28 March 2011

The budget was as green as the inside of a coal mine


Last week’s Budget was a wasted opportunity from the man who said in 2009, “if I become Chancellor the Treasury will become a green ally not a foe.”(1) Indeed it made it even less likely that the coalition government would be the “greenest government ever” as David Cameron pledged on day two of his administration.(2)

George Osborne’s fancy footwork over petrol prices and oil company taxes did nothing to combat climate change and prepare the UK for peak oil. The so-called “fair fuel stabiliser” is a simply a sop to drivers. When global oil prices are high, as they are now, fuel duty will be lowered, with the loss of revenue compensated for by extra tax on profits for companies producing UK North Sea oil and gas. A UK carbon floor price of £16 per tonne starting in April 2013 was announced. But the carbon price in the EU Emissions Trading Scheme rate is already £17/tonne so the proposed UK floor price is meaningless. The floor price is supposed to rise to £30/tonne in 2020, but it would be far more sensible if it rose steadily year on year. The money earned from the carbon floor price will pay off public debt rather than being invested in renewables infrastructure. Scandalously, if it does ever come in, the existing nuclear power operators would make windfall gains on their supposedly carbon-free electricity. So not a great plan all in all.

The Green Investment Bank will start in 2012, but won’t be able to borrow until 2015 and then only if the public debt has gone down. Until then it’s just a £3bn fund. Nice, but not a Green Investment Bank. At the same time no serious attempt to rein in the conventional banks was announced in the Budget. To put the Green Investment Bank/Fund into perspective, Barclays paid its investment bankers £3.5bn in bonuses for their work in 2010.(3)

The previous government's commitment to zero carbon homes by 2016 is being watered down to a carbon emissions reduction target of 67%. That will make it harder for innovative councils like Milton Keynes who have been seeking planning gain contributions from those developers who fail to hit zero carbon.

The Chancellor reaffirmed the previous government’s commitment to spend £1bn on Carbon Capture and Storage (CCS) pilots and said they would fund four test CCS projects, but no decisions on who would get funding were announced. The reality is that only one of those who originally offered to test the CCS concept is still in the game: Scottish Power’s Longannet coal-fired plant in Fife.

Mr Osborne scrapped the coalition’s pledge to replace air passenger duty with a green tax on entire flights rather than individual passengers. It will be interesting to see how Lib Dem MPs explain this one away as it's one of those coalition successes they trumpet on their websites. The Chancellor also delayed an increase in airline passenger duty which had been due in April.

The budget accelerated the coalition’s reform of the planning system, making a "yes to development" the default option in an attempt to encourage more construction of homes and workplaces. These drew angry protests from planning experts and the Campaign to Protect Rural England since many of those developments looks set to be on the green belt.

Here’s what various green NGOs said:

Green Alliance: “This could have been a major green budget, but the chancellor has rained on his own parade by putting the brake on the best announcements and indulging in fuel price gimmicks.”(4)

Greenpeace: “The 'greenest government ever' keeps us addicted to oil and other dirty energies.”(5)

New Economics Foundation: “With a drop in fuel duty, a freeze on air passenger duty and a carbon floor price that is too low, the Chancellor has demonstrated that the self-professed ‘greenest government ever’ is more of an anaemic beige.”(6)

Friends of the Earth: “The 2011 Budget won't wean the UK off fossil fuels or do enough to develop green industry - it will increase our oil addiction. The Government talks about ending our fossil-fuel dependency but, like a 40 year-old smoker pledging to give up in 10 years time, the Chancellor is taking a reckless gamble.”(7)

The Campaign for Better Transport: ““The Chancellor has chosen to give motorists a hand-out while leaving other transport users to face spiralling fares and service cuts. Rail users will see big fare rises year on year, while bus passengers are seeing services cut and fares increase as a result of a £133m cut in Government support.”(8)

The Campaign to Protect Rural England: “[The Budget is] a massive threat to the environment. The triple whammy of scrapping national brownfield targets, introducing a default yes to development, and pursuing half-baked proposals for land auctions could be devastating to treasured countryside.”(9)

RSPB: “George Osborne failed in his pledge as Chancellor to become a ‘green ally, not a foe’ by ignoring growing calls for more action to phase out damaging peat use.”(10)

References

(1) www.independent.co.uk/opinion/commentators/george-osborne-the-treasury-should-lead-the-fight-against-climate-change-1826464.html
(2) www.guardian.co.uk/environment/2010/may/14/cameron-wants-greenest-government-ever
(3) www.guardian.co.uk/business/2011/feb/15/barclays-banking-pay-bonuses-row
(4) www.green-alliance.org.uk/grea1.aspx?id=5515
(5) www.greenpeace.co.uk/
(6) www.neweconomics.org/press-releases/budget-response
(7) www.foe.co.uk/news/budget_news_reaction_30099.html
(8) www.bettertransport.org.uk/campaigns/public_transport/budget-2011
(9) www.cpre.org.uk/news/view/736
(10) www.rspb.org.uk/media/releases/275963-osborne-fails-to-step-up-for-the-environment-