Aldersgate Group 2009 Budget Response

Aldersgate Group 2009 Budget Response

The AG submitted evidence to the Treasury Committee outlining its response to the 2009 Budget.  It praised a number of policy announcements, particularly in light of the critical state of public finances.  However, the current figure for the green component of the stimulus package now stands at 10.6%, below the global average (around 15%) and international competitors such as such as China (34%), South Korea (80.5%) and France (21.2%).    

Perhaps the most significant announcement was the publication of the world’s first carbon budgets, as required by the Climate Change Act, committing the UK to a minimum 34 per cent reduction in greenhouse gas emission by 2020. 

Commenting on the budget, Peter Young, Chairman of the Aldersgate Group, said: “The Chancellor should be commended for outlining the world’s first carbon budgets but there is a real risk these will not be met without further commitments for environmental technologies.  The additional support for CCS, offshore wind and energy efficiency is welcome. However the scale of green fiscal stimuli and green budget credentials still lag behind that needed to meet the scale of the economic and environmental challenges we face.”

Government rules threaten renewable investments

In an open letter from the Aldersgate Group to Joan Ruddock, the Parliamentary Under-Secretary of State for Energy and Climate Change, a coalition of 55 leading UK business and third sector organisations claim that the current regulatory framework on carbon reporting is creating disincentives for investments in renewable energy projects.  Signatories include BT, BSkyB, Eurostar, Ikea, Aviva, News International, Microsoft, Motorola, Cable & Wireless and Sun Microsystems.    

The barriers arise from inconsistencies arising from Defra’s Best Practice Voluntary Reporting Guidelines (June 2008) and the Carbon Reduction Commitment (CRC), as well as other incentives administered by DECC.  This is because the Government insists that end-users must assume that all electricity generated on-site contains the average carbon intensity for the national grid.  For its true carbon content to be reflected in company carbon reporting, the company must forgo the only relevant subsidy – Renewable Obligation Certificates (ROCs) – which in turn makes the vast majority of renewable energy investments financially unviable.   

Regulatory Budgets

The Government has abandoned plans to introduce a system of regulatory budgets, instead recognising the need for bespoke regulatory reforms dealing with current economic priorities.  Whilst welcoming the decision, the Aldersgate Group issued a warning against deregulation in response to the recession.  The current economic climate represents a unique opportunity where high environmental standards that prioritise long-term value in the economy will provide considerable first-mover advantages to UK businesses and promote sustainable growth. Regulation is also a powerful tool to drive innovation in environmental markets, and innovation can be one of the few positives to emerge from a recessionary period.

Low Carbon Industrial Strategy

The launch of the Government’s vision for a low carbon industrial strategy was met with disappointment due to the absence of any detailed proposals.  The Government also published new research by Innovas that shows that the global environmental sector is worth £3 trillion, and there are vast opportunities for the UK to carve out a leading position.  Andrew Raingold, Deputy Director of the Aldersgate Group, said: "The Innovas report shows that the environmental sector is a very significant part of the UK economy and has the potential to grow considerably.  But while the government's rhetoric on creating a low-carbon economy and creating thousands of green jobs has been impressive, delivery continues to fall wide of the mark."

New Members

The Aldersgate Group is delighted to welcome the Renewable Energy Association, National Grid, Sustain, and Barry Sheerman MP into its membership.

Upcoming Events

The Aldersgate Group will be launching a new report on the 3rd June 2009 at a reception at the House of Commons.  Commissioners from the influential Commission on Environmental Markets and Economic Performance (CEMEP) will assess government performance in relation to its ambitions to be a world leader in the environmental sector and make recommendations for the low carbon industrial strategy.  If you would like to attend, please RSVP to events@aldersgategroup.org.uk