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Budget 2013: Chancellor George Osborne supports shale gas and CCS, but ignores cleantech

Posted on 21 March 2013

The chancellor, George Osborne, announced support for carbon capture
and storage, shale gas and new high energy-using industries in his
Budget 2013.

However, the chancellor largely ignored the low carbon sector,
despite the fact that it provided one third of all UK growth between

The chancellor confirmed further spending on infrastructure projects,
but capital spending is still due to full-back in 2014-15 by £3bn from

"Creating a low carbon economy should be done in a way that creates
jobs," he said, announcing support for two major carbon capture and
storage projects; this represents the next step in the £1bn CCS
commercialisation programme.

There will also be tax incentives for the purchase of ultralow carbon
vehicles, of 5% in 2015-16, 25% in 2016-17, and 35% in 2017-18.

Capital allowances for energy and water efficient technologies will
also be increased by 25% in 2015-16, 30% in 2016-17 and 20% 2017-18.

Tax relief will continue for high energy-consuming industries, and
for the first time industrial processes in the metallurgical and
mineralogical and ceramics industry will be exempted from carbon taxes.
The 2015-16 carbon price support rates will be equivalent to £18.08 per
tonne of carbon dioxide in line with the carbon price floor set out at
Budget 2011.

He also announced a new tax regime to promote early investment in
shale gas. "Shale gas is part of the future," said Osborne. A new field
allowance for shale gas is to be given and an extension of the Ring
Fence Expenditure Supplement for shale gas projects from 6 to 10 years.
The government is to consult on the detail of these measures, including
whether they should be extended to other forms of unconventional onshore

Fuel duty will remain the same in September, not be increased.

The chancellor praised the aerospace and car manufacturing
industries, and promised new support for media companies in the
animation and film industries.

The government is also to put £500m towards other sectors such as the
automobile industry and agriculture technology. The low carbon
industries will benefit from other more general measures announced by
the chancellor.

Enterprise investment schemes are to be extended to promote inward
investment into the UK. Further tax relief for social enterprises are
also to be implemented.

Corporation tax will be cut from 21% next year to 20% the following
year. "This is the lowest business tax of any major economy in the
world," the chancellor said.

This complements a major simplification of red tape for small businesses.

Commenting on the budget, Greenpeace executive director John Sauven
said: “This was a twentieth-century budget for a twentieth-first century
economy. We got tax breaks for polluters and almost complete
disinterest in the green economy, one of the only sectors that has
consistently delivered jobs and growth in recent years.

"British businesses stand poised to become dominant forces in the
global clean energy market, but they’re being undermined by a Chancellor
who seems increasingly ill-suited to the times we live in. This man
lacks a vision.”

Responding to the chancellor’s announcement of tax breaks for the
shale gas industry, Greenpeace energy campaigner Lawrence Carter said:
“The chancellor is slashing public services with one hand while gifting
tax breaks to the fossil fuel industry with the other. This is unfair on
struggling households, especially when everyone from the energy
regulator Ofgem to BP to the Energy Secretary say UK fracking won’t
bring down bills.”

The chancellor defended his record. "It has taken longer than anyone
thought," to beat the recession, he said, "but we will get there".

The Eurozone will remain in recession for another year, accounting
for 40% of British exports, he said, but exports have increased to the
rest of the world.

He said there were six jobs created in the private sector for every
one job lost in the public sector. The OBR expects 600,000 more jobs in
the next year to be created.

The public spending deficit has fallen from 11.3% to 7.4% forecast
for this year, and the fall is expected to reach 2.2% by 2017-18.
Borrowing has also fallen.

Government spending is to be further cut. An underspend of over £11bn
by government departments is already forecast for this year. Most
departments will be subject to a 1% reduction in spending per year from
now on. However, 0.7% of GDP will be spent on foreign aid, unchanged
from today.

There will be a 1% freeze on pay rises until 2015 in the public sector. The defence department is exempted from this.

The annual managed expenditure of government departments will have
further controls put upon it. Further details will be set out in June.

He also announced a further clampdown on tax avoidance measures
including offshore employment scams. He promised to name and shame the
promoters of tax avoidance schemes.


Source: Link2Portal