Why is George Osborne Considering Abolishing the Coalition’s Green Tax Target?

Earlier this month, Chancellor of the Exchequer George Osborne announced his summer budget, the first completely Tory budget since 1996. Contrary to widespread rumours in the media prior to its release, Osborne did not make any mention of renewable energy or cutting subsidies to green industries. However, this doesn’t necessarily mean that renewables are out of his crosshairs for good – just for now.

Much Ado About Nothing

It had been feared that Osborne would take the opportunity of his first summer budget to announce the abandonment of the green tax targets set by the previous coalition government and managed by the Liberal Democrats over the last four years.

These fears were largely due to the spiralling costs of subsidising such green energy, which could allegedly cost households up to £170 per annum by 2020. This hike in projected spending on the industry is down to a variety of factors, among which are the huge numbers of solar panels which have been installed on private homes (much higher than projected), the unexpected productivity of offshore wind farms and falling energy prices as a whole.

Because of the unpredicted spectacular performance of the renewable sector, the government has been forced to subsidise more heavily than it had intended. The knock-on result from this would be, according to the Conservatives and some members of the media, higher taxes from the public.

Bad News for the Wallet, Great News for the Earth

While these fears may still hold some water, they are clearly not as serious as were being reported by some quarters of the media, given the fact that Osborne did not slash investment in green energies in his opening budget.

Indeed, one of the only mentions he made of the sector was an unremarkable continuing show of support from the Conservatives, claiming that they would “continue to promote low carbon investment and innovation.” The only slightly ominous phrase “best value-for-money policies” in relation to renewables might signal that the green industry isn’t safe indefinitely, but the speech is certainly much more positive than some environmentalists had feared.

However, it wasn’t all good news. The renewables sector will be removed from the tax exemption list, which is something of a blow for consumers and businesses alike who support and employ green technology. Furthermore, Osborne did signal the Party’s continuing support of fossil fuels in the UK, as well as expanding fracking plans and investing in North Sea drilling.

Better than Feared

In summary, the summer budget did not abandon green tax targets completely, as had been feared prior to Osborne’s speech. Indeed, such an announcement would have been out of keeping with the government’s assertion that they are committed to reducing emissions levels significantly by 2020. This is certainly welcome news, what with concerns about our environment and in particular the pollution in our air growing by the day. For more information on this topic and on possible means to combat it, check out the article Improving Air Quality and Reducing Transport Related Pollution.