While the Budget announced on Wednesday 22nd didn’t reveal anything remarkable or surprising in terms of renewable energy in the UK, at least it didn’t cut any of the already promised items on the agenda.

In a bid to drag the UK out of its current situation, the Government’s focus was mainly placed on deficit reduction and ensuring economic recovery. However there were glints of green in amongst the more ‘pressing’ issues.

Newly appointed Prime Minister, David Cameron, has already pledged that this will be the ‘greenest government’ yet, outlining his belief that climate change is one of the most serious threats to the world, and that the UK should aim to cuts its carbon emissions by at least 10% between mid-May 2010 and mid-May 2011.  

Moving towards this goal, the government has established a goal for £200 billion of investment to 2020 to provide secure low-carbon energy market. In order to achieve this, the following has been put forward as a plan of action:

  • Assessment of how the energy tax framework can provide the right incentives for investment, alongside wider market reforms.  In the autumn, the Government will publish proposals to reform the climate change levy in order to provide more certainty and support to the carbon price. Subject to consultation, the Government intends to bring forward relevant legislation in Finance Bill 2011;
  • The putting forward of detailed proposals on the creation of a Green Investment Bank, following the Spending Review, to help the UK meet the low-carbon investment challenge.  The Government is considering a range of options for the scope and structure of the Green Investment Bank; and
  • Establishment of a Green Deal for households through legislation in the Energy Security and Green Economy Bill, to help individuals invest in home energy efficiency improvements that can pay for themselves from the savings in energy bills.  The Government will also continue to progress work on creating green financial products to provide individuals with opportunities to invest in the infrastructure necessary to support the green economy.

There are also planned changes in terms of fuel. The Chancellor will ask the Office for Budget Responsibility to undertake an assessment over the summer of the effect of oil price fluctuations on the public finances.  Informed by this assessment, the Government will examine options for the design of a fair fuel stabilizer. The Government is also said to be considering the case for introducing a fuel duty discount in remote rural areas, including possible pilot schemes in Scotland. Finally the government will look at aviation taxation, exploring changes to the aviation tax system, including switching from a per-passenger to a per-plane duty, which could encourage fuller planes.  Major changes will be subject to public consultation. 

The Budget also confirms the following previous announcements:

  • Inclusion of nitrous oxide gases in the EU Emissions Trading System from 2011;
  • Reduction of the discount from the climate change levy for industries participating in a climate change agreement from 80 to 65% in April 2011, and the increase of the climate change levy in line with inflation;
  • Increase of the standard rate of landfill tax by £8 per tonne on 1 April 2011 until at least 2014, and introduce a floor so that that the rate will not fall below £80 per tonne until at least 2020;
  • Increase of aggregates levy to £2.10 per tonne in 2011;
  • Introduction of an enhanced capital allowance for zero-carbon goods vehicles from April 2010;
  • Introduction of exceptional rates of vehicle excise duty for certain heavy goods vehicles from April 2011; and

Reformation of company car tax so that it continues to provide an incentive to purchase the lowest emitting vehicles on the market.