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The Chancellor brings his 'Green Box' to COP26
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Budget was a missed opportunity for green taxes

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Sheena McGuinness is surprised that the Chancellor did not present more of a green focused Budget, and she has some suggestions for remedying the situation.

4th Nov 2021
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Rishi Sunak yesterday announced the government's plans to move towards making it mandatory for firms to set out “a clear and deliverable plan” on how they will decarbonise and transition to net zero.

News that the UK will become “the first ever net zero aligned financial centre” was the Chancellor’s headline announcement in Glasgow at Cop26.

However, Sunak missed an opportunity in last week’s Budget to further cement the UK’s plans to deliver a greener financial system.

In terms of what was said in the distinctly lacklustre Autumn Budget for green fiscal incentives, only about £30bn of funding was allocated to the government’s net zero. Green bonds, green finance, wind investment and innovation were mentioned, but overall it was limited in terms of environmental tax changes.

Backward and forward steps

Some would argue that the 50% reduction to air passenger duty (APD) rates for domestic flights, the freezes in fuel duty, carbon price support rates and aggregates levy are all backward steps toward net zero.

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However, the business rate exemptions and relief in England for eligible green technologies and plant to support the decarbonisation of non-domestic buildings is a welcome change. Until now hospitals, schools and businesses faced higher business rates where they had installed solar panels on their buildings. The government is also pressing ahead with the plastic packaging tax and it did announce a new rate of APD for ultra-long haul flights.

Transport is key

As the number of petrol and diesel cars decline, we are going to see a large budgetary deficit as fuel duty revenues decrease. Despite the fuel duty freeze, these currently provide about £27.5bn per annum. Whilst electric vehicles (EVs) are seen as helping to lower carbon emissions there is currently no sign from the government as to how it will replace that £27.5bn loss of tax revenue.

Yet among the ‘build back greener’ announcements are investments to improve infrastructure for EVs (charging points), public transport and funding for zero emission buses.

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Replies (13)

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By Nebs
05th Nov 2021 10:08

Given that the one problem facing the planet is overpopulation - solve that one and everything else solves itself - I'd suggest an extra 5p on national insurance rates for each child after the second that you are responsible for creating.

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By Michael C Feltham
05th Nov 2021 10:39

I would suggest that the very first step, would be to address the insane level of sovereign risk debt!

Playing with a budget on narrow grounds and tinkering around the edges is all every chancellor has been doing for far too many years! Plus larding taxation with political concepts, which is stupidity.

In any case, before any major decision of value could be taken, first an holistic strategy is essential. At present there isn't one! Bozo the Clown and his cabal of fools are throwing out sound bites and nice greeny ideas.

Electric Cars; Air Source Heating using electricity; Hydrogen heating and commercial vehicles...yet no cohesive developed plan for generation of sufficient electrical energy for the forward demand!

As an example, JCB's recent deal with an Australian company for hydrogen supplies is fine: except no figures have been supplied for the transport cost. Hydrogen taken from the atmosphere uses what are called Electrolysers, which are based upon the concept of electrolysis, if you remember your school science.
However, electrolysers need err, more electricity! The Australian company use a combination of wind power and their abundant solar energy for huge arrays.

Now, without all these clever gadgets and concepts and limited volumes of EVs, we are informed by UK power generators that we face power cuts this Winter!

Final comment: Green Electricity:

"Offsetting fossil fuels:

One key concern raised about green energy tariffs is that suppliers make the claim after paying to obtain certificates that "offset" fossil fuels. When an renewable unit of electricity is generated - for example, by a wind turbine - energy regulator Ofgem issues a Renewable Energy Guarantee of Origin (REGO) to the firm owning the wind turbine, to prove that this energy is green. That firm is then allowed to sell both the electricity and the certificate separately. There is a marketplace where leftover REGOs are traded, and there are enough of them "going spare" to allow energy suppliers to cover the proportion of fossil fuels they sell to customers on each tariff. Each certificate costs just £1 or £2 per customer per year, meaning an energy supplier can make electricity from the wholesale market, which includes fossil fuels, look entirely green, at an affordable price."

Source BBC.

Thus a nasty coal fired power generator can hoover up bits of paper and suddenly, et voila! they are supplying "100% Green Energy"!

Utter insanity.

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By matthewleitch
05th Nov 2021 11:34

The effect of incentives is surely greater when there are many people with the expert technological skills to implement more sustainable technology. Having more of those people is key. We need more courses at school/college/university level and more for adults retraining.

