Osborne's carbon-fuelled budget sets the scene for a gas-fired future

Would you trust this man to lower carbon emissions?

Budget 2012 will be remembered in the future as the trigger for a new era of gas-fired generation and oil exploration.

• "A bad day for the environment" (John Sauven, executive director of Greenpeace).
• “I am concerned about the focus that the Budget took on fossil fuels" (Mark Kenber, CEO of The Climate Group).
• "Despite small green shoots of recovery, investor confidence, instability and uncertainty remain" (Michael Lunn, Environmental Industries Commission’s Director of Policy and Public Affairs).
• "Sticks two fingers up at David Cameron's promise to build a clean future – and gives a massive thumbs down to new jobs and cutting our reliance on expensive gas and oil" (Andy Atkins, executive director of Friends of the Earth).
• "We had hoped for greater clarity around future energy and emissions policies to enable better business and investment planning." (Melanie Leech, Director General of the Food and Drink Federation).
• "We urgently need a long term, consistent policy framework to provide businesses with the confidence to invest in low carbon and energy efficient improvements" (Martin Baxter, Executive Director of Policy, Institute of Environmental Management and Assessment, who believes the Budget does not deliver this).

This fair sprinkling of reactions paints the broad brush picture. Read on for the Low Carbon Kid's comprehensive summary of the sector highlights of Mr. Osborne's third budget.

Carbon Reduction Commitment (CRC)

The Chancellor announced a review of the Carbon Reduction Commitment (CRC). Mr. Osborne said it is "cumbersome, bureaucratic and imposes unnecessary cost on business", and that if ways of improving it "cannot be found, I will bring forward proposals this autumn to replace the revenues with an alternative environmental tax".

The CRC has few friends. The CBI, the Engineering Employers' Federation (EEF) and others felt he should have gone the whole way and announced its immediate dissolution. “The Government is wasting time by announcing yet another consultation," said the CBI's Director-General John Cridland.

Gareth Stace, head of environment and climate policy at the EEF, welcomed the news, saying "no amount of tinkering with this doomed tax on British business will ever make it work and therefore the government should scrap the scheme".

But the CRC is not completely isolated. KPMG's lead CRC advisor, Ben Wielgus, cautioned that "the introduction of a tax alone would be unlikely to deliver on all aspects of the CRC: namely the reputational drivers and focus on energy usage that are core to the scheme at present".

"Any reporting requirements would create an administrative burden on business and would need to be carefully designed to ensure that any replacement actually reduces administrative costs compared to the CRC," he added.

Michael Lunn of the Environmental Industries Commission was even more sceptical: "Having previously diverted funds raised from the CRC Scheme from green initiatives into general taxation, the Chancellor has now announced that it must be simplified, or scrapped. This sends a very unhelpful message to those companies working their internal budgets and committing funds to comply with a regulation that may become redundant in just a few months’ time," he said.

"Constant policy changes are detrimental to business and growth in the green economy, and we need to put in place a long-term, predictable and ambitious environmental policy framework right across the UK economy."

Martin Baxter, Executive Director of Policy, Institute of Environmental Management and Assessment (IEMA), said he was "disappointed that the government has not taken a longer term approach, as this would provide business with more certainty for investment and effective action on climate change″.


He said he was looking forward to an announcement on mandatory GHG reporting for business, "which will provide benefits for both the UK economy and the environment, by delivering cost and carbon savings”.

The Chancellor said that allowances sold with respect to 2012–13 emissions will be set at £12 per tonne of carbon dioxide, half as much again as the current carbon market price.

Carbon price floor

The Carbon Price Floor is designed to ensure that greenhouse gas emitters pay a price for their emissions, and will be set at £9.55 per tonne of carbon dioxide from 2014–15.

The EEF estimates this will lead to a 6-7% increase in industrial electricity prices and “locks the UK into higher energy taxes than our competitors, regardless of the European carbon price".

Its Gareth Stace said this "contradicts the government’s stance that the UK will go no faster than our partners in Europe.”

Greenpeace slammed it as a "stealth tax" which the Chancellor regards as an opportunity to raise revenue. "To drive investment in the clean technologies that would cut carbon and bring down bills he should instead have said the revenues would be ring-fenced to support ending our addiction to dirty fossil fuels,” said Dr Doug Parr, policy director for Greenpeace.

The CBI called the new level a “33% rise" that would "hit UK energy-intensive businesses hard, and underlines the need for a more coherent strategy to unlock low-carbon industrial growth".

“In the meantime, we urgently need support to those companies most at risk from the increase,” said John Cridland, which the Chancellor already has announced he is doing with £100 million over the Spending Review period.

Combined Heat and Power

"Combined Heat and Power plants will not be liable to carbon price support rates on fuels used for heat," said the Chancellor, in a move which only partially reinstates the tax break on CHP he removed last year.

This was criticised by Graham Meeks, director of the Combined Heat and Power Association, who said that the break "was what allowed these plants to compete in the power market. He has not restored this, and that's very negative".

The positive effect of not applying carbon price support charges to fuels used for Combined Heat and Power (CHP) is offset by the decision to remove the associated Climate Change Levy (CCL) exemption certificates, he said.

Climate Change Levy

Plants must generate at least 2MW of electricity before they become liable for the carbon price support rates of the Climate Change Levy (CCL).

CCL rates themselves will increase in line with inflation from 1 April 2013.

As announced in 2011's Budget, Climate Change Agreements (CCAs) will be extended to 2023, and as the Chancellor said in his Autumn Statement 2011, the Climate Change Levy discount on electricity for CCA participants available from 1 April 2013 will be increased to 90% to support energy-intensive industries.

The removal of exemption certificates to the Levy will bring in £110m in 2013-14, rising to £165m in 2016-17. This will go some way to paying for the carbon price floor and support for combined heat and power, which is estimated to cost £45m in 2013-14, rising to £145m in 2016-17.

Oil and gas

The Chancellor made significant announcements to support expansion of fossil fuels, especially gas, in a move that, together with Ed Davey's announcement of support for gas-fired generation earlier this week, is more than likely to stimulate a new building programme of gas-fired plants.

“Gas is cheap, has much less carbon than coal and will be the largest single source of our electricity in the coming years,” he said, adding that there will be a new strategy for gas generation published by DECC in the Autumn.

