Budget 2020 rightly focused on the global outbreak of COVID-19 and the need to shield people and businesses from the worst of the economic shock. However, the Chancellor also unveiled a series of initiatives and spending commitments aimed at boosting investment in natural capital and clean growth, a welcome sign that the government is starting to put sustainability at the heart of the economic model.
Here are 5 key commitments:
1. Not one…not two…but THREE new natural environment funds were announced! A “Nature for Climate Fund" which will invest £640 million in tree planting and peatland restoration in England; a "Nature Recovery Network Fund" which will partner with businesses and local communities to protect, restore and support existing habitats and wildlife; and a "Natural Environment Impact Fund" to help prepare green projects that could be suitable for commercial investment in order to encourage private sector support for environmental restoration. Taken together, these will unlock significant public and private sector investment in enhancing natural assets and pave the way for developing new environmental markets.
- 2. This winter has seen significant flooding as the UK has experienced the wettest month since records began in 1862 (Feb 2020). A doubling of flood defence spending to £5.4bn over the next 6 years is the right move given UK climate projections are for warmer wetter winters and more intense storms.
- 3. The plastic packaging tax, to come into effect from April 2020 to incentivise the use of recycled plastic, is set at a rate of £200/tonne. It applied to plastic packaging that contains less than 30% recycled content and will provide a much-needed boost to UK recycling processors – helping to deal with UK-derived plastic waste.
- 4. The removal of the red diesel entitlement from April 2022 for certain uses will provide a significant incentive for the construction sector to innovate in the design and use of new clean technologies. Support for the move will come from doubling the size of the energy innovation programme, but the potential for cleaner air and reduced noise in urban areas is welcome.
5. The shift to a net zero economy in part requires a transition away from gas towards the use of greener fuels. Re-balancing the Climate Change Levy to remove incentives to use gas, and the introduction of a Green Gas Levy to support the use of bio methane, help to create the financial incentives to further the transition to a net zero economy.
Other notable initiatives include a carbon capture and storage infrastructure fund, £500m extra for the fast-charging electric vehicle network, and an extra £304m to reduce NO2 emissions.
Of course, enthusiasm will be tempered by the freeze in fuel duty and the delay in tackling home energy efficiency which don’t reflect the urgency needed to tackle the climate and environmental emergency….and road spending needs to be viewed through the lens of electric vehicles if it’s to align with a net-zero world…but, overall this is a positive start.
Posted on 16th March 2020
Written by Martin Baxter
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