UK Budget 2010 : Climate Change Aspects

This years budget is not likely to surprise to many people but there are a few interesting proposals and a couple of delayed measures that we are reminded are about to come into force.

The new measures:

• Up to £60 million "for the development of port sites to support offshore wind manufacturers looking to build new facilities in the UK"

This is superficially similar to a Lib Dem proposal for upgrading actual ports. However the lib dems proposed spending £400 M on upgrading up to seven existing ports and a further £100 M on training and testing facilities.

• "A summer consultation on mechanisms to provide greater certainty for low carbon investment."

This sounds a lot like the recently announced plans for a carbon tax set out by the Tories.

• The launch of UK Finance and Growth " to streamline the Government’s SME
  finance support – including to help businesses seeking to commercialise low-carbon technologies" this new organisation will bring together projects currently administered by DECC, The Carbon Trust and Regional Development Agencies.

The Tories suggested a similar idea recently.

• Establishing a Green Investment Bank from the funds raised by selling two pieces of government infrastructure. Starting with around £1bn of government and £1bn of private equity.

A small investment bank is certainly a worthwhile project, but £2bn doesn't go a long way in the energy sector. Lib dem proposals for a British Development Bank along with productive use of government owned banks and a restructuring of the whole banking sector better illustrate the size of the challenge we face. The Tories had already proposed a green investment bank, the details for which are expected out before the general election.

Delayed measures:

• During the first year cars will be subject to VED that is dependent on their carbon emissions. Vehicles emitting less than 130g/Km will pay no VED while those above 165g/Km will pay increasing amounts up to 255g/Km. The top first year VED is £950.

When this policy was being discussed the environmental audit committee stated strongly that in order to effect behaviour of those buying powerful cars brand new the tax should be nearer to£2000. They also supported a scheme where revenues raised from the most polluting cars are paid back to those in the least polluting cars--a so called bonus/mallus scheme as already practiced in France.

• Fuel duty will be raised by 3p over the course of a year in 3 individual stages.

Not much to say about that, other than the importance of providing really good alternatives to cars if you are going to increase their running costs. In terms of climate policy this failure to provide alternatives to 'auto-culture' is one of the Labour governments major failings.

• DECC recently announced plans to allow borrowing of money for low carbon forms of energy and to repay this in a pay as you save manner. The budget confirms this proposal.

The UK green building council have a good information page on this idea, including a radio interview on the topic. The UK proposal would have the loans provided by commercial banks wher as in the US a Californian scheme allows the loan to be linked to the property via property tax (equivalent to council tax), which is an interesting alternative.

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