The statement was welcomed by Energy Networks Association (ENA), which represents the transmission and distribution network operators for gas and electricity in the UK and Ireland.

It claimed credit in a press release for advising him to do so, in what it called "our" Redpoint report, published a year ago, a claim which throws doubt on the impartiality of this key consultation document.

Mr. Osborne announced a programme of support to make it more economical to exploit small oil fields; action to open new fields to the West of Shetland; and promised primary legislation to permit measures to support investment in brown-fields.

The package was decried by environmentalists and welcomed by the industry, with Richard Forrest, partner in the oil & gas practice of global management consultancy A.T. Kearney, saying it "will entice oil and gas players who have investment options in many basins around the world".

Kearney felt that the introduction of a new £3 billion field allowance for particularly deep fields with sizeable reserves targeted at the West of Shetland "will help drive innovation and capability in the UK oil and gas service sector and have the knock-on effect of supporting competitiveness beyond the UK."

But Charlie Kronick, senior energy advisor for Greenpeace, said: “George Osborne hasn’t learned any of the lessons after the disaster in the Gulf of Mexico. Any oil spill in the west of Scotland would wreak untold devastation on some of the UK’s most fragile habitat and the local economy."

Mark Kenber, CEO of The Climate Group, said this move ridiculed David Cameron's pledge to create the “greenest government ever”. "To drive forward clean technologies we need a government that is willing to invest in low-carbon technologies while displaying strong and inspiring leadership," he said.

To secure billions of pounds of additional investment in the UK Continental Shelf, the Government will introduce a contractual approach to offer long term certainty on decommissioning old rigs.

Kronick said this would mean that "UK taxpayers will continue to pick up the tab for cleaning up the oil companies’ mess," observing that the UK’s tax regime for the oil industry is already among the lowest in the world.

Renewable energy

In a speech notable for few mentions of renewables other than referring to support measures already in the Government's workstream and the updated national infrastructure plan, the Chancellor did affirm that “renewable energy will play a crucial part in Britain’s energy mix – but I will always be alert to the costs we are asking families and businesses to bear.

"Environmentally sustainable has to be fiscally sustainable too.”

Gaynor Hartnell, head of the Renewable Energy Association, welcomed the “noticeably more positive tone” than in the Autumn Statement on renewables, but observed that the government’s own advisers had found that ″volatile gas prices, not renewable energy costs, were responsible for recent soaring electricity bills″.

Enhanced capital allowances

Expenditure on solar panels will be designated as special rate expenditure for capital allowances purposes from next month under the Finance Bill 2012.

While plant eligible for Feed-in Tariff support is ineligible for tax-free enhanced capital allowances, other designated energy-saving and water-efficient technologies do qualify, and the ECA list of eligible technologies will be updated during this summer.

The Government is also extending the 100 per cent FYA (first-year allowance) for businesses purchasing low emissions cars until 31 March 2015, a move welcomed by Mark Kenber, CEO of The Climate Group.

"The Climate Group’s EV20 Plugged-In Fleets report which was published in February 2012 highlighted that electric vehicles (EVs) can be commercially viable in business fleets," he said.

Less cash for DECC and Defra

The Department for Energy and Climate Change will see its Programme and Administration budget cut in real terms after 2012-13; currently it is £1.1 billion, which will rise to £1.4 billion for the next two years before falling to just £1 billion in the last year of this Parliament.

Defra's Programme and Administration budget will also fall, from £2 billion now to £1.8 billion by 2016-17, which will be around an 6% cut with inflation taken into account.

DECC's capital budget will almost double, however, from £1.4 billion to £2.7 billion by 2016-17, reflecting the need to support investment in more energy infrastructure, and a trend that has been ongoing for several years.

This support was broadly welcomed, but the ESA's Matthew Farrow said the waste industry "would have liked to see specific ‘green infrastructure allowances’ to incentivise investment in the sector, as the loss of industrial building allowances has made some potential waste management investment less economically viable".

By contrast, Defra's capital budget will fall in real terms, remaining at £0.4 billion.

Transport

The Chancellor announced plans and support for more roads, rail investment and even potential enlargement of Gatwick Airport.

Greenpeace said this "flies in the face of the Coalition agreement that specifically ruled it out".

Amongst the announcements on rail was support for Network Rail to invest a further £130 million to improve transport links between cities in the North of England which will enable the number of fast trains to double.

Vehicle excise duty (VED) rates will increase in line with the Retail Price Index from April 2012 but VED rates for heavy goods vehicles will be frozen.

For fleets and company cars there are changes to the capital allowance regime for business cars to strengthen the incentive to purchase more fuel-efficient cars.

Environment

Alongside the revolutionary Red Tape Challenge changes to environmental legislation announced by Defra this week, Mr. Osborne said the Government is to set up a Major Infrastructure and Environment Unit that will at an early stage look at the impact of nationally significant infrastructure projects on potential Habitats Directive issues.

The appointment of Dieter Helm as Chair of the new UK Natural Capital Committee was announced by the Chancellor. This body provides advice on the state of English Natural Capital to the Economic Affairs Cabinet Committee (chaired by the Chancellor of the Exchequer).

To coincide with this, the Global Legislators Organisation (GLOBE) released a new Rio+20 draft of its original Natural Capital Action Plan which helped shape the creation of the UK Natural Capital Committee last year by the Government, and which will form part of the central agenda of the Rio+20 meetings and World Legislators Summit meeting this June that GLOBE is helping organise with the UN.

Landfill tax

The standard rate of landfill tax will increase by £8 per tonne to £72 per tonne from 1 April 2013. The lower rate of landfill tax will remain frozen at £2.50 per tonne in 2013–14.

The value of the landfill communities fund for 2012–13 will remain unchanged at £78.1 million. As a result, the cap on contributions by landfill operators will be reduced to 5.6%.

Packaging recycling targets

These will increase annually by 3% for aluminium, 5% for plastic and 1% for steel from 2013 to 2017. Glass recycling targets will be split by end use.

Matthew Farrow, the Environmental Services Association’s Director of Policy said this was right. “The higher targets and five year timescale will give confidence to investors in recycling and reprocessing facilities."

He added, "We also support the splitting of glass PRNs by end use, to reflect the environmental benefits of glass recyclate going to remelt".

