The Chancellor who Sang all Summer
Determined to fulfil his dream of making the UK a ‘gas hub,’ George Osborne has announced further tax breaks for the gas and oil industries as an attempt to boost production, increase the longevity of brownfield sites and respond to falling sector employment.
12th September 2012 | Peter Rolton: Chairman, Rolton Group
This follows not long after his latest budget slashed support for green initiatives, excluding feed-in tariffs on renewable projects from tax relief eligibility and once more showing his utter disinterest in promoting sustainable energy as any part of the solution to the fiscal crisis.
At its most basic level, this is economically counter-productive; globally, we are now moving towards a necessary shift to clean energy and it is common sense that investment should be encouraged to follow suit in the UK. Instead, the country flounders with a chancellor who, at this stage, surely cannot fail to be aware of the lasting financial damage his actions are causing to accumulate. Long term security does not, however, win elections, and Osborne’s only gauge appears to be how to gain the most short term support for legislation which simply acts as a financial tourniquet, and is far from a solution.
In his statement accompanying the breaks, Osborne said the move was ‘more good news for the North Sea, and good news for jobs and good news for the broader economy.’ Perhaps this is true, if you are practised in blinkered, four-year thinking like the Chancellor. The lasting ramifications of sizeable investment and support in these sectors, however, will be an increased dependency on unsustainable energy. If the UK follows Osborne’s advice, and renewable energy continues to be lost in a tangle of legislation and poor promotion, this energy will have to be imported at great cost once national supplies run out, as alternative infrastructure simply won’t exist.
The situation brings to mind Aesop’s fable, ‘The Ant and the Grasshopper’: Osborne, like the Grasshopper, is content to sing bawdily all summer, thinking solely of today. Many others share the Ant’s mentality, and are keen to start storing supplies for the winter to come. In Aesop’s telling, the Grasshopper comes unstuck as a result of his thoughtlessness, but, worryingly, our economic equivalent governs vital policy decisions.
Lord Deben, Chairman of the Committee on Climate Change (CCC) last week took the bold step of publishing an open letter to Energy and Climate Change secretary Ed Davey stating that Osborne’s proposal for gas to play an ‘important role in the energy mix well into and beyond 2030,’ is ‘incompatible with meeting legislated carbon budgets.’ Without the use of carbon capture and storage (CCS) in the gas extraction process, the UK risks breaking the Climate Change Act, which commits us to reducing carbon emissions by 80% from their 1990 level.
Besides putting more kindling under the fire between the CCC and the Treasury, this letter is hoped to make officials think twice about their long term responsibilities before making rash and damaging decisions. More in the way of Lord Deben’s public letter needs to be done to reverse the aggressive promotion of harmful energy over its sustainable counterpart. Of course, it’s all political, but real lives will be impacted by the decisions made on the topic of investment and funding, making it an imperative subject for discussion.
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