The Green Investment Bank, a central plank of the Government’s green growth strategy, will receive an extra £2 billion from the Treasury, but it will not be able to borrow and raise capital for another four years, the Chancellor of the Exchequer George Osborne announced today.
Unveiling his
Budget for "growth" and "fairness", today,
Osborne confirmed the
Green Investment Bank will effectively act as a fund until the Government can meet its debt targets. The £2 billion of extra funding pledged today comes on top of £1 billion already committed to the bank by the Government and will be paid for through public asset sales.
Describing the move as a "bold step" in the Coalition's plans to be the "greenest government ever", Osborne said the bank would open in 2012, a year earlier than previously planned, and would leverage £15 billion worth of private sector
investment for green projects over this Parliament. It will be given powers to borrow from 2015-16.
"From 2015-16, and subject to our overall debt target being met, we will allow the Green Investment Bank to borrow and invest in a better future," said Osborne.
Carbon price floor
In what is seen as another key move to accelerate the UK’s move to a greener economy, Osborne today announced more details about the Government’s carbon price floor aimed at encouraging more investment in low carbon energy. The Chancellor said the floor price for carbon, levied on the power sector, would be set at £16 per tonne of carbon dioxide in 2013 and move to a target of £30 per tonne by 2020.
"Investment in green energy will never be certain unless we bring some stability to the price of carbon," he said. "Today we become the first country in the world to introduce a carbon price floor for the power sector."
CCS
In another move to decarbonise the energy sector, Osborne confirmed the Government will back a carbon capture and storage (CCS) demonstration plant with £1 billion of funding. However, he said future projects would be funded out of "general spending" rather than the CCS levy on energy bills.
Green cars
There was also further support for green cars, today, in the shape of a freeze on company car tax for low emission vehicles. Those that emit less than 95 grammes of CO2 per kilometre won’t see their tax go up by one per cent, as others will. This benefit comes on top of the Government’s £5,000 Plug-in Car Grant.
However, the green car tax freeze was counter-balanced by a cut in fuel duty of one pence per litre, which will take effect from 6pm today. The Chancellor also confirmed, as expected, that the planned rise in fuel duty will be delayed until 2012.
Aviation
Air passenger duty rates were also frozen today while a tax that would have discouraged airlines from flying planes half-empty was dropped on the grounds that it would contravene international law.
Green DealThere was mention today of the Green Deal, the Government’s flagship energy efficiency
policy for homes and small businesses due to come into effect next year. However, despite industry calls for more clarity and incentives around it, Osborne gave little more away, saying only that "we will act to incentivise and encourage its take up".
Other measures
As part of his package of green measures, today, Osborne also said he would extend the Climate Change Agreements to 2023, and increase the Climate Change Levy discount on electricity for those who sign up from 65 per cent to 80 per cent from April 2013.
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