Aggregates levy

The Government is delaying the planned increase in the aggregates levy rate from £2.00 to £2.10 per tonne until 1 April 2013 to avoid putting additional pressure on the aggregates industry in Northern Ireland.

That's it. The Chancellor barely mentioned or ignored the Contract for Difference Feed-in Tariff, the Renewable Heat Incentive, the Green Deal, Electricity Market Reform policies, UK Green Investments (UKGI), changes to the Renewables Obligation, or the Energy Efficiency Deployment Office.

But perhaps that is just as well.

UK Government's green record comes under worst criticism yet

With friends like this, do the LibDems need enemies? Tory Aardvark campaign material.

Coalition Government claims to be the “greenest government ever" have been severely tarnished from five directions following developments over the weekend.

According to a YouGov survey, just 2% of the British population believe this claim, which will be further undermined by revelations in the Guardian on Saturday that restrictions on environmental pollution are about to be removed under the Government's “red tape challenge".

Furthermore, last Friday, Energy and Climate Change Secretary Ed Davey revised the Emissions Performance Standard requirements for a new generation of gas-fired electricity generating plants, which Greenpeace has calculated will lead to Britain missing its climate change targets.

This morning the Prime Minister also signalled his government would support new airport expansion in the South East, and heavily hinted Gatwick would be the focus of these plans.

The coalition agreement explicitly says: “We will refuse permission for additional runways at Gatwick and Stansted.”

But the Prime Minister said this morning: “I'm not blind to the need to increase airport capacity, particularly in the south-east. We are acting now to make the best use of existing capacity...... Gatwick is emerging as a business airport for London, under a new owner competing with Heathrow.”

Finally, the National Audit Office (NAO) has criticised the way in which the competition for the first UK demonstration carbon capture and storage project was run, saying valuable years have been lost in developing this new technology.

Not the greenest Government

On 27 May 2010, Secretaries of State Chris Huhne and Caroline Spelman repeated the new coalition Government’s pledge to be the greenest in UK history and outlined their legislative programme for the first term of government.

Chris Huhne said, "Making this Government the greenest ever...is not merely an aspiration; it is essential. The actions of this Government in this Parliament will define our ability to combat climate change in the decades to come.

“We are developing an integrated strategy across the public, private and third sectors, to tackle the loss of biodiversity, address the way that we use resources, adapt to climate change and grow a greener economy that provides the clean, green jobs and industries of the future."

Twenty two months later, where are we?

A YouGov poll, commissioned by Greenpeace, has found that only 2% of voters asked believe that the government is the “greenest government ever", with the majority, 53%, believing that it is “about average".

10% believe it is “greener than most other governments have been", with 9% believing it is “less green" and 7% believing it is the “least green". 18% didn't know.

The votes were split pretty equally by age and gender, but more Tories believe the claim (3%) than Labour (1%) with no LibDems agreeing with the statement.

People were asked whether they thought that current safeguards to protect Britain's wildlife and countryside were too strong, too weak, or about right.

Just 4% thought they were too strong, with 40% thinking they were too weak. 37% thought they were about right and 19% didn't know. Again, age and gender did not have a strong effect on the results, but voting intention did. Nearly half the number of Labour and LibDem voters thought that currently there was too little protection, whereas just 28% of Conservative voters did. 54% of Tories thought they were about right.

Red tape challenge

This being the case, the question of why the Government is slashing environmental protection for the countryside is being asked following revelations in the Guardian over the weekend that the Government will soon announce that 174 environmental regulations are to be relaxed.

These include laws concerning the dumping of asbestos, preventing the spread of invasive species, the protection of wildlife and common lands, curtailing noise nuisance, industrial air pollution and animal traps.

Ministers are expected to claim that the simplification of this legislation will save business £1 billion, yet apparently neither the Environment Secretary, Caroline Spelman, nor any other environment minister attended the ‘Star Chamber’ conducted by Cabinet Office Minister Oliver Letwin who is leading the “red tape challenge".

97% of the many thousands of public responses on the red tape challenge website asked for stronger protection or no change in the rules.

"The brazenness with which the government has sought to undermine the very principles of environmental protection is shocking enough," said Green Party MP Caroline Lucas. "But it's also astonishing that ministers have been so willing to waste taxpayers' money on such an ideologically driven vanity project."

A spokesperson for Defra merely said that “some of the rules we ask businesses to follow are either too complicated, ineffective or just obsolete".

The EU Habitats Directive, which protects rare and threatened wildlife, has been targeted by Osborne and will be "liberalised", according to the document. Other targets include regulations about:

• persistent organic pollutants
• cleaning up contaminated land, because this is a “burden for the housing industry"
• development of common land
• requirements for local authorities to investigate complaints about noise, dust and smell
• waste management at construction sites
• safe disposal of electrical goods and batteries by manufacturers
• recycling targets for larger UK businesses.

Any environmental damage not paid for by business will have to be borne by the taxpayer.

New gas plants

Thirdly, on Friday Ed Davey announced measures to be included in the forthcoming Electricity Market Reform legislation that he says are intended to provide more certainty to those investing in new gas-powered generation.

He wants to maintain the 450 grams per kilowatt-hour level of emissions from such plants until 2045, so that they do not have to be fitted with emission-reducing technology or made more efficient, and adjust the Capacity Market in such a way that ensures such plants are built.

Greenpeace immediately slammed this as “the Liberal Democrats’ most craven submission yet to George Osborne’s bonfire of environmental protection".

Its senior energy campaigner Joss Garman said, “by stripping away the simple requirement that our power stations need to become more efficient and less polluting, Clegg and Davey are undoing whatever good work their party has done on the environment since entering government".

They have calculated that the effect of this measure "would make it impossible for the UK to meet its long-term carbon emission reduction goals".

The move could even be illegal and subject to challenge in the courts, since to comply with the recommendations of the Committee on Climate Change, Greenpeace notes that the level of emissions from these plants would need to fall to 50g per kwh at 2030.

According to DECC’s October 2011 Updated Emissions Projections, an additional 4.9 gigawatts (GW) of new gas-fired electricity generation capacity is projected to come online by 2020, with 4.1GW due by 2016.

However, new consented gas projects already amount to 16.2GW, and National Grid and New Power data shows that all of these projects could be online before 2020.

Garman called this "a major change of course from the one followed by Chris Huhne," and said it was “just about the worst thing Ed Davey could have done in his first weeks in office.”

