We heard from the Chancellor George Osborne yesterday as he set out government spending plans and it certainly offered a mixed bag for the energy and environment sector. It was framed as a budget of long-term solutions, “putting the next generation first”, which was promising following the recent Paris Agreement, however this claim has since received some criticism from representatives of the ‘green economy’.
There were undoubtedly some positive announcements and there was an obvious effort to streamline energy efficiency requirements for businesses. Following a consultation on the future of the energy efficiency tax landscape it was finally revealed that the CRC scheme is to be abolished. In the form it has adopted, the CRC is a tax rather than a ‘commitment’ and, recognising this, the levy will be collected through an increase in the Climate Change Levy (CCL) after the 2018-19 reporting year.
The obligation for large companies to report on their greenhouse gas (GHG) emissions will remain. In the consultation, GHG reporting through the ESOS regulations was highlighted as a successful driver for energy efficiency investments. CO2balance are conducting a review of our ESOS experience and will publish the results in the coming weeks.
A single energy and carbon reporting scheme is to be introduced from April 2019 that integrates the requirements from climate change agreements (CCA), the ESOS regulations and the EU emissions trading scheme (EU ETS). In the short-term, not much will change but a single reporting system and tax will be seen as an improvement for any company negotiating the current overlapping policies and schemes.
Those looking for a drive towards a low-carbon, energy efficient future however have found few positives. After the last Budget the CCL also applies to electricity generated from renewable sources who will be impacted by the increase and policies to support and encourage the renewables sector were again, scarce. This dearth is one reason the UK has slipped in the ‘Renewable Energy Country Attractiveness’ table and with the announced tax cuts for oil and gas it does not seem as if the Government has much ambition to climb it again.
In the first Budget since the Paris Agreement and in the face of record-breaking global temperatures over the first two months of the year, many felt there was an opportunity to send a strong signal to bolster the ‘green economy’ in the UK. This ‘budget for the next generation’ however, was particularly notable for its failure to mention climate change at all and has left many feeling that, perhaps, this was an opportunity wasted.