The Rt Hon Philip Hammond MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ
Dear Philip,
I am writing to you ahead of the Autumn Budget on the 22nd November to call on you to take action that enables the UK to reduce its emissions to net zero by 2030 – a necessary goal if we are to keep global warming below 1.5 C. The United Nations Environment Programme Emissions Gap report 2017 found that current pledges can only deliver a third of the emission reductions necessary to limit global warming to 2 C. In the light of this urgent net zero emission target and the extremely worrying analysis from the UN, I urge you to take account of the following priorities in the Autumn Budget.
Increase investment in all renewable infrastructure
Offshore wind has proven that it is cost effective and practical, with costs falling by 50% over the past two years. The renewable revolution is reflected in the renewable sector as a whole, as demonstrated on the 7th June this year when sources of renewable energy generated more electricity than coal and gas in Great Britain for the first time.
However, Government is providing no clarity over the renewable industry’s funding pipeline, and this is impeding the sector’s growth and investment potential, as well as posing risks to future energy security and emissions reductions targets. I am dismayed that the Government’s Clean Growth Strategy is too vague to guarantee any success on meeting climate targets, omits provision of support for onshore wind (the cheapest low carbon technology available), solar, hydropower and tidal, and risks locking us into years of more centralised energy.
In the Autumn Budget 2017, I ask you to:
Guarantee the remaining £554m of the £730m already committed to offshore wind and other renewables is allocated to the industry over the next three years. In particular, investment into local and small scale renewables should be prioritised. According to the National Grid’s energy scenarios, small-scale, distributed generation will represent a third of total capacity in the UK by 2020. This is consistent with the industry's 2050 level of ambition, and aligned with what is technically feasible in terms of the speed and scale of roll-out.
Provide a clear and secure funding pipeline for all renewables post-2020 to deliver an additional 11.5 gigawatts of clean energy. This funding would bring the UK’s total offshore wind to 21.5 gigawatts by 2025; provide a strong and supportive policy direction for solar with a level playing field for different sub sectors in terms of market access, tax treatment and regulations; and support the development of tidal energy infrastructure.
Establish a subsidy free Contracts for Different auction mechanism for mature low carbon technologies, including large scale solar, as soon as possible.
Scrap Hinkley C now rather than delaying the decision further and incurring higher costs for taxpayers, and cancel all new nuclear projects in the UK. It has been estimated that consumers could end up paying £37 billion in subsidies for electricity from Hinkley 1. A 2015 joint report by the IEA and NEA suggested that new nuclear power in the UK would be more expensive than in any other country and it’s also consistently more expensive than renewables2. Money earmarked for new nuclear plant research, development and construction should be reallocated to energy efficiency measures and renewable energy infrastructure. Sufficient funding for decommissioning redundant power stations, and for research into the safe storage or disposal of existing radioactive waste stockpiles, should be retained.
Prioritise energy efficiency
I am shocked that the 2017 BEIS Fuel Poverty Statistics show an increase in the number of households in fuel poverty from 2.38 million in 2014 to 2.50 million in 2015 (the statistics provide data on a two-year time lag). Living in cold, damp homes causes harm to the health and wellbeing of householders and contributes to the 25,000 excess winter deaths that occur each year in England. Energy efficiency is the most effective way to tackle the root causes of fuel poverty because it reduces energy demand and brings down energy bills. The Committee on Fuel Poverty’s Annual Report 2017 suggests that around £15 billion is needed to fund the activities to meet the 2030 fuel poverty target, but that only about £1 billion of this is currently in place.
In the Autumn Budget 2017, I ask you to:
Hugely increase Government spending on fuel poverty, to be consistent with meeting England’s 2030 fuel poverty target. BEIS projects that the 2019 fuel poverty statistics will show only 11% of fuel poor homes at Band C or above. Domestic energy efficiency should be an infrastructure priority, in particular for the National Infrastructure Commission, with far more ambition than is currently required by eg The Energy Efficiency (Private Rented Property England and Wales) Regulations 2015.
