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The least green Budget yet

The Chancellor showed his colours again and they are certainly not green. In fact the only thing in the Budget that is in any way green are the title headers in the Budget report!

For many years, the government has set out an environmental objective at the start of the Budget such as building an environmentally sustainable or low carbon economy, but it is notable by its complete absence in the government’s 2013 strategy.

The green sector is also not included in the 11 key sectors which will receive support, although off-shore wind does make it on (alongside nuclear and oil and gas).

There were a few re-announcements of previous measures such as the support for low carbon generation increasing to £7.6bn by 2020 and the new carbon floor price from April 2013. In addition, it continues to confirm investment in the port of Hull for renewable energy and Biomass at Ironbridge.

The government also continues its commitment to implementing zero carbon homes from 2016 although we now know that it is limited to zero regulated carbon and it does not cover all emissions.

The government announced that it intends to take forward two CCS projects to the planning and design stage allowing coal fired power stations to operate, and DECC have announced that these are Peterhead Project in Aberdeenshire and White Rose Project in Yorkshire.

The most major anti-green announcement was around shale gas with a new generous tax regime being introduced to promote early investment into this exploration, together with planning guidance on large shale gas projects.

While there is some mention of ensuring the local communities will benefit from shale gas projects in their area, Sustain calls for any tax regime to ensure that the wider externalities of any exploration are adequately covered.

There have been some subtle revisions to the announcements around CRC in the Autumn statement and the impact that it is going to have on tax receipts. The government is no longer highlighting it as a priority for removal and the reason for this is schools.  

The government has confirmed that English state schools will be excluded from the CRC from April 2014, and its impact has been estimated by HMRC to reduce tax income by £65m, a lot more than the £25m indicated in the Autumn Statement.

It looks like this £40m under estimation has encouraged the Treasury to retain the CRC for now.

The government confirms it previous announcement of taking charitable buildings out of the reduced VAT rate for energy saving materials from 1 August 2013.

Therefore any charitable buildings considering insulation or other energy saving measures should undertake the works in the next four months to benefit from the lower VAT rate for these works.

The list of qualifying technologies for enhanced capital allowances for energy saving and water efficient technologies is going to be updated in summer 2013, worryingly this update is being forecast to bring in more tax revenues to the Treasury indicating that they will reduce the list of qualifying measures restricting the number currently on the list.

Together with a continued freeze in fuel duty there is little sustainable development to toast in the Budget of 2013, but at least the consolation beer will be a few pence cheaper!

Matt Fulford is head of low carbon buildings at Sustain

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