Budget 2013: Osborne shuns renewables in favour of shale gas

  • Osborne

    Osborne's 'tax breaks for polluters' have come under fire from green groups.

Green groups have expressed their disappointment at George Osborne’s commitment to shale gas as part of the 2013 Budget.

Billing it as a “Budget for people who aspire to work hard and get on”, the chancellor unveiled his plan to get the UK economy back on track in the House of Commons today. Key to his plans to stimulate the economy was investment in infrastructure and, in particular, energy.

Osborne began with a warning that, “creating a low carbon economy should be done in a way that creates jobs rather than costing them”.

The chancellor continued: “I want Britain to tap into new sources of low cost energy like shale gas. So I am introducing a generous new tax regime. And by the summer, new planning guidance will be available alongside specific proposals to allow local communities to benefit. Shale gas is part of the future. And we will make it happen.”

The chancellor’s commitment to shale gas exploration in the UK will include a new shale gas field allowance and an extension of the ring-fence expenditure supplement from six to 10 years for projects. The Treasury hopes that this will promote investment in shale gas at the “early stage of its development”.

Reacting to the news, Greenpeace energy campaigner Lawrence Carter said: “The chancellor is slashing public services with one hand while gifting tax breaks to the fossil fuel industry with the other. This is unfair on struggling households, especially when everyone from the energy regulator Ofgem to BP to the energy secretary says UK fracking won’t bring down bills.”

The chancellor also announced that some of the most energy intensive industries will be exempt from the Climate Change Levy in an attempt to alleviate the pressure put on businesses by high energy costs.  

However, there was some good news for green groups as Osborne also announced that government will be taking two major carbon capture and storage (CCS) projects to the next stage of development. The Department of Energy and Climate Change (DECC) announced that the Peterhead Project in Aberdeenshire and the White Rose Project in Yorkshire have been selected as the two preferred bidders in the £1 billion CCS Commercialisation Programme Competition.  

Commenting on the news, energy minister John Hayes said: “We are working quickly to our goal of a cost competitive CCS industry - and these projects are just the start. In the past year we have demonstrated there is significant appetite from industry to invest in UK CCS, providing jobs and investment opportunities.”

Natalie Bennett, leader of the Green Party launched a scathing attack on the Budget, stating: “His slightly amended Plan A for austerity - with some small, and largely unwise, investments in trying to promote largely unaffordable private housing, fracking and road building - is effectively business as usual - an approach that has delivered us youth unemployment of 21.2%, plummeting real wages, and misery for benefit recipients. What he should have done today is to announce a serious programme of investment in the successful green economy.”

Greenpeace executive director John Sauven concluded: “This was a twentieth-century budget for a twenty-first century economy. We got tax breaks for polluters and almost complete disinterest in the green economy, one of the only sectors that has consistently delivered jobs and growth in recent years. British businesses stand poised to become dominant forces in the global clean energy market, but they’re being undermined by a chancellor who seems increasingly ill-suited to the times we live in. This man lacks a vision.”

However, Osborne did trail some important news regarding the zero carbon homes scheme. He said: "The government is committed to implementing ‘zero carbon homes' from 2016. The Department for Communities and Local Government (DCLG) will publish a detailed plan, setting out its response to the 2012 consultation on the energy efficiency requirements in building regulations, by May 2013. The government will then consult on next steps, including on the means of delivering allowable solutions, by Summer Recess."

The REA said that it is "disappointed" that zero carbon homes remains a "pale shadow of the original policy, having been much watered down in its on-site carbon reduction ambition". The REA is calling on government to support the ‘halfway to zero carbon’ option in the 2013 building regulations, reflecting the huge cost reductions in solar PV and its ability to reduce consumers’ energy bills.

Responding to the news Paul King, CEO of UK Green Building Council, said: “George Osborne’s re-commitment to zero carbon homes from 2016 is the one shining green beacon in today’s Budget. The fact that it’s there is welcome and important, but it looks very solitary in a Budget otherwise devoid of support for green growth, with even the government’s flagship Green Deal failing to get a look in.”

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