Friends of the Earth welcome budget's Green Investment Bank plan

Friends of the Earth welcome budget's Green Investment Bank plan

By staff writers
25 Mar 2010

Friends of the Earth has welcomed Government plans, unveiled in yesterday's Budget, to set up a Green Investment Bank, and has published a critical appraisal of the chancellor's announcements.

The environmental campaigning charity has played a leading role in the campaign for such a bank since January 2009.

Friends of the Earth's Executive Director, Andy Atkins, commented: "The Government's announcement to set up a Green Investment Bank is fantastic news - it should be a crucial building block in the creation of a safe, clean and prosperous future."

He added: "This bank will provide crucial funds for major green developments, such as off-shore wind projects, which will slash emissions, increase our energy security and create thousands of new jobs."

"We must do much more to build a low carbon economy - but today's announcement is a massive stride in the right direction," said Atkins.

The World Development Movement (WDM) also welcomed the Green Investment Bank, but criticised the government for not tying it into the Royal Bank of Scotland (RBS), the majority of which is now owned by the taxpayer.

"By not aligning the RBS investments with the goals of the Green Investment Bank, the Treasury is effectively throwing good money after bad,” said WDM’s Director, Deborah Doane.

She called on the Chancellor to “instruct RBS to use public money for exactly the kinds of projects it wants to fund under a Green investment Bank, rather than pouring billions from the public purse into companies that are heavily involved in tar sands extraction, mining and weapons manufacturing”.

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FOE's BUDGET ANALYSIS

1. Green Investment Bank

Friends of the Earth played a central role in the campaign for a Green Investment Bank - a business and investor alliance to lever billions of pounds of investment into low-carbon technology and energy efficiency.

We strongly welcome the set up of the Green Investment Bank - using a £2 billion fund to lever billions of pounds of private sector investment into low carbon infrastructure. The bank will focus initially on offshore wind. Getting sufficient investment in new green technologies is a crucial building block in delivering a low-carbon economy.

Later, the Bank will also look at investments in other areas - we believe this must have a strong focus on ensuring investment in energy efficiency and smaller-scale renewable technologies, and that the Bank must not fund nuclear power. Other and increased sources of funding may be necessary; particularly if the sale of assets to fund the Bank's start-up is delayed.

2. Renewable energy

The announcement of £60 million for development of ports to support offshore wind turbine manufacturers is very welcome - a core element of strengthening the supply chain for offshore wind.

3. Energy efficiency

This year's Budget did not expand on last year's excellent schemes to give interest-free loans to small businesses, hospitals, schools and local authorities to invest in cash-saving energy efficiency measures. These loans are a win-win: organisations cut carbon emissions and save on their energy bills, and the Treasury gets its money back - this should have been prioritised.

4. Homes

Friends of the Earth is concerned that the Government's strategy to cut emissions from homes will not be effective without a supporting package of tax breaks for homeowners, builders and landlords.

There were no tax measures in the Budget to help homeowners and people renting to cut their energy bills, to back up the Government's recent Household Energy Management Strategy. The Chancellor could have cut VAT on refurbishment, and given bigger grants to landlords to install energy efficiency measures.

5. Waste and Resources

Landfill tax - the Government has announced a further year for the £8 [per tonne] per year landfill tax escalator, now to 2014. This is welcome and will further drive incentives for expanding and improving recycling and reuse facilities.

Aggregates Levy has gone up from £2 to £2.10

6. International Climate Finance

It is disappointing that the Government did not introduce a financial transaction tax on sterling trades - the first Robin Hood Tax. This could have kick-started international progress on other financial transaction taxes, and provided £3 billion a year for international climate change efforts and poverty alleviation. Mr Darling's speech implied that banking taxes would have to be applied internationally, for fears of costing jobs in the UK. In this instance though, this unilateral tax is on the trade in sterling wherever in the world it takes place, not a tax on the UK's financial sector, so this concern does not apply.

7. Transport

Delaying the planned increase in fuel duty costs £550m - just £260 million of this would have paid for the nine most congested urban areas in the country to introduce Smarter Travel Choices - measures that would get people out of their cars in favour of walking and cycling and using public transport. The cost of motoring has fallen under Labour, while the cost of travel by bus and rail has risen. Last month the Government revealed that between 1997 and 2009 rail fares increased by 13 per cent while the real cost of motoring, including the purchase of a vehicle, declined by 14 per cent. Also, the cost of the average UK one-way air fare, including taxes and charges, covering domestic flights fell by 35 per cent between 1997 and 2008: http://www.publications.parliament.uk/pa/cm200910/cmhansrd/cm100205/text/100205w0001.htm[i].

Funding for road repairs is necessary, but the £285 million for hard shoulder running is motorway-widening by stealth, and this will increase traffic and increase emissions.

There are a number of tax changes to encourage zero-carbon cars - such as company car tax exemption for zero-carbon cars.

8. Other

Nitrous oxide gases into EU Emissions Trading Scheme from 2011 - saves two million tonnes of CO2.

Energy Market Assessment report - The Government is looking into broadening the feed-in-tariff. The Government should expand feed-in-tariff to include large-scale renewable generation; this expansion should not include nuclear, which has huge negative environmental impacts.

Climate change levy - This has risen in line with inflation.

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Friends of the Earth's Green Budget 2010 briefing is available here (*.PDF Adobe Acrobat file):
http://www.foe.co.uk/resource/briefings/budget_20102.pdf

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