Ed Davey said: “This is all part of our commitment to transforming the market, providing long-term certainty to investors, increased competition, and the best deal possible for consumers.”

Carbon capture and storage

Finally, the National Audit Office has issued an investigation into the competition launched in 2007 by the Department for Business, Enterprise and Regulatory Reform designed to stimulate innovation in carbon capture and storage and put the UK at the forefront of global attempts to develop this novel technology.

It was cancelled four years later by the Department of Energy and Climate Change on the grounds of protecting value for money and because the project could not be funded within the £1 billion budget agreed at the 2010 Spending Review.

The report concludes that it was launched with “insufficient planning and recognition of the commercial risks".

However, it does say that some good came of it: the results of engineering and design studies completed by bidders, upon which the Government spent £40 million (63 per cent of the £64 million it spent in total on the competition), may help to reduce the costs of future carbon capture and storage projects.

But during the competition, "DECC's decisions to continue were not informed by detailed consideration of the probability of reaching acceptable contract terms and the time lost should the competition not succeed.

"When a capital budget was decided in October 2010, there was no agreement on government funding for operational costs," it observes.

Amyas Morse, head of the National Audit Office, said: "Taking calculated risks is perfectly acceptable if those risks are managed effectively; but in this case DECC, and its predecessor, took too long to get to grips with the significant technical, commercial and regulatory risks involved.

"Four years down the road, commercial scale carbon capture and storage technology has still to be developed.

"The Department must learn the lessons of the failure of this project if further time is not to be lost, and value for money achieved on future projects."

Carbon capture and storage is a three-part process that involves capturing the carbon dioxide produced from burning fossil fuels, transporting it to a storage site, and permanently storing it under pressure, usually underground.

The individual elements of the technology exist but have yet to be linked and operated together at a commercial scale power station.

Defra tackles water shortages but ignores carbon

Defra's new vision for water management ignores the industry's carbon emissions.

Defra has set out its plans to protect the future water supplies of the country, and how water companies should become more efficient, but has failed to link water use to measures to tackle climate change.

The new White Paper, 'Water for Life', also explains how river water quality will be improved with the help of local organisations, and pledges to reform the water industry with further deregulation “to drive economic growth".

Business and public sector customers will be able to negotiate better services from their suppliers in order to cut their costs, the Paper says.

Market reform will also remove barriers that have discouraged new companies from entering the water market, which is currently supplied by 23 firms.

The Paper incorporates nearly all of the recommendations from the Environment Agency on industry governance, with one notable exception: whereas the Agency dedicates many recommendations to reducing the carbon emissions associated with water use, the White Paper completely ignores this.

The White Paper does take on board the EA's recommendations for more national management of water supply, by developing the concept of water trading and interconnecting pipelines.

Water companies will also be able to set new social tariffs for people who struggle to pay their bills, and there will be measures to tackle bad debt, which results in householders carrying the can for those who can't or won't pay, to the cost of ￡15 per year each.

Measures are also outlined to compensate those in the South West for the “historic unfairness" of water infrastructure in the region, by pledging to reduce their bills by ￡50.

Tackling water shortage

Launching the Paper, Environment Secretary Caroline Spelman said: “Currently we enjoy clean water at the turn of a tap, and watch it drain away without a thought. But parts of England actually have less rainfall per person than many Mediterranean countries."

Unprecedented dry weather conditions this year, and low water levels, led Anglian Water last week to ask the Environment Agency for a drought permit, in December.

The Agency says that if the dry winter continues, more drought permits are likely to be sought because river and reservoir levels across south east England are well below average.

“Making sure we’ve got enough water for everyone is going to be one of the major challenges this country will have to deal with in the years ahead. With water expected to be less predictable as time goes on we all have to play our part in ensuring our water supply remains secure,” said Caroline Spelman.

As Aecom Water regional director Peter Robinson has observed, household water use has to be rethought as the population of the south east of England is projected to grow over the next 25 years.

Not tackling carbon emissions

The White Paper contains much about how the water regime needs to change drastically in order to reduce the risks associated with climate change, such as water scarcity and environmental damage.

However, one glaring omission from the Water White Paper is that there is no mention of the carbon content of water, a matter of deep concern that has been raised by both the Energy Saving Trust and the Environment Agency.

The last available annual figures show that the UK water industry as a whole emitted five million tonnes of greenhouse gases through treating and supplying clean water, and dealing with wastewater and sewerage. This is 0.8% of the U.K.'s greenhouse gas emissions.

The Environment Agency has calculated that when household and water company emissions are considered together, 89% of emissions in the water system can be attributed to ‘water in the home’, which includes energy for heating water but excludes space/central heating.

The remaining 11% of emissions originate from abstracting, treating and supplying water, and subsequent wastewater treatment.

The Agency recommends, in its last bulletin on the subject, that any proposed supply options, such as a new reservoir or desalination plant, must be evaluated on a scheme by scheme assessment basis so to select the lowest carbon solution.

But the White Paper fails to address these concerns, except to say that some domestic water conservation measures, such as paying for water butts, will be covered by the Green Deal.

Catchment area management

Many of the policies in the White Paper also stem from the EU Water Framework Directive, which represents a long-term, sensible and radical overhaul of Europe's water management systems.

The White Paper takes credit for fostering a change to the way our water resources are managed to a catchment area-based system. This is actually the system that has been developed for the last twelve years in the Water Framework Directive (the Framework documents call it a River Basin Management Plan).

The reason for this approach is that water does not respect administrative boundaries, whether local authority or national ones, so only a catchment-based management system makes sense.

It means that neighbouring local authorities sharing the same catchment area must cooperate over its management.

According to the timetable of the Water Framework Directive, pricing policies at a national level should have been set in 2010 and operational programmes of measures are due to be introduced next year, with environmental objectives having been met by 2015.

Defra's White Paper acknowledges that the Environment Agency is already carrying out ten pilot schemes to test catchment-based management and is pressurising water companies to meet their obligations to produce River Basin Management Plans.

Farmers are being encouraged to change their land management processes to reduce contamination of waterways, particularly from nitrate pollution, and Defra is looking into simplifying the red tape regulating this area.

The government is also trying to get reforms made to the Common Agricultural Policy to help farmers adopt more of a custodial role for the natural environment.