When I first read the book 'Factor Four' I was stunned by how much the authors knew about how to reduce resource consumption in so many areas of human life. From air conditioning to agriculture, from transport to wall cladding, they had ideas (with data and calculations) for seemingly everything. More people like that in the world would help to push progress along faster.

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By Mr J Andrews
05th Nov 2021 13:58

Think of all the Energy that could be saved if the additional MTD filing is flushed down the pan.

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By Abax
05th Nov 2021 15:45

COP 26 was a wasted opportunity. Chia decided to not show up. Probably because they consume over half total world production of coal of which half is burned for electricity generation. If the government was to do something really worthwhile, it would be to use the green agenda at COP26 to introduce increasing environmental tariffs on goods produced by countries that use dirty energy like coal and diesel to generate electricity.

It is one thing for your international competition to work harder and smarter. It is another when our domestic industry is hamstrung by green initiatives whilst the international competition gets away with polluting the environment to save money.

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By soundadvice
05th Nov 2021 16:06

I could not disagree more with the "missed opportunity" analysis of the budget in relation to green issues.

For me it was a great relief that more money is not going to be wasted in this pointless and wasteful pursuit of remedies to global warming and climate change.

The world seems to have been sucked into a conventional wisdom that we can do something significant about global warming and no-one is allowed to portray a contrarian view without being pilloried.

The sad thing is that many billions are going to be spent on crank solutions to global warming that will make very little difference to global warming but will take precious money away from many other more worthy causes.

Global warming is a fact and that cannot be denied, however believing that we can do anything about it and that trying to reduce CO2 emissions is the answer is the delusion alot of the world is suffering under.

The facts are that the planet produces around 800 billion tonnes of CO2 a year. Made up of 330 billion tonnes of net CO2 from the oceans, 220 billion tonnes of CO2 from plants and animals, 220 billion tonnes from soil respiration and decomposition, less than 1 billion tonnes from volcanoes and 38 billion tonnes of CO2 from human activity (fossil fuels, heating, industrial production etc)

So human activity creates less than 5% of CO2 emmissions produced by the planet.

Of this 38 billion produced by human activity just 1% is produced by the UK.

So does anyone realistically believe that any action taked by the UK Chancellor is going to make an iota of difference to global warming because I don't. Does anyone really believe that the UK setting an example to the rest of the world will make any difference?

We are just all sucked into this conventional wisdom and as often happens when this occurs logical decision making goes out of the window.

The solution for the UK is to embrace and accept what is going on and defend against it. That means for example not a single new house should be built within 10 feet of sea level from today and for the next 100 years. That could mean 10 million new homes built over 100 years none of them at the mercy of rising sea levels.

The planet will adjust to global warming in due course, it always does adjust, and we need to deal with the consequences in the mean time. Even if every country in the world achieved net zero emmissions by 2050 (which of course won't happen) then the impact on global warming is likely to be minimal.

There is, in my view, absolutely no point wasting vast sums of money on hugely expensive renewable energy schemes and white elephants like electric cars. Far better to invest in areas where we can make a difference like social care, education, health, infrastructure and finding practical ways of dealing with rising sea levels.

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Replying to soundadvice:
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By Michael C Feltham
05th Nov 2021 18:43

Excellent post, Soundadvice, thank you.

Reference sea level rise, according to the US EPA (Environmental Protection Agency) mean average global sea level rise is circa 0.14 Inches per annum.

Yet the fear mongers published just two days ago a map showing how my part of the UK would be under water and flooded within ten years. By an increase of circa 1.4 inches??

IMHO having carefully researched the facts, the whole matter of climate change is a cross between a scam (to further enrich such as Al Gore who has already made zillions from the carbon trading scam), and a prime example of The Emperor's New Clothes: which has created a panic and a state of fear, fomented by the media and those unhinged people seeking a cause.

One of the World's most qualified real climate scientists, Professor Richard Lindzen wrote:

"Future generations will wonder in bemused amazement that the early 21st century's developed world went into hysterical panic over a globally averaged temperature increase of a few tenths of a degree and, on the basis of gross exaggerations of highly uncertain computer projections combined into implausible chains of inference, proceeded to contemplate a roll-back of the industrial age."

To impoverish, yet further, Britain, when its CO2 creation is just 1% of alleged anthropogenic greenhouse gas and China's is measured at 26%, with India, Russia and Brazil et al creating far more than the UK is insanity to the level of extreme.

