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Sustainability overcomes the recession

Article taken from GreenWise Business. To view article, click here

In the end, the Budget turned out to be greener than many had dared hope.

The Chancellor of the Exchequer Alistair Darling announced a raft of green measures, covering everything from energy efficiency and renewables through to carbon capture and storage - backed up by £1.4 billion of extra cash to support low carbon industries.

Whether the Budget proves green enough to create the new jobs and new businesses to put the UK "at the forefront of a worldwide low carbon recovery" as the Chancellor intends, remains to be seen of course.

At the core of the Chancellor's green strategy was the setting of UK's first three carbon budgets as required by the new Climate Change Act. These set a new legally binding 34 percent reduction in emissions (based on 1990 levels) by 2020 which, the Chancellor believes, represents a new level of ambition for UK climate policy - strengthening the Government's long-term policy framework and giving UK industry the confidence to invest in low carbon technologies.

Hard line environmental groups were predictably unimpressed. Friends of the Earth is calling for the rich nations meeting at Copenhagen in December to cut their emissions by 40 per cent by 2020. The 34 per cent target set by the Chancellor puts Britain in a weak position to provide leadership at the crucial UN talks, the organisation believes.

The initial response from industry to the new carbon budgets has been generally more positive. Gareth Stace, head of climate and environmental policy at the manufacturers' association EEF, said: "We welcome the fact that the UK Government is positioning itself as a leader on climate change, and the Chancellor is right to recognise that this will bring substantial economic opportunities, especially for manufacturers. However, reaching a global climate deal at the UN meeting of ministers in Copenhagen is essential if these targets are to achieve the goal of avoiding dangerous climate change. There is no reward for the UK acting on its own."

£4 billion of new capital from the European Investment Bank

More targeted green business measures announced by the Chancellor included extra support for renewable energy companies to help them through the credit crunch. Responding to industry demands, the Government has undertaken to free up £4 billion of new capital from the European Investment Bank (EIB) through direct lending to energy projects and intermediated lending to banks. It believes that this initiative can bring forward £1 billion worth of consented small and medium-sized UK renewables projects to deployment.

£525 million of support to offshore wind

The Chancellor is also allocating £525 million of support to offshore wind through reform of the Renewables Obligations Certificates (ROCs) system. Electricity supply companies currently receive 1.5 ROCs for every megawatt hour (MWh) of energy they buy from offshore wind farms, which they can then sell on. Under the Chancellor's plans this will rise to two ROCs for the financial year 2009-2010, and fall back to 1.75 ROCs in 2010-11.

The British Wind Energy Association (BWEA) has been lobbying for both the freeing up of European Investment Bank funds and reform of ROCs. Its chairman, Adam Bruce, welcomed the Chancellor's announcement: "This package of measures deserves a welcome from our industry, and is in line with proposals that we have been working through with Government [...] It also re-states the Government's long-term commitment to the renewable energy sector, and should enable us to unlock up to £10 billion of private sector investment in wind and marine energy projects over the coming few years."

£405 million of targeted support for low carbon industries and advanced green manufacturing

The Government is also allocating £405 million of targeted support for low carbon industries and advanced green manufacturing, supporting the development and deployment of low carbon technologies such as wind and marine energy - for example, through building facilities to test prototype models.

Alan Moore, the chair of the Government's Renewables Advisory Board and outgoing chair of BWEA's marine strategy group, welcomed this provision: "The £405 million for low carbon technologies development and deployment is a very promising and much needed Budget decision. The wave and tidal industry has been fighting for support over the past years and only through determined efforts has made steady progress and established the UK as the world leader in this field. With this boost we should see the UK speeding the progress towards exploiting our massive indigenous wave and tidal energy potential."

£375 million to support energy and resource efficiency

A number of the Chancellor's measures also seek to promote energy efficiency. An additional £375 million is being made available to support energy and resource efficiency in businesses, public buildings and households over the next two years.

This breaks down as: £100 million for local authorities to deliver housing to 'higher energy efficiency standards' - though there is a lack of detail about what standards these might be; £100 million extra to improve the insulation for 150,000 homes in the social sector; £100 million of new funding for low cost loans via the Carbon Trust for 3,500 small and medium-sized businesses for energy efficiency savings; £65 million of new funding for loans to install energy efficiency measures in public buildings, supporting around 3,000 projects in schools, hospitals and other public sector institutions; and £10 million to waste infrastructure.

Tom Delay, ceo of the Carbon Trust, welcomed these initiatives. He said: "This Budget is good news for carbon reduction. Moving forward we will work with Government to ensure that the funding announced delivers maximum carbon impact and good overall value for money for Britain [...] This loan initiative makes perfect business sense as it will deliver low cost carbon savings and drive significant overall cost savings for the UK economy."

£250 million for low carbon investments

In line with the Government's industrial strategy unveiled earlier this week and to ensure the UK is in a stronger position to take advantage of opportunities as the global economy moves out of recession, the Chancellor said he would establish a £750 million Strategic Investment Fund, of which £250 million has been earmarked for "low carbon investments".

£140 million for small-scale electricity and heat

Over the next two years the Budget promises £70 million for decentralised small-scale and community low-carbon energy, including £45 million for small-scale renewable electricity and heat, primarily through the Low Carbon Buildings Programme, and £25 million for at least ten community heating schemes.

The Budget certainly could not be faulted for the sheer quantity of green measures it contains. Among the many others are a new funding mechanism for up to four carbon capture and storage demonstration projects, increases in fuel duty and landfill tax, a car scrappage scheme and (as previously announced) support for electric car production.

Responses from the green business community has been generally positive, though many concede that the devil will be in the detail that emerges in the following days and weeks.

Philip Wolfe, director general of the Renewable Energy Association (REA), which has supported Lord Stern's call for 20 per cent of stimulus packages to be devoted to green investment, said: "Although the new announcements in this Budget move towards the 20 per cent level, the UK is still failing the 'Stern test' overall. We are allocating substantially less to sustainable energy during the global downturn than other countries and this will leave our world class renewables businesses at a competitive disadvantage. The additional £405 million support for the 'low carbon industrial strategy' may help bridge this gap, but there are so few details it is hard to know."

For more information on the 2009 budget, visit the HM Treasury website

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