More deferred action

Urban diffuse pollution of water courses is also a problem. Unfortunately its solution is being deferred; this is not tackled in today's paper but will be subject to a different national strategy to be published next year.

The Paper also outlines methods to improve bathing water standards around the U.K.'s coast; but they won't come in until 2015.

Water companies will have more pressure put on them to restore abstraction from their waterways to more sustainable levels in the price review process, but again this will be subject to a separate consultation next year, along with one on national standards for SuDS (Sustainable urban drainage systems) and a new approval system for sustainable drainage.

A National Policy Statement for Waste Water is also expected imminently. This will look at how planning for new sewage treatment facilities should be managed.

At the same time, Defra will look at using its powers to remove permission given to water companies to abstract water, without having to give them compensation for doing so. Barriers to trading in abstraction licences will also be reduced.

Water meters?

There has been much talk about whether water meters should be compulsorily introduced everywhere, for example in the Walker Review, of the water industry, and whether smart meters could be used which would benefit consumers through reduced costs.

The White Paper argues that it should be up to water companies themselves to decide whether to install meters in people's homes.

The draft Water Bill will be published in early 2012.

Defra takes on DECC over energy-from-waste

Environment Secretary Caroline Spelman has pitched herself against Government policy on energy-from-waste (EfW) plants by withdrawing support for such a plant in Kings Lynn, Norfolk.

At the same time, DECC, in its new consultation on the Renewables Obligation, is ignoring advice from its own consultants that EfW should receive no financial support and is instead proposing plants receive half a ROC of subsidy per megawatt generated.

Mrs Spelman took the unprecedented step yesterday of withholding £169m of PFI credits from Norfolk County Council's project at Saddlebow, near King’s Lynn, saying that she wanted more information about environmental impacts, the Council's waste strategy and a greater consensus that the plan should proceed amongst the local population.

The Conservative-controlled Council has reacted with fury, accusing her of causing "chaos".

Bill Borrett, its cabinet member for environment and waste, said: "After years of carefully following the criteria laid down, this apparent late moving of the goalposts has surprised and dismayed us.

"Worse, we are concerned it may lose Norfolk people as a whole a government grant worth a staggering £169m."

In fact, a statement said they were expecting "in the region of £500 million over 25 years".

The project is already suspended pending a High Court hearing on December 5th, brought by opponents, to determine whether it should be subject to a full Judicial Review.

The winning bid for the plant's construction, out of ten initial submissions, was from a consortium of Cory and American energy-from-waste specialist Wheelabrator.

Apart from domestic waste, the proposed plant would also process commercial waste that would otherwise go to landfill.

Opposition

In her letter to the Council Mrs Spelman gives as the reason for her decision that she is not satisfied that its waste management strategy has popular support.

At the public enquiry stage, a record 2,592 responses were received, of which 2,524 (97.4%) objected to the incinerator and 27 (1%) supported it.

93 parish and town councils also responded, of which 61 (65.6%) were opposed and nine (9.7%) in favour.

Mrs Spelman's stance is supported by two local Tory MPs, Elizabeth Truss, and Henry Bellingham.

Bellingham and Kings Lynn Borough Council recently held a referendum on the topic in which 93% (65,000) voted against the proposal for economic, environmental and health reasons.

Financial support for EfW

Government waste policy is currently weighted in favour of incineration and uses PFI credits to support projects.

They have been allocated to 32 waste treatment plants (mostly, but not all, incinerators), and, although called credits, they do not have to be repaid, making them effectively grants.

The PFI credit for the proposed incinerator at King’s Lynn is worth about £40 per tonne.

A Government paper on EfW published in July notes that PFI credits worth £2.48 billion have been committed to 37 waste projects.

There are additional projects in the application process, for which it is expected a further £0.8 billion PFI credits will be awarded.

Norfolk Council also stands to benefit from landfill tax avoidance of £56 per tonne, rising by £8 per tonne for each of the next three years and an average of £110 per tonne over the incinerator's 25 year life.

Then there would be the income from a gate fee of an estimated £77/tonne and from the expected power generation from the Combined Heat and Power plant of 22MW of electricity and 20.4MW of heat, some of which will be used by a paper mill next door.

DECC rejects advice on support for EfW

DECC has received evidence from consultants Arup that EfW should receive no financial support from Renewable Obligation Certificates (ROCs), but is choosing to ignore it.

In its latest consultation on proposals for the levels of banded support under the Renewables Obligation for 2013-17, published yesterday, it says that it is rejecting this advice on the grounds of supporting renewable energy and jobs, because EfW plants have high initial capital costs.

It is proposing that the support goes from the current 1 ROC, (costing £8.7m per year from 2016/17 onwards) to 0.5 ROCs.

It also expresses hope that the level of renewable electricity generation capacity from energy from waste CHP could reach around 60-70MW by 2020, and around 100-130MW by 2030.

"This level of deployment could potentially generate in the region of 0.3-0.4TWh/y of renewable electricity by 2020 rising to around 0.6-0.8TWh/y in 2030", they say.

Critics say that such a policy locks the UK into an unsustainable route, and that such energy is not truly renewable.

By halting the Council's plans in Norfolk, it looks as though Mrs Spelman sides with these critics against DECC.

The dilemma of waste or recycle

The dilemma experienced by Norfolk is being felt in many cash-strapped councils around the country: if there is cash for EfW - why shouldn't they accept it?

410,000 tonnes of municipal rubbish is produced in Norfolk every year and the county has a recycling rate of 43%.

The incinerator would need 170,000 tonnes of waste every year for 25 years.

The Council calculates that after incineration of 170,000 tonnes, there is sufficient margin left of the 410,000 tonnes total to meet recycling targets.

But the waste hierarchy that is key to the Waste Review prioritises reduction, re-use and recycling, and it is likely that in the future ways of reducing the level of absolute rubbish will be found, making it hard to meet the national appetite for burnable waste should many of these plants be built.

Waste destroyed in an incinerator will be replaced, requiring new raw materials, manufacture, transport and packaging.

By contrast, reduction, reuse and recycling represent a win-win strategy. A number of cities in Europe have already achieved high levels (over 60%) of diversion of waste.

Moreover, Defra’s own paper on ”The Economics of Waste Policy" states that it is desirable that "waste is allocated to the various management options such that the social marginal cost of each option is equalised".

