In his Budget speech yesterday the Chancellor confirmed that gas would play a major role in the UK’s energy security.
In his Budget speech yesterday the Chancellor announced new plans to encourage gas exploration and confirmed the UK’s continued reliance on gas. Last weekend Mr Osborne said “Gas is a reliable, affordable source of energy. We need to recognise that gas will be a vital part of the mix in delivering affordable and secure low-carbon energy”.
Many green groups are unhappy with the Chancellor’s policies to help the gas industry, saying the government has missed out on a chance to create green jobs and a low-carbon economy.
Many countries are moving towards gas as an alternative to sources of renewable energy because it has much less carbon than other fossil fuels such as coal. But wholesale gas prices have increased recently as countries such as Japan buy up supplies previously meant for Europe.
The Chancellor, George Osborne said “Gas is cheap, has much less carbon than coal and will be the largest single source of our electricity in the coming years. And so the energy secretary will set out our new gas generation strategy in the autumn to secure investment. I also want to that ensure we extract the greatest possible amount of oil and gas from our reserves in the North Sea”.
Mr Osborne announced a £3bn allowance for new oil and gas fields in the west of Shetland which he said was “the last area of the North Sea basin left to be developed – a huge boost for investment in the North Sea”.
There have been complaints from critics of renewable energy that subsidies are an increasing burden on energy bills, at a time when domestic and business electricity prices and gas tariffs are increasing. The Chancellor said “Renewable energy will play a crucial part in Britain’s energy mix – but I will always be alert to the costs we are asking families and businesses to bear”.
One proposal made by the Chancellor appeared to be good news for businesses. He announced changes to the carbon reduction commitment (CRC). The CRC involves companies paying an increasing amount depending on how efficiently they use their energy. Mr Osborne said the tax was “cumbersome and bureaucratic” and added that if it could not be made more workable then it would be scrapped and “an alternative environmental tax would be put in its place”.
Meanwhile the Engineering Employers’ Federation (EEF) said that changes to the carbon floor plan would damage competitiveness. The tax on emissions is set to rise from £4.94 per tonne of CO2 in 2013-2014 to around £9.55 per tonne in 2014-2015. EEF estimates that industrial electricity prices will therefore increase by between 6 and 7%.
Head of environment and climate policy at the Engineering Employers’ Federation (EEF) said “This decision locks the UK into a system with higher energy taxes than our competitors, regardless of the European carbon price”.