Coalition's green agenda goes up in smoke

12th December 2011


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Osborne announces support for energy-intensive industries and potential shake up of countryside regulations in his autumn statement.

Measures to support the transition to a low-carbon economy were almost completely absent from the chancellor’s autumn statement. Instead, big energy users will get financial assistance to help them mitigate the impacts of carbon policies, while laws that protect the countryside are at risk.

The few positive environmental measures in the statement included £200 million to kick-start the Green Deal energy-efficiency scheme, and the creation of five Centres for Offshore Renewable Engineering.

George Osborne also offered the possibility of establishing enterprise zones in areas earmarked to be offshore wind hubs and made £100 million available in the next financial year for commercial and industrial energy-efficiency projects.

The chancellor told MPs that the government will help to reduce the impact of environment policies on the costs of power for the most electricity intensive industries. “We will not save the planet by closing down our steel mills and aluminium smelters,” he said.

High electricity sectors will receive £100 million to protect them from the introduction of the carbon floor price (CFP) in April 2013.

Other planned support mechanisms include increasing the climate change levy (CCL) discount to 90% on electricity for climate change agreement participants and providing compensation of up to £110 million for the indirect impacts of the EU emissions trading scheme (ETS).

Industry groups largely welcomed the proposals. “The supportive measures around the CCL and ETS and the UK carbon price support mechanism in particular will give some much needed reassurance to sectors such as chemicals which are ideally placed to not only deliver economic growth but also our green future,” commented Steve Elliott, chief executive at the Chemical Industries Association.

His counterpart at the British Ceramic Confederation, Dr Laura Cohen, claimed the plans did not go far enough, however. “Even the most electro-intensive ceramic processes might only receive an extra £2 per MWh of relief in 2013 – hardly enough to mitigate all their extra UK-only climate-related costs and taxes,” she said.

Others were more critical. IEMA policy director Martin Baxter said that the assistance to electricity-intensive industries could jeopardise the UK’s ability to meet its carbon budgets, while Richard Gledhill, partner at PwC sustainability and climate change, believes that the measures will hinder a speedy shift to a low-carbon economy.

The cornerstone of the autumn statement was a plan to improve the UK’s infrastructure, but there was no mention that the funding would be channelled into low-carbon projects. Paul King, chief executive at the UK Green Building Council said: “This was an opportunity missed to put green growth and green jobs at the heart of economic recovery.”

Osborne also raised the prospect of dismantling existing regulation, telling MPs that he would ensure that so-called “gold plating of EU rules on things like habitats aren’t placing ridiculous costs on British businesses.” Environmentalists reacted furiously to the suggestion that changes may be made to the habitats regulations.

“Weakening them is not only unnecessary for growth, but ultimately incompatible with longterm sustainable development,” said WWF’s Margaret Ounsley.

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