UK Budget 2013: renewables miss out as shale subsidies rise

By Ed King

In short, UK Chancellor George Osborne’s 2013 Budget promises little for climate campaigners.

His proposals increases subsidies for shale gas exploration, maintains its support for energy intensive industry and cancels a rise in fuel duty.

In the ‘plus’ drawer he did announce a small increase in the Carbon price floor (CPF) rates to £18.08 per tonne of carbon dioxide, and offered support for the country’s beleaguered Carbon Capture and Storage (CCS) programme.

I’ve outlined the key announcements related to climate and energy below, together with reaction from experts and observers as it comes in.

If you have any views on the 2013 Budget send me a tweet @rtcc_edking or leave a note in the comments form at the bottom of the page.

Shale gas
New field allowance for shale gas and extension of Ring Fence Expenditure Supplement for shale gas projects from 6 to 10 years. Review over whether the largest shale gas projects should have the option to apply to the major infrastructure regime. Government to develop proposals by summer 2013 to ensure that local communities will benefit from shale gas projects in their area.


Carbon Capture and Storage (CCS)
CCS projects in Aberdeenshire, Scotland, and the White Rose Project in Yorkshire to be “taken forward” to the detailing, planning and design stage of the competition with £1 billion capital funding.


Fuel prices A 1.89 pence per litre fuel duty increase due to take effect on 1 September 2013 cancelled. In 2015-16 the duty differential between the main rate of fuel duty and the rate for compressed natural gas to be maintained, and the duty differential for liquefied petroleum gas to be reduced by the equivalent of 1 penny per litre.


Energy intensive industry Government will continue to provide support to energy-intensive industries to compensate for the indirect cost of the CPF in 2015-16. Further details will be announced at the next spending round. Government to introduce exemptions from the climate change levy for energy used in metallurgical and mineralogical processes from 1 April 2014.


Carbon price Government to set 2015-16 carbon price equivalent to £18.08 per tonne of carbon dioxide in line with the carbon price floor set out at Budget 2011.


Carbon Reduction Commitment Government to exclude English state schools from the Carbon Reduction Commitment from April 2014.


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