The Government spending review this past week has put paid to a number of Quango’s and cut swaiths through a number of Government Departments. Have the cuts also put an end to the idea of a ‘green economy’ in the UK? The Chancellor made the following statement, which is understandable –
We (the Coalition Government) are going to ensure…that what we buy, we can afford, that the bills we incur, we have the income to meet and that we do not saddle our children with the interest on the interest on the interest of the debts we were not ourselves prepared to pay’
Chancellor George Osborne
But will we also still be working towards a greener future for our children?
A basic list of the winners;
There will be more funding for flood defences and coastal erosion management.
The Chancellor promised £1bn for a carbon capture and storage plant and £1bn for a Green Investment Bank. (The UK is a leader in carbon capture technology and has agreed that it will help carry the banner on this technology for Europe.)
A further £200m will be spent on job-creating low-carbon technologies, particularly on offshore wind and a port to service wind farms.
And subsidies to renewables remain broadly untouched;
The government is setting aside £860m of funding from the Treasury for low-carbon forms of heating, like wood burners. This sector produces 47% of the UK’s CO2 emissions but has been largely neglected until now and subsidies for wind power also remain untouched.
Businesses are complaining that they are indirectly funding these investments through changes to the CRC energy-saving initiative. The CRC applies to organisations like hotel chains, supermarkets, banks, and government departments, which account for around 10% of the UK’s carbon emissions. It starts next year and was due to raise a self-financing fund through levies on energy.
The fund was to have been recycled to those firms in the CRC which cut energy most but the Chancellor will now claw the estimated £3.5bn back into the Treasury – good or bad?
The coalition have said they want to “simplify” the complexities of the CRC and this is certainly a novel way to do this. This will ensure that the CRC will in effect cost the wider business community almost £3.5bn more than it would have. Perhaps not the best way to get big industry “on side” with green issues?
The other main controversy is over the announcement concerning the Green Investment bank.
The general view of commentators appears to be that the Chancellor’s £1bn will not be enough to create a fund to remove the risk for investors pondering offshore wind schemes. The figure is half the amount originally mooted, and although £1bn sounds a lot, it may not be enough to leverage the billions of pounds of extra private sector cash needed to kick-start the aimed for low-carbon revolution.
The idea of a Green Investment Bank holds considerable promise, but it must be properly funded and given the power to borrow on money markets. If the bank is launched as a fully fledged government-backed bank, it will be able to leverage huge funding from the private sector.
Other green schemes have mostly been ‘shaved’ rather than axed.
The home energy-saving scheme ‘Warm Front’ faced the most savage hack with a fall in funding from £345m to £100m in two years. The plan is that their task will then be picked up by energy firms through the Green Deal for energy efficiency (although it remains to be seen if this will work).
So the bottom line? It appears that the Government have tried where they can to support the Green Economy. The Energy and Climate Change Secretary Chris Huhne is reported to have said that “Decc is playing its part in tackling the deficit.”
In reality they appear to have done rather well as a department, all things considered!