Blog: Budget 2014 - a helping hand
EEF's Richard Warren argues that the 2014 Budget is a positive step ensuring the UK makes a cost-effective transition to a low-carbon economy
Some commentators viewed the energy related announcements in the 2014 Budget as a regression of climate change action and capitulation to polluters and big business. But, this is not the case.
EEF supports the need for action to cut global emissions. But, this must be done in a way that does not leave the UK with the highest carbon price, the most burdensome climate change legislation and the highest targets for which we pay a price in lost investment and jobs.
This is not to call for a reduction in UK climate change ambition, far from it as the move to a low-carbon economy is a significant business opportunity for manufacturing. It is merely recognition that we remain a long way from reaching a global binding agreement for all countries to reduce emissions, and that until we reach this point climate change policy must reflect this.
To do otherwise will do nothing to reduce global emissions and has the potential to do a great deal of damage to UK industry and encourage carbon leakage in the future. This is in no-one’s interest and why the Budget announcements are a positive step forward in terms establishing a climate change policy framework that will facilitate the transition to a low-carbon economy, while allowing UK manufacturing to benefit and contribute to this transition.
The freezing of the carbon price floor and the measures to shield our energy intensive industries from high energy costs are a common sense approach. Furthermore, they are no more or less than what other countries across the EU, Germany in particular, are doing to support their industries.
However, the measures in the Budget have done nothing to reduce the UK’s ability to meet its climate change responsibilities. We still have the highest targets in the world, we still have the highest carbon price in the world, we still have binding targets for renewables out to 2020 and will soon have binding emissions reductions targets out to 2030.
The 2030 target, will almost certainly be accompanied by an EU-wide renewables target and through the new governance structure the UK will need to demonstrate how it will contribute towards this. This may mean increased investment in renewables in the 2020s or a greater reliance on other forms of low-carbon technology. The UK climate policy framework still provides a remarkably secure investment platform for low-carbon generation and will continue to do so throughout the 2020s.
Tackling global emissions remains the ultimate prisoner’s dilemma, but we must design our policies in a manner that accurately reflects the realities we face and how that world is not how we would like it to be.
If this means accepting that limiting a global temperature rise to 2°C is no longer a realistic global target so be it. This may sound pessimistic, but it is better to be honest about what we can achieve globally then to continue to kid ourselves, not least because this will help us take more appropriate and adaptable options in the years to come.
Far from a u-turn on climate change, this year’s budget represents a realistic view of the challenge we are facing, strengthens the UK’s ability to reduce emissions and the manufacturing sector’s ability to provide the solution we all desperately want.
Read Martin Baxter's assessment of the budget which argues that the measures raise serious questions over the “greenest government’s” commitment to sustainability.