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A green Budget?
Professor Paul Ekins (UCL Energy Institute)
The Coalition Government has repeatedly said that it wishes to be the 'greenest government ever', which may or may not mean much depending on your perceptions of its predecessors. It has also said that it will encourage the emergence of a 'green', sometimes also called 'low-carbon', economy. The Budget is a major opportunity for it to progress these goals if it is so minded. So how does Mr Osborne's first full budget stack up against these aspirations?
In a recent report on the green economy the largely business Aldersgate Group, which lobbies broadly for a green economy, listed action on the following issues as crucial to its achievement: fiscal policy, finance, skills, innovation, public procurement and planning. What has the Budget to offer in these areas?
On fiscal policy the headline announcement is of a 'carbon floor price' for power generation, of £16/tonne CO2 now from 2013 rising to £30 by 2020. Taking into account the current price of allowances under the EU Emissions Trading Scheme, this implies for 2013-14 a levy on the fuel inputs to electricity of about £5/tonne CO2 - a useful but hardly mould-breaking signal of the rising cost of carbon. It is also welcome that the Budget confirms the Government's commitment from the Coalition Agreement to increase the proportion of tax revenues coming from green taxes, but there are worries about how it defines 'green taxes' and no calculations to show how it is doing on the basis of its first two budgets (June 2010 and today). So the jury is still out on that one.
On finance the long-awaited public capitalisation of the Green Investment Bank was announced - £3 billion (£2 billion more than previously known) from 2012-13 (a year earlier than thought). It is hoped that this will leverage another £15 billion from the private sector by 2014-15. This is good news for the green economy, though, to put it into perspective, it is less than one tenth of the investment that will need to go into the energy sector alone over the next ten years to meet the government's targets for low-carbon energy security. So a lot more money will have to come from somewhere else!
On the other Aldersgate Group issues, there are initiatives but nothing specifically oriented towards the emergence of a green economy. The biscuit for weasel words in this Budget goes to the sentence: "[We will] introduce a new presumption in favour of sustainable development, so that the default answer to development is 'yes'" (p.29). As anyone who has been remotely involved with sustainable development (SD) over the last 20 years knows, the default SD question to 'development' is 'is it sustainable?', to which the answer has usually been 'no'. There is therefore not much 'greenest government ever' in that particular Budget gem of political obfuscation.
Paul Ekins is Professor in Energy and Environment Policy at the UCL Energy Institute. He can be contacted here.
Page last modified on 25 mar 11 16:16