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Replying to soundadvice:
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By Open all hours
05th Nov 2021 19:05

You are so right. This quasi religion will one day be seen as little more than insane group think.
Me, I’m going to do my bit and turn the sun down in the hope that cooler heads prevail.

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By matthewleitch
06th Nov 2021 09:42

Some of the posts in response to the above article make the common mistake of thinking that the arguments made by hysterical activists, TV news activists, and 'striking' teenagers are representative of the reasons for moving towards sustainable technology and lifestyles.

They are not. They are for the most part adding noise and counter productive rhetoric and nastiness to a debate that is complex anyway.

The information and arguments most relevant to our decisions on sustainability are those that are correct and logical. In other words, pay attention to the best material, not the worst. There are fools on all sides of this debate.

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By matthewleitch
06th Nov 2021 09:47

Responding to climate forecasts requires us to grapple with the uncertainty involved. It is irrational to refuse to consider action because forecasts of climate change are uncertain. It is also irrational to respond only to the best estimates from models and forecasting groups.

Because we worry (legitimately) about the reliability of the models we need to respond to the full distributions of plausible outcomes. In other words, dealing with climate risk requires us to understand the risk involved (which is a product of our uncertainty) and take actions that are a good bet even when we cannot say with certainty that they are definitely required. This is just the usual logic of risk management.

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By matthewleitch
06th Nov 2021 10:02

The best reasons for implementing most of the important sustainable technologies (and associated lifestyle changes) are mostly local and not to do with climate worry. The focus on climate is, if anything, taking attention away from more important reasons. Here are two central examples:

1. Electric Vehicles are attractive first because they are great to drive. Smooth, quiet, low vibration, no gear changing, even automatically. I already drive a Toyota Yaris hybrid and that is a smooth ride, and so easy in heavy traffic as well as economical. EVs are simple and will be very reliable. Technology will improve so that energy density of batteries is better and charging is fast and cheap.

Another 'local' reason for going with EVs is that it will improve air quality in the UK, with benefits for enjoyment of walking outside in urban areas and for health. Many thousands of QALYs are lost each year due to fine particulates released from diesel engines in particular. Never mind what China does or does not do. We can have cleaner air in towns and near busy roads through our own choices in the UK. (And less noise.)

Next, it would be great to reduce our dependence on fuel provided by countries that do not like us for cultural, historical, and even religious reasons. Vehicles are the main reason why we need support from oil rich countries, mostly in the middle East. (A similar argument applies to gas from Russia but that is not related to EVs.)

2. Insulating buildings is attractive because I hate being cold. I live and work in a 1930s detached house in Surrey and in winter have to have the heating on nearly all the time. If I don't I start to feel miserable and sluggish. This is getting increasingly expensive. For contrast, my mother lives in a 1960s block and in winter only needs her heating on for about an hour a day to stay snug all the time.

I am very interested in any affordable system that can deal with the lack of cavity wall insulation in a building as old as my home. We already have thick loft insulation and double glazing, but it's not enough to be comfortable in winter.

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By matthewleitch
06th Nov 2021 10:19

In many arguments around sustainable technology investments there is confusion between the state of technology and infrastructure now and in the future. The situation now is relevant for some purchases we are making now, but more often it is the trajectory of technology that is relevant to decisions. Yes, charging an EV quickly may be expensive now but what about in a few years? Yes, charging is slow now but what about in a few years? Yes, there are technologies that rely on materials that are hard to get (e.g. mined in war torn countries) but what about in a few years? Engineers know about these problems - better than most of us - and they are looking for solutions.

Heating homes with heat pumps is a current example of this. Systems available today are expensive. Actually I would describe them as absurdly expensive when you think that they are not much more than the innards of a large fridge. Higher volume production, competition, and innovation will push these costs way down.

In the future I can imagine heat pumps and heat exchangers being standard for buildings and used for heating and cooling. Buildings will be designed to work with heat pumps, having concentric zones, each warmer than the next: cool living space, cosy living space, bathing/drying space, cooking space (i.e. oven). Each zone would have a heat exchanger to pump heat up to the next higher temperature zone. Very effective insulation in between would be in place. Heat exchangers and mechanical ventilation would be used.

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By AndrewV12
24th Nov 2021 10:48

'It is possible the Chancellor wanted to save some announcements back for the Cop26 summit, but if not, my comment on the Autumn Budget from a green taxes perspective is “could do better”.'

I am commenting post Cop 26, not many further green announcements were made.

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