The mixed bag of green and dirty policies put forward by the Chancellor will leave many businesses confused
Few events provide the media with the opportunity to dip into their bucket of journalistic clichés quite like the budget. And as such we can confidently report that George Osborne's latest budget offered a mixed bag for the green economy.
The headlines will inevitably be dominated by the row over the 50p tax rate, the tax raid on pensioners, and perhaps even Ed Miliband's amusing challenge for cabinet ministers to admit whether they crossed the £150,000 a year threshold that would allow them to benefit from the cuts. But from a green business perspective there were plenty of intriguing announcements that executives will need to be aware of. The problem is that each positive bit of news for the green economy was swiftly followed by some equally encouraging news for high carbon, polluting industries. It was impossible to detect any sort of green narrative, meaning that once again those business leaders calling for a coherent and wide ranging low carbon strategy were left both disorientated and disappointed.
So Osborne offered some genuine succour for the renewables sector with his vocal support for "clean energy" and his pledge that "renewable energy will play a crucial part in Britain's energy mix", before immediately signaling that he would cut support for the sector if he saw fit with an assertion that "environmentally sustainable has to be fiscally sustainable too".
He promised to respond to those who have been complaining that the government's carbon tax regime is too complex with a pledge to simplify the Carbon Reduction Commitment or scrap it altogether if it cannot be effectively streamlined. But in signaling that the scheme's days could be numbered he paved the way for at least another six months of uncertainty for businesses keen to invest in energy efficient and green technologies.
He announced some really encouraging changes to vehicle excise duty and company car tax rates that should further accelerate the shift towards greener cars, and perhaps most significantly resisted calls to defer the increases in fuel and air passenger duty. But any sense of progress on green transport was immediately undermined by a clear commitment to support new airport capacity in the south east.
He unveiled a new tax break for combined heat and power plants, which initially looked encouraging, but barely had the words left his mouth than the industry was calling the move a red herring that failed to compensate for a separate tax break that was removed last year. Their overall assessment: highly efficient CHP plants will close.
He revealed plans for new enterprise zones, enhanced capital allowances, and packaging targets, but also announced changes to allowances that will apparently cause yet more harm to the solar industry and indirectly confirmed that the Green Investment Bank will not be able to borrow until 2016/17 - a year later than had been hoped.
He confirmed a new independent Natural Capital Committee would assess the impact of government decisions on ecosystems and natural capital, and then immediately announced that a close advisor and advocate of increased gas investment, academic Dieter Helm, would head up the new body.
Most importantly, he offered a much more conciliatory tone towards the green economy than in previous speeches, insisting renewables would play a "crucial" role, praising clean energy, recognising the risks posed by rising oil prices, and insisting any cut in the Carbon Reduction Commitment would be followed by a new environmental levy. Before then heaping fulsome praise on the gas industry, hailing it as a "cheap" form of energy despite endemic price volatility, and lavishing a new £3bn tax break on oil companies. You did read that right, he worried about rising oil prices, before praising cheap gas prices, ignoring the fact both are linked.
This confusing picture has inevitably informed the reaction to the budget.
Climate Minister Greg Barker told me the budget represented the moment the "green economy joined the economic mainstream", highlighting the unequivocal support the Chancellor offered to clean energy and the wider green business sector (we'll have a full report on his comments tomorrow).
But many green groups took a different view, accusing the budget of "sticking two fingers up at David Cameron's promise to build a clean future" and providing a "polluters charter" for carbon intensive firms.
Green businesses will inevitably take a more nuanced approach.
On the plus side, one wind energy industry insider suggested to me that the clear statements in favour of renewables could provide firms such as Vestas and Siemens with the certainty they have been seeking before committing to major new manufacturing plants. There will also be excitement at the prospect of the Green Investment Bank starting investing from next month, cheers from fleet operators keen to reduce their emissions, and encouragement that a more effective carbon taxation regime might finally be in the offing.
But at the same time there will be continued frustration across the green business community at the way in which Osborne's fixation with gas demonstrates that he still has not been fully sold on the transformational nature of clean technologies, nor the critical need to move the UK away from fossil fuels as quickly as possible. The likes of BT, Tesco, Siemens, and even Shell, who all wrote to the Chancellor before the budget calling for a better understanding of the green economy, will already be preparing similar letters for the autumn.
What do the contradictions and juxtapositions in Osborne's budget reveal?
It seems clear that the long-running row at the top of government over the precise detail and direction of the green agenda is raging as fiercely as ever, despite the departure of former Energy and Climate Change Secretary Chris Huhne. There is general and sustained support for the green economy, but there are clear divisions between the Lib Dems and the green wing of the Conservative Party and the Treasury and more traditional Conservatives on how central a role green growth should play and what the mix should be between emerging green technologies and more established alternatives such as gas and nuclear.
We will get another insight into who is winning these crucial battles in the autumn as the government publishes its newly promised gas strategy and reaches a decision on what to do with carbon taxation. Green businesses will have a crucial role to play in ensuring the environmental wing of the coalition wins the key arguments and delivers a genuinely effective carbon tax regime and a commitment that gas is only used as a transitional energy source ahead of the full role out of genuinely low carbon alternatives.
It is time for those business leaders who are committed to the low carbon economy to use up some of their political capital and make it clear to Osborne that they can deliver the growth he is looking for. Efforts need to be redoubled in the battle to convince the Treasury that effective green policies are crucial if the UK is to benefit from emerging clean technologies that are rapidly becoming normalised at a global level, regardless of the decisions being made in Whitehall.
At the risk of more cliches, it is time for the Treasury to start thinking outside the box of its crippling economic orthodoxy and deliver less of a mixed bag and more of a coherent budget for green growth.
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