Policy News

Tuesday 24 November 2009

Shadow chancellor George Osborne said the Treasury would become a "green ally" under a Conservative government

The Conservative party has today (November 24) discussed the approach it will take to tackling climate change and stimulating investment in new green technologies if it comes to power next year.

Outlining his ambitions at Imperial College in London, George Osborne, the shadow chancellor, said that under a Conservative Government the Treasury would become a "green ally" and would consult on creating Britain's first green investment bank.

The Treasury would also introduce 'green ISAs' to fund investment in renewable technology companies, he added.

Mr Osborne also confirmed he would put a floor under the announced 2013 level of landfill tax until 2020, guaranteeing that the tax will not fall in real terms for ten years. The policy is designed to give investors more confidence and long-term certainty in investing in alternative treatment solutions, such as energy from waste.

Other measures announced included slashing government emissions by 10%, publishing Whitehall's energy use online, expanding the City's green trading market and paying the public to recycle, following a trial scheme in Windsor and Maidenhead.

Explaining his plans for the green investment bank, Mr Osbourne said this would draw together money currently divided across existing micro government initiatives, and leverage private sector capital to finance new green technology start-ups.

He said that providing start-up capital to firms facing severe difficulties in accessing loans and investment would create jobs and "back the bright ideas of the future in an area where Britain is now lagging behind."

The shadow chancellor claimed that Britain had "failed to take advantage" of the growth of the renewable technologies sector and that a green investment back would "invest in the next generation of green British businesses."

Mr Osborne said: "Instead of the current system of multiple sources of government funding for green investment projects, we will look to roll up these funds into a single bank that can leverage private sector investment and fund new green start-ups."

"Our Green Investment Bank will help deliver the green finance we need for new growth and new jobs in every region of the country. And it will help us to decarbonise our economy and compete for business around the world," he added.

ISAs

As a complementary measure to the investment bank, Mr Osborne said he would create tax-free savings vehicles where all the funds invested would be channelled to green companies and environmental technologies. He added that these green ISAs would be a priority for any increase in ISA tax-free saving limits.

"[The Green ISA scheme] would not only unleash new sources of finance for green firms, but it gives everyone a chance to be an investor in our low carbon future," Mr Osborne said.

He also pledged that the Conservatives would cut central government's carbon emissions by 10% within twelve months of coming to office, with a promised annual saving of £300 million for the tax payer. Mr Osborne said a Conservative government would work with Tesco, BT and B&Q, all of which have lowered their own emissions.

The energy consumption of every Whitehall department would also be published online in real time, with those departments that did not cut energy use seeing their energy budgets cut.

Mr Osborne said: "If I become Chancellor, the Treasury will become a green ally, not a foe. Departments will have to report to the Treasury on their energy consumption and emissions. And let me make it clear: if any Department that does not cut their energy use, we will simply give them less money to spend on energy."

Criticism

Responding to the proposals, Energy and Climate Change minister Ed Miliband cast doubt on the Conservatives' green credentials.

"This so-called greening of the treasury involves no new money," he said.

"The truth is the Tories have opposed Labour's extra public investment including the 400m allocated at the time of the budget for new green industries. Why should anyone believe a piece of greenwash from George Osborne?"

However, the speech was welcomed by the trade body the Renewable Energy Association (REA) and the Aldersgate Group, a coalition of businesses and environmental groups that lobbies on environmental issues.

The REA said: "The REA welcomes calls for a dedicated Green Investment Bank to ensure this important sector has secure access to affordable finance. However, incentives for investment including the need for an ambitious ‘Feed-In' Tariff and Renewable Heat Incentive are essential to drive jobs and manufacturing in the UK renewables industry.

"In this regard it is helpful to highlight the potential for the Treasury to adopt a positive approach to the huge economic, security and climate benefits of investment in renewable energy - the more wholeheartedly we invest, the quicker costs will fall and precipitate the green energy revolution we all agree is needed."

Peter Young, chairman of the Aldersgate Group, said: "A green investment bank could play a major role in financing and accelerating the low-carbon transition, while acting as a useful intermediary between investors and policy makers.

"It would also be a major source of competitive advantage, ensuring the City of London remains at the forefront of clean tech financing and carbon markets."