Where were energy, environment and climate change in the budget?

In Philip Hammond’s first spring budget since becoming Chancellor of the Exchequer, there was a disappointing lack of focus on energy consumption and the environment.

Posted on 09 March 2017.

There was also an equally disappointing announcement of cuts in the Department of Business, Energy and Industrial strategy, where the budget will fall from £2bn to £1.7bn in 19/20, with incremental decreases every year.

In fact, the words energy, environment, climate change and air quality were not mentioned at all and the budget has been widely criticised by those involved in carbon reduction activities. 

That being said, Hammond has pledged a further £300mn to support the UK’s research and development sector, bringing the total budget for the year to £4.7bn.  Part of this money is destined for a newly created “Industrial Strategy Challenge Fund (ISCF)” which aims to support collaborations between business and the UK’s science base.  An initial investment of £270 million will be available in 17/18 to drive the development of disruptive technologies.  The first wave of challenges to be addressed includes the following:

  • Leading the world in the development, design and manufacture of batteries that will power the next generation of electric vehicles, helping to tackle air pollution

  • Developing cutting-edge artificial intelligence and robotics systems that will operate in extreme and hazardous environments, including off-shore energy, nuclear energy, space and deep mining

To lead the world in the development of battery technology is no easy feat with American company Tesla having already taken one giant leap towards the accolade with the development of its new car and home battery technologies.  However, with advances in car battery technologies it is certain there will be progression of a similar nature for applications in the commercial and industrial sectors.  With battery storage use becoming ever more prevalent in the industrial sector this is a huge opportunity for the UK to be at the forefront of an exciting and lucrative emerging market.

Staying true to the budget set out in the autumn, the scrapping of the Carbon Reduction Commitment (CRC) and the reformation of the Climate Change Levy will go ahead and look to raise a total of £515mn by 2011/22.  The mood surrounding this announcement will undoubtedly be one of relief.  Many will be glad to see the back of the failed CRC which started life as a voluntary carbon saving initiative and has ended up as just another tax on carbon.

So, that all sounds quite positive, so why should the Chancellor have done more for the green economy?

It is true that progress has been made in reducing carbon emissions in the UK.  Emissions have reduced an average of 4.5% pa over the past three years and are now 38% below 1990 levels.  However, this has been achieved almost entirely through the power sector thanks to investment in renewables and a reduction in coal use.  Progress on other fronts, including low carbon heat, energy efficiency and transport, has been disappointing.

More importantly, since 1990, actual average reductions have totalled 1.3% pa towards the UK 2020 target.  To meet the UK 2050 target this rate needs to increase substantially to 3% pa so the rate of improvement needs to 'step up’!  Nothing in this budget speech recognises these facts or indicates how the gap is going to be bridged!

Every UK organisation, including the Government and the Chancellor of the Exchequer, needs to get on board with saving energy if we are to stand any chance of meeting the UK’s climate change targets and doing our bit to limit global temperature increase to 1.5°C predicted by the UK 2050 target.