Emergency budget 2010 - Energy & Industrials

The measures which will impact the energy and industrials sector did not fit the tone of the rest of the Budget, with nothing particularly groundbreaking announced. What is clear is that the Government wishes to incentivise both business and consumers to make progress to a low carbon economy and hit increasingly stringent emissions targets.

For business, the Green Investment Bank and a reformed Climate Change Levy will be the tools by which the Government will encourage investment in politically palatable forms of energy, whereas it is hoped that households will be attracted by the Green Deal.

Announcements of interest:

·         Carbon price – The Government will publish proposals in the autumn to reform the Climate Change Levy, in order to provide more certainty and support to the carbon price. These will be the subject of consultation, with the relevant legislation coming through in the 2011 Finance Bill.

·         Green Investment Bank – The Government is taking forward this idea (first mooted by the previous government), promising to come forward with detailed proposals on the creation of the bank. It is currently looking at a wide range of options for the scope/structure of the bank, based on effectiveness, affordability and transparency.

·         Green Deal for households – Through measures in the forthcoming Energy Security and Green Economy Bill, the Government wants to help people invest in home energy efficiency improvements, to be repaid through savings on energy bills.

·         UK oil and gas fiscal regime – The Government will take forward discussions with the oil and gas industry to ensure the tax regime encourages continuing investment and exploitation of remaining resources in the North Sea.

·         Fair fuel stabiliser – The Government has asked the Office for Budget Responsibility to assess the effect of oil price fluctuations on the public finances. Based on the outcome of this, it will look at options for the design of a fair fuel stabiliser.

·         Air transport – The Government will look at changes to the aviation tax system, including switching from per passenger to per plane duty to encourage fuller planes.