This is far from the case at the moment.

The social marginal cost includes the health and environmental cost of the plants.

Health and environmental effects

The Environmental Permitting (England and Wales) Regulations 2007 Updated October 2009 Version 2.0, lays out the monitoring and reporting criteria to operate a waste incineration facility.

It requires continuous monitoring of emissions to air but not of heavy metal, dioxin and furan emissions, which are only regulated by spot checks once or twice per year for 6-8 hours, under the Waste Incineration Directive.

Norfolk County Council has stated that "technology in today‘s modern energy from waste plants stops the formation of dioxins",

But the proposed plant does not use the latest technology which reduces dioxin production.

Opponents cite a 2008 dioxin breach from the Dundee incinerator, which they say illustrates how even a ‘modern’ energy from waste plant can still release dioxins over 100 times the legal limit.

Residents are also worried about smell, particulates (PM10 and PM2.5), and low level ozone.

The County Council has alleged that the incinerator would produce around one nine-hundredth of such emissions compared to other sources like traffic.

But this statistic is a national average, not a local observation.

Nationally, municipal EfW incinerators make a small contribution to the UK's total emissions because there aren't many of them.

And even the Environment Agency has identified bottom ash as potentially hazardous, which cannot be disposed of casually.

It seems that Caroline Spelman has found a way to make herself popular and support health and the environment.

But the prospects for energy-from-waste look entirely unclear.

Why does this government spend less on the environment than culture, media and sport?

Here are some interesting facts about government spending.

The Department for Energy and Climate Change (DECC) is just about the smallest government department of all.

Its annual budget is £2.52 billion, but it has to spend 48% - £1.2bn - of that on nuclear decommissioning and nuclear waste management.

Therefore the amount of DECC's budget which it is able to spend on policy is a mere £1.32bn a year.

To put this in perspective, benefit spending in Great Britain is over 100 times more at £147.7 billion.

With 1% of the benefits budget, DECC's minister, Chris Huhne, is trying to save the planet and keep the lights on.

At the same time, DECC is hamstrung by the Treasury's Levy cap, which says that its approval is needed where policies could set a "potentially expensive precedent", amongst several other conditions.

The Department of the Environment Farming and Rural Affairs, DEFRA, is also one of the government's lowest spenders at just under £3 billion annually.

This means it receives less than consultancy Capita, the Government's favourite, single largest outsourcing firm (it received £3.3bn of contracts over the first five months of the Coalition Government alone).

Together, DECC and DEFRA's combined budget is less than that of the Department for Culture, Media and Sport's £6.97 billion.

Think about that: to this government, culture, media and sport is worth more than energy, environment and climate change.

Together, these departments are therefore pitching above their weight against the contrary inclinations of their main adversaries: the Treasury officials, with a budget of over £40 billion; and BIS, which has £26.25 billion to spend every year.

(Let's recall that the Treasury's last Budget was labeled the "blackest in living memory" by George Monbiot, and 79% of BusinessGreen website users agreed.)

In last year's Spending Review, Defra eagerly volunteered to deliver savings of £661m by 2015.

The budget for its arm's-length bodies was slashed by over 30% and led to the merging of WRAP and Envirowise with a 37.5% reduced budget and just 11 remaining ALBs.

WRAP and (DECC's arm's-length-body) the Carbon Trust are to have all their direct funding cut from April next year and have to bid competitively for contracts to do their work.

Is this the greenest government ever?

UK public buildings waste millions on energy

Last week, David Cameron, not for the first time, said that government departments and publicly-funded bodies must improve their energy efficiency in order to save public money and become greener.

Now, thanks to freedom of information requests, the Centre for Sustainable Energy has made it possible for us to see exactly how all these buildings are actually performing.

Alarmingly, some of the worst offenders are in the environment sector and some appear not to have submitted data at all: neither the Department for Energy and Climate Change (DECC) nor the Treasury are amongst the government offices included in the list of tens of thousands of buildings.

However, the Department of the Environment, Farming and Rural Affairs (DEFRA) is, and its offices at 3-8 Whitehall Place achieve a miserable G. Some of its properties are better, including one in Norfolk which manages to achieve B, but the vast majority are below average.

By law, all public buildings of over 1,000m2 must display Display Energy Certificates. These grade the performance of buildings' energy efficiency in terms of CO2 emissions from A - (below 25 tonnes of CO2 per year) the best, to G - the worst (over 150 tonnes).

Disappointingly, there are just 142 A-rated buildings out of a total of 40,147. They include Birmingham City Council, Crown Prosecution Service buildings in Bradford, Leeds and Derby, English Heritage, H M Customs & Excise building in Ipswich, Parcelforce Worldwide and a couple of Royal Mail buildings, Royal Holloway University of London, the Science Museum Swindon.

Compared to this there are 6,112 G-rated buildings. The worst offenders amongst national bodies here are, sadly, the Environment Agency (3 buildings) and Defra (9 buildings including incl. 3-8 Whitehall Place). In addition, the Royal Mail, NHS, MoD, Metropolitan Police, HSE, HPA, FCO, DWP, DoH, DfT, Department for National Savings, CPS and the Benefits Agency all feature prominently as poor performers.

Of the national government departments, there are only a few with a B as well. HMR&C comes out on top with 8 buildings (although it also has 141 G rated ones) and there are also a DSS building in Cheltenham, with 9 Job Centre Plus shops, a disability benefit centre in Bristol and a Defra building in Alnwick.

The Department of Health, which really needs to save money, achieved only F and two Gs on its London buildings while none of the 18 DSS buildings got better than C, with one exception, a B.

There are clearly plenty of opportunities to reduce the energy bills of the government estate and save carbon emissions.

When a building receives its certificate, the buildings facility manager or energy manager will receive at the same time, a report advising them on what measures they can take to improve the performance of the building. This comes complete with payback time estimates for different measures to make it easy for them.

Amongst the measures that can be taken include those at little or no cost such as installing low-energy lightbulbs and turning off equipment when not used, not to mention switching to a renewable energy electricity tariff. Advice on these and other measures are available from the government-funded Carbon Trust.

Did Spelman invite GM firm to join Green Economy Council?

Why has a GM firm been invited to join a new body set up to liaise with three government departments on developing the 'green economy'?

