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HM Treasury Budget 2010: Budget for Green Jobs and Growth (24/3/2010)
Investment in low carbon technologies was at the heart of the Budget delivered by the Chancellor today.
Energy and Climate Change Secretary Ed Miliband said:
“This Budget will help propel the UK further and faster towards the green industries of the future. Jobs, growth, energy security and the fight against climate change are all winners.”
Major low carbon components of today’s Budget are:
Green Investment Bank
The new Green Investment Bank for Low Carbon Development announced by the Chancellor today will be a major step in overcoming the finance challenge confronting infrastructure projects in the UK. It will be particularly important for the energy sector given the scale of the investment needed to bring forward low carbon electricity.
The Government will fund its investment of up to £1bn in the bank using receipts from the sale of mature infrastructure-related assets and will seek to match this with at least £1bn of private sector investment.
Energy market reform
The initial findings of the Energy Market Assessment were published alongside the Budget, narrowing down the options for market reform to incentivise the necessary investment over the next few decades and to ensure the consumer gets the best deal possible in the long term.
The initial findings are:
- The energy market has delivered for the UK economy and, with the measures set out in the Low Carbon Transition Plan, will continue to deliver to 2020.
- But for the long term the status quo is not an option. The challenges beyond 2020 are significant and will increasingly place pressure on the market in its current form. The UK’s binding 80% greenhouse gas reduction target by 2050 will only be achieved by huge increases in low-carbon electricity generation, requiring unprecedented levels of investment, including the upfront costs of many low carbon technologies.
- Providing greater certainty on the current carbon price alone will not be enough to drive the long-term change needed.
- The Government is ruling out a single buyer agency. This would not drive cost efficiency or bring the same benefits as a market-based approach.
- The issue of liquidity in the wholesale electricity market needs addressing. New players are needed to ensure a dynamic market that delivers the best possible deal for the consumer.
- The Government will work closely with the industry, regulator and other interested parties to assess the remaining options against a criteria of cost-effectiveness, affordability and investor certainty. Proposals will be brought forward for consultation this autumn, with a White Paper following in Spring 2011.
Pay As You Save
Following the publication of the Government’s Household Energy Management strategy in March, the Budget has today announced that the Government and the financial services industry will undertake detailed work through a joint forum to develop PAYS arrangements. This will enable millions of households to finance the high upfront costs of installations from the savings they make on their energy bills.
Consultation on Biomass
The Government today announced its intention to consult shortly on proposals to change the way in which electricity from biomass is supported to improve investor certainty and ensure sustainability. This follows a review of how biomass is supported under the existing £1bn Renewables Obligation (RO).
Renewable Heat Incentive
The Government continues to review the basis for longer term funding of the renewable heat incentive. In line with existing tax law, households that generate renewable heat mainly for their own use mainly for their own use will not be subject to income tax on renewable heat incentive payments, based on proposals in the consultation.
(source: www.DECC.gov.co.uk)
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