Budget 2017: Missed opportunity to tackle climate change and air pollution
Campaigners and industry groups have slammed the budget for failing to introduce new measures on climate change, air pollution and environmental protection.
In his budget document, chancellor Philip Hammond announced that the Levy Control Framework (LCF) would be replaced by a new mechanism, to be published later this year. The LCF set a cap on the amount of public subsidy available for renewable energy, but was exceeded after investment in wind, solar and other technologies proved more popular and cheaper than the government had anticipated.
IEMA chief policy advisor Martin Baxter said: ‘Scrapping the LCF without a clear plan of what will replace or supersede it is a real concern; failure to provide clarity will raise significant uncertainty for investment in renewable energy.’
Emma Pinchbeck, executive director of RenewableUK, said the trade body was keen to work with the government on a replacement for the LCF, but that clarity was needed. ‘Energy infrastructure takes time to build. Projects being thought about today will come on line in the 2020s, after the period covered by the LCF expires.’
Developers and investors in wind, wave and tidal energy projects need certainty so projects can be built, economic returns can flow and consumers can benefit from the low cost of renewables, she said.
Richard Black, director of the Energy and Climate Intelligence Unit, called the LCF a ‘blunt instrument’. ‘Whatever replaces it needs to lead the UK towards the smart, flexible power network that, according to the National Infrastructure Commission, will lop £8bn off our national energy bill – which means incentivising things like energy storage, demand-switching and interconnectors.’
Hammond ignored calls to clarify the post-2021 carbon price floor, stating that an announcement on future carbon prices would be made in the autumn budget.
Black said that a UK carbon price would be essential if the UK leaves the EU emissions trading system after Brexit. ‘But ministers need to say soon what the price will be, because energy companies are already signing power contracts for 2021.’
Meanwhile, the chancellor announced a consultation on whether to allow buyers and sellers of oil and gas assets to transfer tax history. He said: ‘As UK oil and gas production declines it is essential that we maximise exploitation of remaining reserves.’
Doug Parr, Greenpeace UK policy director, said allowing the North Sea oil and gas industry to pollute for longer was ‘outrageous’. ‘Today could have been a turning point for the government’s strategy to invest in the north east. They should be moving away from dirty, old fossil fuels towards backing the thriving offshore wind and smart technology, which could deliver thousands of new skilled jobs,’ he said.
The solar industry expressed dismay that the budget did nothing to alleviate the hike in business rates for organisations that have invested in solar technology on their own buildings. Around 44,000 microgenerators, including schools and hospitals, will see rate rises of up to 800%, according to the Solar Trade Association.
Hammond also did not announce any new measures to tackle air pollution. The government has been ordered by the Supreme Court to come up with a new air pollution strategy after its last proposal was judged inadequate. It is also under pressure from the European Commission, which has threatened legal action. Campaigners had called for the government to introduce radical measures to cut air pollution in the budget, such as a diesel scrappage scheme, or changes to Vehicle Excise Duty (VED).
Hammond said proposed changes to the road user levy for HGVs would incentivise hauliers to plan their routes efficiently to improve air quality and cut congestion. VED rates for cars, vans and motorcycles registered before April 2017 would be increased by the retail prices index (RPI), he confirmed.
On skills, Hammond announced initiatives for those going into technical careers. Around 13,000 different qualifications will be replaced with 15 career-focused training schemes, and students at new Institutes of Technology and National Colleges will be eligible for study loans.
Baxter welcomed the investment in technical qualifications to support the development of a future workforce that will be responsible for low-carbon innovations.
Aldersgate Group executive director Nick Molho said: ‘It was positive to see lots of focus in today’s budget on supporting innovative businesses and ensuring the UK’s workforce has the skills it needs to benefit from the job opportunities of the future. But despite the fact that some of our key trading partners such as China are investing heavily in renewable energy and other clean technologies, there was no reference to the importance of the low carbon sector to the future competitiveness of the UK economy.’
The waste industry was happy with the chancellor’s proposal to extend the scope of landfill tax to illegal disposal of waste. Scotland and Wales have already adopted this measure, which would see those prosecuted of dumping waste without a permit pay the tax.
Jacob Hayler, executive director of trade body the Environmental Services Association, said: ‘This will help punish the criminals who undermine legitimate operators in our industry and restrict the option of illegal dumping as a means of avoiding landfill tax.
Hammond also announced that new packaging recycling targets for 2018 to 2020 would be set in legislation. Recycling targets for paper rise to 75%, aluminium to 64%, steel to 85% and wood packaging to 48%. Targets for overall packaging recycling would increase to 75% and for recovery to 82% by 2020, he said.
Overall, IEMA was concerned at the lack of measures in the Budget focusing on the environment and sustainability. ‘While we knew this wouldn’t be a radical budget, it’s really surprising how little space and funding the chancellor dedicated to environment and sustainability,’ said Baxter. ‘I could say it’s disappointing, but in reality it means we’ve seen a number of missed opportunities for the government to tackle some big sustainability challenges.’