At the Green Economy Council's first meeting, held yesterday, amongst the 23 representatives from the sector was one of the world's top companies developing genetically modified seeds - Syngenta - which, despite being Swiss, likes to think of itself as the "British Monsanto".

Its Chief Scientist, Mike Bushell, met with ministers including Caroline Spelman and Vince Cable from the Department for Business, Innovation & Skills (BIS), the Department of Energy and Climate Change (DECC) and the Department for Environment, Food and Rural Affairs (Defra).

Syngenta, formed in 2000 from a takeover of Novartis, is one of the world's top four seed patent owners (with Dupont and Bayer), who between them control more than half of the world’s seed patents.

It is also one of the big three companies looking to commercialise GM crops in the UK in the near future. They have have carried out a small number of GM crop research trials in the UK including research into Genetic Use Restriction Technologies (GURTS/traitor technology) and GM wheat.

It has been called "perhaps the most successful GM crops company at co-opting the sustainable development agenda" (by Corporate Watch).

Bushell might have been co-opted onto the forum because of the company's backing of research into the causes of the epidemic facing honey bees.

However, Caroline Spelman, Defra's beleaguered minister, is a known supporter of GM. Until 2009 she was a director of the food and biotechnology lobbying company Spelman, Cormack and Associates, which she set with her husband, Mark Spelman, in 1989.

Spelman and Syngenta are not strangers. Last month, the Final Report of the Foresight Global Food and Farming Futures Project was published by BIS. Spelman co-wrote the foreword to it.

It highlights GM crops as one solution to the threat of food security, and in particular a "public-private partnership between Syngenta and the International Maize and Wheat Improvement Center (CIMMYT) [that] will focus on the development and advancement of technology in wheat through joint research and development in the areas of native and GM traits".

Most of the British public remains to be convinced what GM crops have to do with sustainable development, social equality or environmental caretaking - the only green thing about Syngenta's GM activities is that they grow seeds.

Will the "greenest government ever" preside over a 'blackout Britain'?

Before the election, the energy sector and the CBI by and large supported a policy programme that promised to "keep the lights on" and build a low carbon economy.

In five to ten years' time some current coal and nuclear power stations may have to be mothballed and there is now doubt that new nuclear power stations - which anyway would not be producing power for 15 years - will now be built, as Chris Huhne is known not to favour spending public money on them.

Add this to the cuts in both DECC's and Defra's budgets, and there is concern over a possible 'energy gap' looming.

The Energy Gap

“We need to explore alternative ways to combat this shortfall, such as building green oil power plants that  run off of sustainable oil, waste to energy systems that use all municipal solid waste (MSW) to generate electricity, which means there is no need for consumers to sort out their waste," said David Weaver, CEO of clean-tech company Ultra Green.
 
“These kinds of projects can be completed and producing power within five years. However, we need government support in the form of development grants and guarantees to accelerate the Britain’s renewables growth programme.”

We have already seen the loss of the Low Carbon Buildings Programme (LCBP) grants which will adversely affect the renewable heat sector (see my previous blog post).

An energy efficiency drive will reduce the rate of increase in demand for electricity.

But the sector requires immediately huge input in research, development, infrastructure and plant to quickly evolve a low carbon energy supply mix that meets future demand and bridges the energy gap.

Furthermore, the Queen's Speech contains bills that could have a negative impact on the UK’s energy and environmental sector.

Planning issues

A Devolution and Localism Bill, which will give local councils more control, could affect onshore renewable energy projects, by giving more power to NIMBYs.

Greg Clark, Minister for Decentralisation, said, "This Bill would reverse years of creeping state control and return power to people, communities and councils."

But the vast majority of councils which have rejected wind farm planning applications across the country have historically been Tory held.

One commentator, Howard Thomas, said on a government website that the coalition policy on ensuring 'sustainable development’ in planning is too vague and requires clarity. He called for "a clause in planning policy statements that every new development must not increase global-warming emissions and should save on them".

Loss of support

There's also the Public Bodies (Reform) Bill, which promises to do the opposite to the Localism Bill - centralise power by abolishing, merging or transferring quangos back into Departments.

Cutting quangos like The Carbon Trust, The Technology Strategy Board and its Knowledge Transfer Networks, and WRAP could seriously affect low carbon delivery objectives.

This could result in the loss of support for emerging tender shoots of nascent low carbon technologies.

Green Belt campaigner and serial expenses abuser is new Defra chief

Caroline Spelman has joined the Cabinet as one of the few women members and is the new Secretary of State for Environment, Food and Rural Affairs - Defra.

She is MP for Meriden in the West Midlands and was once the Conservative party chairman (Jul 2007 - Jan 2009) but was removed during the expenses scandal.

During that time she was forced to apologise and pay back £9,600 of Commons allowances she 'inadvertently' misused to pay her children's nanny.

She also faced questions over her Commons expenses after pocketing £40,000 to run her Georgian mansion, claiming it was her 'second' home - allowing her to claim a small fortune of taxpayers' cash for cleaning and bills - while her husband Mark claimed it was his main home during his unsuccessful bid to become a Conservative MEP in this month's European elections.

And she overclaimed £200 for council tax which she has paid back. She said it was a 'one-off administrative oversight'.

More recently she has kept well within her expenses limit.

Previous attitudes

According to They Work For You, she has voted "very strongly" for laws to stop climate change and for replacing Trident - opposing her new Liberal Democrat colleagues.

She also appears to have been confused about what to do with the House of Lords having voted both "strongly" against removing hereditary peers from the House of Lords and "strongly" for a wholly elected House of Lords.

Previous posts she has held are:

• Shadow communities and local government secretary since Jan 2009

• Shadow secretary of state for communities and local government (Dec 2005 - Jul 2007)

• Shadow secretary of state for local and devolved government (Mar 2004 - Dec 2005)

• Opposition spokesperson, environment and shadow minister for women (Nov 2003 - Mar 2004)

• Opposition spokesperson, international development (Sep 2001 - Nov 2003).

Why has she been chosen for Defra?

Defra says that before then Mrs Spelman had an extensive career in the agriculture sector, with fifteen years in the agriculture industry and in-depth experience of the international arena, including as deputy director of the International Confederation of European Beet Growers and a research fellow for the Centre for European Agricultural Studies.

She has also authored a book on the non-food use of agricultural products.

She has a particular interest in preserving the "green belt" and housing.

