Green measures


The Government have recognised that the low-carbon economy is central to building strong, long-term, sustainable growth - in 2008-2009 the UK's low-carbon and environmental sectors were worth an estimated £112bn and provided employment for almost 910,000 people (Innovas, March 2010). They also recognise the role the Government has to play in enabling the investment needed for the transition to a low-carbon economy, particularly in the energy sector given the unprecedented scale of the investment challenge (the Government estimate investment of £100-120bn is required in this sector by 2020).

The measures

Budget 2010 announced the following measures aimed at supporting the financing of low carbon investment and low carbon jobs:

  • The creation of a Green Investment Bank operating on a commercial basis which will invest in low-carbon infrastructure to address emerging equity finance gaps. The Government will invest up to £1 billion from the sale of infrastructure-related assets and will seek to match this with at least £1 billion of private sector investment. A consultation will be launched in summer 2010;
  • Whilst the Government recognise that the EU ETS cap provides the best long-term solution to secure a more robust low carbon future they acknowledge the need for greater certainty. They therefore plan to consult this summer on mechanisms to provide greater certainty for low-carbon investment with measures to be introduced in the 2010 Pre-Budget Report;
  • Nitrous oxide gases from nitric acid production will be opted into the EU ETS from 2011;
  • A previous assessment of the energy markets has shown that over the long-term, action on the carbon price will be insufficient to meet the Government's energy policy objectives. There will therefore be a consultation on the electricity policy framework this autumn with a White Paper in Spring 2011;
  • There will be a consultation on grandfathering the minimum level of Renewables Obligation support for biomass installations at the point of accreditation and also the sustainability criteria for biomass used for combined heat and power;
  • Up to £60m for the development of port sites, to support offshore wind turbine manufacturers looking to locate new facilities in the UK;
  • The launch of UK Finance for Growth (UKFG) to streamline the Government's SME finance support which will include help for businesses seeking to commercialise low-carbon technologies. UKFG will work in partnership with DECC and Regional Development Agencies to co-ordinate all public low carbon SME equity schemes including the Carbon Trust's VC activities and the UK Innovation Investments Fund's (UKIIF)'s low carbon programmes;
  • A commitment to reduce government departments' estates and operational carbon emissions by at least 30 per cent by 2020. This will be included in the individual carbon reduction plans to be published shortly.


In addition, the following fiscal measures were announced:

  • The fuel duty increase for 2010 will be staged, with an increase of one penny per litre on 1 April and one penny per litre on 1 October 2010, then 0.76 pence per litre on 1 January 2011. Fuel duty will also rise by one penny per litre in real terms on 1 April each year from 2011 to 2014;
  • The standard rate of landfill tax will increase by £8 per tonne on 1 April 2014, to encourage alternatives to landfill. The lower rate will be frozen in 2011-2012 and the list of wastes which quality for this rate will remain broadly the same as currently;
  • Climate Change levy rates will rise in line with inflation from April 2011 to maintain the levy's environmental impact;
  • Aggregates levy will increase just above inflation to £2.10 per tonne on 1 April 2010;
  • There will be an update to the technologies included in the Enhanced Capital Allowances scheme for energy and water efficient products including new sub categories for 'self driving' magnetic motors and biomass air heaters;
  • Company car tax for ultra-low carbon cars (emissions of between 1 and 75g CO2/km) will be halved for five years from April 2010. Vehicle Excise Duty discounts will be available for vehicles that that achieve early compliance with the Euro VI air quality standard. HGD VED will continue to be frozen in 2010-2011.


Our view

The Government has recognised that the low-carbon economy is central to building strong, long-term, sustainable growth - in 2008-2009 the UK£s low-carbon and environmental sectors were worth an estimated £112 billion and provided employment for almost 910,000 people (Innovas, March 2010). It also recognises the role it has to play in enabling the investment needed for the transition to a low-carbon economy, particularly in the energy sector given the unprecedented scale of the investment challenge (the Government estimate investment of £100-120 billion is required in this sector by 2020).

The Government is putting the Green Investment Bank in place because there is a huge financing requirement in respect of the carbon agenda. In order to meet the UK�s carbon reduction targets significant volumes of investment in low carbon infrastructure will be required and there is a real risk that private financing will not be able to meet that demand. By putting this funding in place the government will give confidence that the infrastructure can now be built.