A 'dash for gas' could make the UK's carbon targets unachievable, warns cross-party Environmental Audit Committee

A Treasury-led 'dash for gas' could make the UK's carbon targets under the Climate Change Act unachievable, the cross-party Environmental Audit Committee has warned in the report of its inquiry into the Autumn Statement 2012: Environmental Issues. The Committee is calling on the Government to restore investor confidence in the future direction of energy policy by setting a clear decarbonisation objective in the forthcoming Energy Bill.

Chair of the Committee, Joan Walley MP said, "The Autumn Statement sets the course of economic policy for the foreseeable future. The Treasury must end the uncertainty on energy policy and give investors and businesses the confidence to seize the enormous opportunities presented by new clean technologies.

"A second 'dash for gas' could lock the UK into a high-carbon energy system that leaves us vulnerable to rising gas prices. The Government needs to reassure investors by setting a clear target in the Energy Bill to clean up the power sector by 2030."

Evidence to the inquiry confirmed the CBI's warning that ongoing policy uncertainty could mean that the UK loses out on millions of pounds of green investment. Global competition for green growth is fierce and the UK is competing with other countries to secure renewables investment.

In its conclusion, the report states:
"Autumn Statement 2012 provides the Treasury with an opportunity to help secure
the ‘step change’ in the pace of emissions reductions repeatedly called for the by the
Committee on Climate Change. The Chancellor must reflect on his comments that
present the ‘environment’ in opposition to the ‘economy’. They are wrong and
counterproductive. Mixed messages from the Government on energy policy are
undermining investor confidence in the green economy. A clearer route is needed,
helping to rebuild investor confidence in the energy sector, which allows proper
scrutiny to begin on definitive plans for our energy mix which move beyond the so
far apparently illustrative and permissive nature of the energy ‘pathways’. Such
greater certainty would be signalled by the introduction of a carbon intensity target
in the forthcoming Energy Bill.

The Committee heard a variety of suggestions to boost take-up of energy efficiency measures in its inquiry on the Autumn Statement, including:

  • Feed-in-tariffs for demand reduction to create a market for measures reducing the amount of energy consumed in an area, in a sector or in a business. (Green Alliance suggestion).
  • Council Tax rebates for energy efficient homes, variable rates of Council Tax depending on the energy efficiency of the home, or variable rates of Stamp Duty Land Tax to reflect the energy efficiency of the property (UK Association for the Conservation of Energy).
  • Extension of the 5% reduced VAT rate on energy efficiency measures to cover A-rated boilers and B-rated windows (UK Association for the Conservation of Energy).
  • Extension of the 'landlord energy saving allowance' beyond 2015, to help spur improvements in the private-rented accommodation sector before the minimum energy efficiency standard comes into force in 2018 (UK Association for the Conservation of Energy).
  • 'Recycling' revenues from the Carbon Price Support and EU ETS into support for energy efficiency (Friends of the Earth, UK Association for the Conservation of Energy, E3G).

The Committee also received suggestions for new environmental taxes that could be implemented to help deliver the Coalition Agreement commitment to increase the proportion of tax revenues accounted for by environmental taxes:

  • Incinerator tax to encourage the re-use or recycling of waste materials (UK Without Incineration Network, Dr Chris Edwards UEA).
  • Charge on single-use carrier bags to reduce litter and cut environmental damage (Campaign to Protect Rural England).

Report: Autumn Statement 2012:Environmental Issue

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