Energy sector disappointed by budget

The energy industry’s reaction to the UK Government’s budget has been lukewarm, with many commentators lamenting a lack of clarity over the carbon floor price and future support for renewable power.

Philip Hammond’s budget unveiled fresh funding for electric vehicles, higher taxes for diesel cars, proposals for a tax on plastic and funding for clean air zones.

Yet the Chancellor was criticised for not providing more guidance on the future of the Carbon Floor Price, with no further funding for the Levy Control Framework (LCF) or any mention of its proposed replacement.

Jonathan Marshall, energy analyst, Energy and Climate Intelligence Unit (ECIU), said: “Despite warm words from the dispatch box, Philip Hammond has failed to deliver on low carbon energy.

“Keeping the carbon price floor unchanged was the bare minimum expected before the Budget, and does not make up for the hat-trick of freezing new low-carbon support, throwing North Sea oil and gas another lifeline, and shying away from fuel duty changes that would both encourage lower-carbon transport and tackle the air pollution crisis.”

Lawrence Slade, Chief Executive at trade body Energy UK, added: “Given the great advances the industry has made in delivering cleaner energy at the lowest cost to consumers, the lack of ambition from the government to build on this progress is disappointing and, coupled with the need to decarbonise heat, seems at odds with the plans set out in the recent Clean Growth Strategy.”

'Disappointing’ for solar and onshore wind

The Renewable Energy Association (REA) expressed “deep concern” over the budget, with Head of Policy and External Affairs James Court saying:

“Whilst the announcements for electric vehicles are positive, the UK government seem to be turning their back on renewables by announcing no new support for projects post 2020 and a freeze on carbon taxes.

“This could see a hiatus in much needed infrastructure development. Considering this is coming only a couple of months after the much-vaunted Clean Growth Plan, it’s hugely disappointing.”

Speaking after the budget was announced, RenewableUK Chief Executive Hugh McNeal said: “The renewable energy industry has a little more certainty than it did this morning.

“What is missing is the ambition to take full advantage of the UK’s global-leading renewables industry at such a crucial time for our country.”

Claire Mack, Chief Executive of Scottish Renewables, added that it was “disappointing” that onshore wind and solar were not being allowed to compete in the energy market.

No new money for renewables

Environmental groups also criticised the lack of progress over renewables, with Sam Gardner, Acting Head of Policy at WWF Scotland, saying: “It seems strikingly contradictory that only days after attending the UN climate conference in Bonn, the UK Government has announced a new way to encourage the exploration of more fossil fuels from the North Sea.”

John Sauven, Chief Executive at Greenpeace, said: “Despite the Chancellor’s pride in the UK’s climate leadership, hidden away in the unannounced text of the budget, he quietly revealed this was one of the least green budgets ever, because there will be no new money for renewables until at least 2025.”

“This is the death knell for new renewable energy like tidal, wave and geothermal technology despite the huge economic opportunities they could bring.”

Meanwhile the Government’s Industrial Strategy has made “clean growth” one of its key aims.

It sets out an ambition for the UK to lead the world in the development, manufacture and use of low carbon technologies, systems and services that cost less than high carbon alternatives.

“The move to cleaner economic growth – through low carbon technologies and the efficient use of resources – is one of the greatest industrial opportunities of our time. By one estimate, the UK’s clean economy could grow at four times the rate of GDP. Whole new industries will be created and existing industries transformed as we move towards a low carbon, more resource-efficient economy,” it said.

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