stern Review on climate change) did characterise it as "the initial step along the path towards a major structural shift in policy which we trust will follow over the coming decade" – but that does leave an awful lot on trust. And £1.4 billion is only a small fraction of what was advocated, for instance, by the Sustainable Development Commission (SDC), whose report on the eve of the budget called for a £30 billion a year package for the next three years.

The majority of the spend [see right, ‘Where the green money goes’] is targeted on a mix of low carbon industries and energy efficiency measures. It includes a decisive step on support for offshore wind power (over half a billion pounds), and a new commitment to back research into the controversial technology of carbon capture and storage (CCS) – which will be accompanied by the not-so-green decision to back new coal-fired power plants. By comparison, some sectors such as housing receive pretty threadbare coverage, leading Paul King of the UK Green Building Council to regret “a wasted opportunity to map a truly low carbon route out of this recession”.

Worryingly (but predictably), green fiscal reform is almost invisible: there's nothing new in the way of shifting taxes on to environmental 'bads'. Landfill tax will go on rising annually through 2013, and the road fuel duty escalator does make a welcome if modest reappearance, adding £0.01 per litre above inflation to pump prices each April from 2010 to 2013. On the other hand, a year-long £2,000 incentive for car-owners to trade in old for new, ostensibly helping to get high-polluting old bangers off the roads, is inexcusably to be applied with no CO2 output limits on their new replacements. This underlines its true nature as a sales booster for the struggling automotive industry – with a negligible or even negative carbon-cutting impact.

The overall verdict? A "light-green budget", moving in the right direction on spending but just not fast or far enough: that's how Peter Madden, Chief Executive of Forum for the Future, sums it up. The Government surely needs to get serious soon on carbon prices, but gave no hint of doing so in this budget, Madden concludes. For Jonathon Porritt, Founder Director of Forum and Chair of the SDC, the green spend is “not exactly the mega-recovery package that has been called for, but not insignificant either”. – Roger East 

Bouquets and brickbats for Darling's budget

“The Chancellor should be commended for outlining the world’s first carbon budgets, but there is a real risk these will not be met without further commitments for environmental technologies. Whilst additional support for CCS, offshore wind and energy efficiency is welcome, the scale of green fiscal stimuli and green credentials is inadequate compared to the size of the economic and environmental challenges we face.” Paul Young, Chair of the Aldersgate Group coalition of businesses and environmental groups

“Although the new announcements in this budget move towards the 20% level, the UK is still failing the ‘Stern test’ [of 20% of stimulus spending to be devoted to green initiatives] overall. We are allocating substantially less to sustainable energy during the global downturn than other countries and this will leave our world class renewables businesses at a competitive disadvantage.” Philip Wolfe, Director-General of the Renewable Energy Association

“This falls short of a comprehensive strategy to put low carbon buildings at the heart of economic recovery. More could have been done to really make green refurbishment affordable and attractive to home owners, businesses and the public sector. This is a wasted opportunity to map a truly low carbon route out of this recession.” Paul King, Chief Executive of the UK Green Building Council

“The Chancellor has failed to grab the best chance to create more green jobs in Britain. Revenue neutral incentives for both owners and tenants to invest in energy saving improvements in the form of lower council tax and business rates, paid for by higher rates for the most polluting buildings, would have a bigger and more immediate effect than the dribs and drabs of extra cash and loans announced today.” Tim Yeo, the (Conservative) Chair of the parliamentary Environmental Audit Committee
“Today’s welcome Budget announcement of an additional £45 million for the Low Carbon Buildings Programme should ...enable this sector to plan with confidence for the launch of the feed-in tariff in April 2010. The Treasury is to be congratulated for recognising the important contribution that technologies such as solar PV can make to delivering a low carbon Britain.” Derry Newman, Chief Executive of Solarcentury

24 April 2009

Roger East