On 5 December 2013 the Chancellor of the Exchequer delivered his Autumn Statement for 2013. The environmental measures it contained had largely been announced in the run up to the budget statement, so there were no real surprises on the day.
The main environmental announcements were:
- Allowance prices for the next round of sales under the CRC Energy Efficiency Scheme were confirmed at £15.60 per tonne of CO2 for the sale at the start of the year (where companies buy based on their forecast emissions); and £16.40 per tonne of CO2 in the year end sale (where companies ‘buy to comply’ if they need to).
- Tax breaks for onshore oil and gas operators have been confirmed, intended to benefit exploiters of shale gas. A new allowances will exclude 75% of qualifying capital expenditure from ring fence profits, which will substantially reduce the amount of profit that is subject to a supplementary charge (an additional 32% tax which applies to such operators).
- The contract terms and strike prices for contracts for difference were confirmed. These contracts incentivise energy companies to invest in non fossil fuel generation by guaranteeing prices for the energy produced – where market rates are lower than the strike price the generator receives a top-up payment, but if prices are lower then they have to repay the difference. The strike prices for onshore wind and solar PV are lower than previously proposed, but the strike price for offshore wind has been increased.
- Confirming the package of measures recently announced to reduce household energy bills. This includes specific funding within the Green Deal scheme for landlords and tenants to make more rental properties energy efficient. This is ahead of the proposed minimum energy efficiency values for the private rental sector, which will apply from 2018 and be consulted on next year.
- The ECO scheme (under which energy companies have obligations to invest in domestic energy efficiency measures) is also being extended meaning that the affected companies have longer to meet their targets. The rationale for this is to reduce domestic energy bills by reducing the cost of ECO to the energy companies. There were further related measures, such as a stamp duty reduction to be spent on energy saving measures, aimed at further reducing the energy costs to householders.
Many industry representatives have voiced disappointment that the government’s carbon price floor, a UK only measure which forces up the price of carbon allowances that energy companies must buy, was not reduced or removed by the Government, after concerted lobbying. They argue that this makes the UK uncompetitive in terms of energy pricing.
There has also been criticism from a variety of sectors over the support provided for shale gas operators, arguing that the Government should not be subsidising fossil fuels.
You can view the Chancellor’s full Autumn Statement here.