On her website she writes "Striking an appropriate balance between the sustainance of rural character and the allowance of urban growth is a particularly sensitive issue in the Meriden Constituency.

"I was elected with a pledge to try and defend the Green belt and find myself in a pitched battle with the Government's planning rules."

She has campaigned against ‘garden developments’ or ‘garden grabbing’, arguing that “Currently, gardens are not protected as ‘green space’, but are treated as ‘Brownfield land’. What is needed is clarification of the definition of ‘Brownfield Land’”.

This is something that I blogged about last week, as an area that the coalition will need to look at.

She introduced a Private Members’ Bill in Parliament at the end of 2006 which would protect these green spaces and adjust planning rules so as to take this need into consideration.

Hopefully this is something she is in a better position to see through now.

With her obvious lack of experience and questionable judgment she will need to sharpen up quickly, before she gets eaten by farmers and waste disposal engineers.

Heathrow Third Terminal social cost - three times higher than Government figure

The Environmental Audit Committee on December 4 heard Friends of the Earth and WWF say that

The figure for the economic cost of carbon emissions — the future cost of climate change - being used by the Government to justify developments like Hathrow's third terminal - is nearly three times lower than Sir Nicholas Stern recommended.

Stern cites a figure for the social cost of carbon in 2000 of $85 per tonne of CO2 equivalent.

Using DEFRA's exchange rate, Friends of the Earth calculated that that equates to £53 per tonne of CO2 equivalent.

But DEFRA has introduced a new concept — "the shadow cost of carbon" — and puts the 2000 value of that at only £19, which is nearly three times lower.

What does this mean?

It gives us a social cost of carbon emissions in the Heathrow consultation of just £4.8 billion.

If DEFRA and the Department for Transport had stuck to Sir Nicholas Stern’s figure, they would have put the cost at more than £13 billion.

That would have stopped in its tracks the proposal for a third runway at Heathrow.

Although carbon emissions are rising year on year — and have risen since the Government came to power — they have given the green light to one of the very projects that will stop them meeting their own targets.

The cost to the environment and, as Sir Nicholas Stern pointed out, to the economy will be huge.

Government says 'yes' to feed-in tarriffs - or does it?

The use of feed-in tariffs as an incentive for microgeneration, which have proved so successful in Germany, "will be investigated", according to a press release from Defra*.

The announcement was buried deep within a release about home energy use advice on 18 November, but is the first time that such a positive statement has been made by the government on the issue.

This will be welcomed by many people - but there's one thing wrong with the announcement - it shouldn't have been made! Someone in Defra dropped a clanger.

Many and loud have been the clamours for such a tarriff over the years, from the industry - eg the Renewable Energy Association - but also recently both the Conservatives and the LibDems have made it their policy. The reason for it is that countries which have such a tarriff have generated robust renewables industries, and it's been highly effective in increasing the amount of renewable electricity generated, combating climate change and helping countries meet EU targets.

The reason the Treasury has rejected it for years and years is, of course, the cost: up to eight times the current subsidy level.

The feed-in model guarantees producers a fixed price - 49 euro cents for a KW/h photovoltaic electricity in Germany and Italy, and 50 cents in Greece - for electricity generated from PVs. It was introduced in Germany in 2000, and revised in 2004 to cover the full costs involved in producing solar electricity, sparking a boom. Germany will have almost 20 times as much PV by the end of 2007 as in 2000 when there was just 44MW, according to the German Solar Industry Association. It has led to around 800,000 properties having the technology installed and 55 percent of the world's photovoltaic power is generated on solar panels set up between the Baltic Sea and the Black Forest.

In the UK we have the Renewables Obligation, which compels suppliers to purchase an increasing proportion of electricity from renewable sources. In 2006/07 it is 6.7% (2.6% in Northern Ireland) and will rise to 10.4% by the period 2011-12, then by 1% annually for the five years following. It has often been criticised for being ineffective, bureaucratic, slow, and in particular excluding small generators such as householders.

However, when I sought clarity for the announcement and more details from Defra, I was referred to BERR, being responsible for energy, as the press office knew nothing about it.

The spokesperson for BERR went away to investigate, and came back to say there was no work, no plans, and certainly no policy at the moment on feed-in tarrifs, and no idea why Defra stuck this in.

I should go back and ask Defra.

Back there, I asked Kate Belson at Defra to dig into it and eventually she came back and announced that the announcement "was just stuck in as an example of all the things we'll be considering" to encourage microgeneration.

It was included merely as an illustration. I wonder why that was picked out in particular.

So, sadly, don't get excited.

Defra is slightly more radical than the Treasury or BERR, so perhaps they're being cheeky. All the same, campaigners for feed-ins should use this as a lever for what it's worth and press the government on exactly what investigations they WILL be pursuing.

[* the announcement is buried as the third bullet point in the second list of bullet points.]

Cutbacks at Defra as environment high on agenda

Defra, the government department responsible for farming, rural affairs, waste, pollution, and climate change, is planning to cut its budget by £300m, at a time when several important pieces of legislation - notably the Climate Change Bill - is going through Parliament.

The Guardian reports today that "frontline agencies tackling recycling, nature protection, energy saving, carbon emissions and safeguarding the environment are all being targeted in the package which is being drawn up by Helen Ghosh, Defra's top civil servant."

Defra cocked up its compensation payments to farmers and lost £200m in the last year, and recent flooding and farm animal disease crises have dented its budget more, while the Treasury is denying more funds.

The many agencies funded by Defra will have to tighten their belts, except for flood prevention, and Tom Oliver of the Campaign to Protect Rural England said the cuts questioned the government's credibility in its attitude to the environment.

The Defra-branded magazine I write for is being cancelled at the end of the financial year. This sends out valuable sustainable resource and energy management support and information to large companies, local authorities, smaller businesses, CEOs and Technical Staff, particularly from Defra's agencies, but also from many other sources.

I had an editorial meeting at Defra on Thursday at which the news was broken as the Policy Chief responsible for it, Charles Harkness, is simultaneously retiring.

There are no plans to replace it. The reason given for cancellation was "to re-evaluate the cost-effectiveness of our channels of comunication with stakeholders".

At a time when concern for the environment is at an all-time high this is an odd decision.

Ten Alps, owned by Bob Geldof, publishes the magazine through its contract magazine publishing business.