Osborne snubs low carbon economy

The focus on deficit reduction was expected, but it provides no excuse for the absence of green commitments

BusinessGreen, 22 Jun 2010
For years the announcement of a new budget was followed by protests from environmental groups that the green section of the chancellor's budget address amounted to little more than political rhetoric. Well, how they will be missing that rhetoric this afternoon.

George Osborne's emergency budget contained barely a mention of the low carbon economy, climate change, the need to cut carbon emissions, or even the coalition's own pledge to become the greenest government in history.

The coalition will insist this is not a snub to green businesses and that the primary focus of the emergency budget was necessarily on the need to cut the deficit. But as Barack Obama witheringly observed when his presidential rival John McCain attempted to suspend the campaign so he could focus on the financial crisis: leadership is about being able to do more than one thing at a time.

There are rumours around Whitehall that environmental groups have been promised far more substantial green policy proposals and new green taxes in the autumn as part of the annual spending review and pre budget report.

Osborne hinted at some of these moves in his speech, confirming that the government would "bring forward" plans for a green investment bank and look at reforms to air passenger duty designed to curb emissions from aviation. The full budget document similarly confirmed plans to "support" the carbon price through reform of the carbon levy and referenced on-going plans for a green home loan scheme, new green "financial products" and reforms of the energy market.

In many ways the current waiting game is fair enough. It is unrealistic to expect the government to deliver a fully-fledged low carbon policy framework within weeks of taking office, particularly when it has to deal with deficit and the delicate workings of the new coalition. If all the promised reviews and proposals do indeed deliver clear cut recommendations by the autumn it may still be possible to have all of the government's main green policies enacted within a year of it taking office.

But the absence of green commitments from Osborne will still grate with many low carbon businesses.

Over the past five or six years Gordon Brown and then Alistair Darling established the green section of the budget as an important part of the theatre. We have grown used to chancellors trumpeting the fact the UK has exceeded its Kyoto commitments and is on track to meet its carbon targets. We expect our chancellor to praise the importance of the low carbon economy as a means of bolstering competitiveness, creating jobs and reducing climate change risks. We require at least a few green policy pronouncements to chew over if we are to convince financiers that low carbon investments remain a good bet. It may only amount to a few paragraphs in an hour long speech, but this rhetoric is important.

In this respect, George Osborne failed one of his first tests as Chancellor.