Anyone involved in the UK clean tech industry has routinely approached George Osborne’s statements with severe trepidation – the chancellor of the exchequer appears to have a weakness for shale gas and often implies that environmental measures are hampering business.

Was this year any different?

Green talking points

North Sea Oil and gas

Osborne outlined a range of measures designed to help ease the pressure of dropping oil prices on the UK’s “vital” North Sea oil and gas industry. Osborne said: “The fall in the global oil price has meant a welcome boost to much of the British economy and families. There is record investment in the North Sea but the lower oil price clearly presents a challenge to his vital industry. I can tell the house today that we will go ahead with an immediate reduction in the rate of the supplementary charge from 32% to 30%. We will expand the ring fenced expenditure from six to 10 years and we are introducing, with immediate effect, a new cluster area allowance.” 

The Autumn Statement reads: “The government will implement an immediate 2% reduction in the rate of the Supplementary Charge, from 32% to 30%, taking effect on 1 January 2015, and will aim to reduce the rate further in an affordable way, to encourage additional investment and drive higher production, sending a strong signal that the UKCS is ‘open for business’ Extend the ring fence expenditure supplement to 10 years for offshore oil and gas activities to support investment by companies whose expenditure exceeds their production income, aligning the treatment of offshore and onshore projects.

“Together these measures are expected to incentivise extra investment and lead to additional production on top of the approximately 9 billion barrels of oil equivalent the UK currently expects to produce, as well as sustaining oil and gas tax receipts for the longer term.”

Shale gas

A sovereign wealth fund will be set up to ensure that revenues generated from shale gas exploration will benefit the area. The Autumn Statement reads: “The government is taking steps to ensure that the UK leads the way with shale gas regulation. Shale gas could increase the UK’s energy security, support thousands of jobs, reduce carbon emissions, and generate substantial tax revenue. The government will therefore provide a new £5 million fund to provide independent evidence directly to the public about the robustness of the existing regulatory regime. This will also ensure the public is better engaged in the regulatory process.”

Flood defences

The Autumn Statement reads: “The government is committed to maintaining and strengthening flood defences across the country, to minimise the damage and disruption caused by flooding. The government is investing £2.3 billion in over 1,400 flood defence schemes over the next 6 years. These will ensure that at least 300,000 homes are better protected by 2021. To further encourage private sector investment in this programme, the government will legislate to ensure that business contributions to flood defence schemes are tax deductible.”



Air travel

Air passenger duty (APD) for children under 12 will be abolished next year, from the following year APD will be removed for all children under 16. 

Fuel duty

Osborne confirmed that fuel duty will remain frozen despite pledging that, if petrol prices did fall (which they have), government would raise fuel duty.


Green reaction

Commenting on the statement, Brian Smithers, strategic development Director for Rexel, said: “We didn’t see much said on energy, but the government has acknowledged the importance of providing a secure energy supply in its commitment to nuclear, shale gas and support for energy companies. It is a shame there has not been similar enthusiasm for renewables – given their importance we would have liked to see at least an acknowledgement of their role in the UK’s future. The government have agreed a price of £92.50 for every megawatt hour of energy produced by the new Hinkley Point C nuclear power station – almost twice the current wholesale cost of electricity. There is no reason why couldn’t have done a similar deal for renewables. Whilst solar and wind are not yet seen as competitive with coal and gas on a per kilowatt hour basis, they could be with the right investment. Furthermore they have more to offer than the usual arguments suggest. With power plants close to capacity, adding renewables – particularly in home renewable energy – to the mix can avoid the need to turn on another power station – an expensive way of dealing with a 10% energy increase each evening. In this situation, renewables generating energy where it is needed (in line with previous government statements) is a far better solution in the long-term.” 

Chris Lewis, Partner at Ernst & Young said: “The pace of shale gas exploration has been painfully slow with no planning applications approved yet. With that in mind the announcement of a Sovereign Wealth Fund in the North with a focus on shale gas is a welcome move that should increase support locally, as well as ensure that communities benefit from skills and jobs.”

Tim Waterfield of Savills said: “There was a lot of rhetoric in the Autumn Statement outlining the emphasis on clean, safe and secure energy supplies. However, beyond a focus on developing UK capability in shale gas, there is very little to note since last year’s Autumn Statement, in which scant detail was offered on the coalition’s carbon and energy security plans.

“Key questions remain unanswered on the future of our energy mix. This is particularly pertinent in the case of ground-mount solar and onshore wind energy, which the government continues to downplay. Of course, the five offshore projects awarded early Contracts for Difference provide a positive platform for continued growth; while previous affirmations of support for rooftop solar have been widely welcomed.”

Silvio Spiess, CEO of  Innasol, said: “Innasol is surprised and disappointed to see that once again green is not on the government’s agenda. We were hoping to see an increased commitment to renewable energies and particularly renewable heat. Heating constitutes 78% of the average domestic energy consumption and 55% of average business energy consumption, so committing to renewable heat would not only help the UK progress towards carbon targets, but also aid in reducing fuel poverty.

“The government must take renewable heating seriously by allocating more investment towards renewable heating, which is by far the UK's cheapest, greenest and most convenient renewable technology. The amount of money the government has put aside for RHI is a fraction of the subsidies that it gives to energy companies. If the government was genuinely serious about reaching carbon targets and fuel poverty, it would first and foremost be tackling the way we heat our homes and businesses.”