Business cautiously welcomes Darling's £400m package of green measures
Peta Hodge
9th December 2009
The £400 million package of green measures announced by Alistair Darling in his Pre Budget Report today have been generally welcomed by businesses and environmental groups – though some feel the Chancellor could have gone further, and concern has been expressed over whether some measures will be implemented quickly enough.
The green measures announced by the Chancellor today, with one or two exceptions, split into two types – those designed to support business investment in low carbon growth, and those aimed at helping households improve energy efficiency.
Infrastructure UK
Support for low carbon energy includes the establishment of ‘Infrastructure UK’ to leverage further investment in renewables. As part of this, the Government will be investing £90 million (€100 million) in a European Investment Bank-led fund to deploy up to €1.5 billion of equity and €5 billion of debt in low-carbon infrastructure.
Peter Young, chairman of the Aldersgate Group, a coalition of leading businesses and environmental groups, commented: “The £90 million for green infrastructure projects channelled through the European Investment Bank is a vital source of capital in the current economic climate but this institution cannot be relied upon to deliver renewable technologies in the UK at the scale and pace required."
Jo Butlin, vice president of SmartestEnergy, which buys and sells independently generated renewable energy, also gave the announcement a cautious welcome. “This money must be ring-fenced for consented small and medium-sized independent renewable energy projects which have the flexibility to deliver much more quickly and cost-effectively than the large utility-scale offshore windfarms," she said.
Offshore wind
Additional support for the renewables sector came in the form of £50 million for the development of the UK offshore wind industry, including funding for new manufacturing and testing facilities.
This was welcomed by Maria McCaffery, chief executive of the British Wind Energy Association (BWEA), who said: "There are up to 3000MW worth of projects which should now benefit from this new support – in the current economic climate this will make a vital contribution to inward investment and employment, as well as delivering on the 2020 targets."
The BWEA was particularly pleased by the Chancellor’s decision to amend the temporary increase in Renewables Obligation Certificates (ROCs) for offshore wind so that all projects accredited between April 2010 and March 2014 will qualify for twoROCs.
"Keeping the two ROCs funding for offshore wind will help the UK retain its world lead and kickstart billions of pounds of investment ahead of the next major phase of offshore developments," said McCaffery.
CCS
In terms of green policy, one of the biggest announcements made by the Chancellor today was the doubling to four the UK’s commitment to fund carbon capture and storage (CCS) demonstration projects, “to make us world-leaders in this vital area”.
Richard Lambert, CBI director-general, welcomed the announcement: “By committing to support four CCS demonstration plants, the Government is increasing the UK’s chances of success in getting this transformative technology off the ground,” he said.
Ben Caldecott, of green investment firm Climate Change Capital, agreed: ”This sends another positive signal to those taking part in the climate change negotiations in Copenhagen,” he said.
“But in order to generate real commercial interest, it is crucial the Government deploys this new money quickly and that the deployment of four CCS plants isn't beset by the problems that have affected the current UK CCS competition."
Domestic front
On the domestic front, the Chancellor said that he would build on the success of the car scrappage scheme, by offering up to 125,000 households £400 to replace the most inefficient boilers with new models.
The CBI’s Lambert said: “The introduction of a boiler scrappage scheme is a sensible way of encouraging households to replace older models with more efficient ones. But with much of the UK’s housing stock to retrofit with new boilers and loft insulation there is still a long way to go to plug the energy efficiency gap.”
Extra resources were also announced for Warm Front to help 75,000 of the most vulnerable households with heating and insulation.
Other measures to help us all become greener included: confirmation that people with a home wind turbine or solar panels who plug their excess power into the national grid, will receive on average £900 a year tax free; exemption of electric cars from company car tax for five years; and a 100 per cent first year capital allowance for electric vans.
Juliet Davenport, founder and ceo of renewable energy company Good Energy commented: "Good Energy welcomes the introduction of tax breaks for domestic micro-generation and is glad the Government can see the benefits of rewarding green homeowners – something Good Energy started over five years ago. Creating a nation of green energy entrepreneurs will play a key role in achieving our national emissions reduction targets.
“We also welcome the support for company electric vehicles but would like the Government to ensure that the electricity used to power these will be zero carbon from 100 per cent renewable sources.”
While welcoming many of the individual green measures announced today, Friends of the Earth's senior economics campaigner Ed Matthew was disappointed with the Chancellor’s low carbon package overall.
“The Pre Budget Report was a golden opportunity for the Chancellor to demonstrate genuine global leadership in developing a low carbon future – but he has chosen to be timid when he needed to be bold,” he said.
"Some of Alistair Darling's eco-initiatives are certainly welcome, but the economy doesn't need green tinkering – it needs a complete low carbon overhaul.”