Quick Verdict:
The Chancellor has done nothing to challenge perceptions that he has little or no time for renewables and is desperate to trigger a new "dash for gas" based on a shale gas boom. More funding for some green infrastructure and science projects will be welcomed, but this will be offset by inevitable cuts to departmental budgets.
Much of the focus will now be on the gas strategy and the Chancellor's gamble that shale gas in the UK can really bring down energy costs and not completely derail decarbonisation. It is a staggering gamble given the fact we still do not have a single shale gas project in the UK and any new projects will face significant political and public opposition.
The Guardian's Damian Carrington. "Osborne forecasting negative growth again, unlike green economy which is 8% of GDP".
Gas strategy and shale gas tax breaks
As widely expected, the chancellor said the government would publish its
gas strategy on Wednesday. This would "ensure we make the best use of lower cost gas power, including new sources of gas under the land [ie shale gas]," he said. On Tuesday, the government's climate advisers called the high gas scenario in Osborne's strategy a "plan Z" that is "completely incompatible" with climate change targets.
He also confirmed that the government was still consulting on new tax incentives for shale gas – at the Tory party conference he said such incentives would be "generous". A decision on whether to lift a suspension on fracking for shale gas in the UK is expected in the next two weeks.
Osborne confirmed that there would be a single office for unconventional gas so "regulation is safe but simple". He added, in almost word-for-word repeat of his party conference speech: "We don't want British families and businesses to be left behind as gas prices tumble on the other side of the Atlantic [due to the US shale gas boom]."
Flood defences
Osborne said the government would be "delivering on flood defence schemes in more cities." This
appears to be a reference to the £120m in new flood defences announced last Friday.
Green investment bank
National debt will not start falling now until 2016-17, according to the Office for Budget Responsibility's forecasts. That means the recently launched green investment bank will not be able to borrow until then.
Roads and petrol
Osborne announced an extra £1bn of funding for road schemes, in particular four new major projects. He also cancelled the 3p rise in fuel duty due in January 2013. "That is a real help with the cost of living for families as they up their cars across the country," he said. "It means that under this governments they have had no increase in petrol taxes for nearly two-and-a-half years."
Renewable energy
Clean energy would be an infrastructure priority on a par with roads and broadband, he said today. "I also want to see investment in our world-leading energy sector including renewables," he said, adding that "renewable energy will play a crucial part in Britain's energy mix but I will always be alert to the costs we're asking families, business to bear." He recapped the establishment of the green investment bank and plans to introduce a carbon floor price from April 2013. No new funds were offered for green energy, however.
Air passenger duty (APD) rise
A rise in the environmental tax on flights, APD, went ahead as planned, despite a last-minute lobbying push by airlines. Duty will rise 8% this year, eventually rising 50% by 2016.
Planning reforms
Britain will earn its way in the world through "new growth-friendly planning laws," the chancellor said. Next Tuesday the government will publish the results of its controversial planning reforms, the national planning policy framework, he said. It would feature a "presumption in favour of sustainable development while protecting our most precious environments," a statement that will infuriate green groups who say such sustainable development is poorly defined and biased towards economic development. He called it the biggest reduction of business red tape ever undertaken.
Airport expansion
The budget statement seemed to suggest a U-turn on the government's stance on airport expansion. "We must confront the lack of airport capacity in south-east England – the transport secretary will set out government thinking later this summer," the chancellor said. However, the
2010 coalition agreement pledged to cancel the third runway at Heathrow and refuse permission for additional strips at Gatwick and Stansted.
CRC reform
In the 2012 budget, George Osborne said he would abolish or reform a green tax on big energy users called the Carbon Reduction Commitment (CRC). In the autumn statement, it was confirmed that this tax would be retained, but simplified in 2013. "The CRC's performance league table will be abolished, to simplify the scheme further. A full review of the effectiveness of the CRC will be held in 2016 and the tax will be a high priority for removal when the public finances allow."
Reaction
John Sauven, executive director of Greenpeace: "This was a bad day for the environment. Support for British manufacturing, green jobs and greening the economy should have been the cornerstone of Osborne's budget. Instead we got a polluters' charter. The chancellor performed a carbon-belching U-turn by supporting airport expansion in the south-east, before handing tax breaks to an oil industry that's already making billions in profits and a cash bung to the very same oil industry to drill in our fragile seas."
Friends of the Earth's executive director, Andy Atkins: "This budget 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. Safeguarding our environment and growing a strong economy go hand-in-hand – but the chancellor has fired the starting pistol for more roads, airports and gas power that will keep the UK hooked on costly fossil fuels for decades to come."