Further amend the Winter Fuel Payment and Warm Home Discount budgets to ensure that this money is received primarily by fuel poor households. The Committee on Fuel Poverty estimate that only 10% of the money from these budgets is currently being received by fuel poor households.
Provide detail on energy efficiency support through financial incentives for all households, including funding for retrofitting. The Government’s October 2017 Clean Growth Strategy proposes looking at such incentives, and I call on you to use the Autumn Budget to commit the necessary funding to make this a reality.
Introduce new diesel taxation
The Government’s July 2017 Air Quality Plan for nitrogen dioxide acknowledges that “road vehicles contribute about 80% of NO2 pollution at the roadside and growth in the number of diesel cars has exacerbated this problem”.
It is extremely worrying that all the main car manufacturers are in breach of the Euro 6 NOx limit of 0.08g per km – by over nine times for Renault and over six times for Ford for example3. This is noncompliance on a huge scale, and means consumers are effectively being tricked into purchasing highly polluting cars in the belief that they are cleaner.
During the 2017 Spring Budget announcement, you said the Government would 'explore the appropriate tax treatment' for diesel ahead of the Autumn Budget 4. Moreover, the Government’s July 2017 Air Quality Plan for nitrogen dioxide made a committing to introduce “relevant taxes on new diesel cars alongside existing departmental budgets” as a means of funding air pollution reduction measures. The same Air Quality Plan also identifies the need for a £255 million “Implementation Fund” to support local authorities in the preparation of their plans and the delivery of targeted action to improve air quality, as well as for a Clean Air Fund from which local authorities can bid for extra money. It’s vital that all these commitments are fully realised through upfront funding.
In the Autumn Budget 2017, I ask you to:
Increase the Vehicle Excise Duty for new diesel cars (except vans) by at least £800 so as to reflect the additional cost to society of dirty diesel engines. This would generate £500 million a year5, which should be directed at helping fund a targeted diesel scrappage scheme.
Implement a feasibility study for a diesel scrappage scheme, to address concerns around fairness and cost effectiveness, and with a view to rolling out an adequate diesel scrappage scheme as soon as possible. As well as offering replacement clean vehicles, these schemes should also offer alternatives such as discounts on public transport, car club membership and rail season tickets.
Seriously increase investment in buses, trams and trains along with safe routes for walking and cycling. People need an alternative to car use and we must protect our towns, cities and countryside from the pollution and congestion that comes with new roads.
Set out how the money from the £255m “Implementation Fund” for local authorities to improve air quality will be distributed, and on what timescale. The government Air quality plan for nitrogen dioxide states that £40 million will be made available immediately to support local authorities to take action to improve air quality as quickly as possible: I call on you to make this a reality now.
Clarify how much money will be available for local authorities in the Clean Air Fund, and the bidding process.
Introduce a Deposit Refund Scheme
Drink containers are significant contributors to litter in our country, and I welcome the current consultation into one solution - a Deposit Refund Scheme. Research commissioned by Zero Waste Scotland indicated deposits would save local government across Scotland £13 million a year. Evidence submitted to the recent Environmental Audit Committee inquiry on disposable packaging cites research for New South Wales, finding the potential benefits of implementing a deposit scheme far outweighed the costs, with an annualised net economic benefit of between $70 and $100 million6. 73% of people in the UK support or strongly support the idea of deposits on bottles and drinks cans, compared to just 9% who are opposed, according to a YouGov poll published in September[7].
In the Autumn Budget 2017, I ask you to:
Confirm your commitment to introducing a Deposit Refund Scheme, and to use the results of the Government’s consultation to ensure the scheme is developed in such a way that will actively support DEFRA in tackling the littering of our landscapes, as well as the threats to the environment and wildlife caused both on land and in the oceans by plastics.
Address loss and damage caused by the adverse effects of climate change
This year’s storms and hurricanes have been unprecedented in their intensity, adding to the case for urgent and meaningful action to dramatically reduce CO2 emissions and in particular those from fossil fuel companies. The fossil fuel industry is disproportionately contributing to climate change and to the adverse effects that go beyond people’s capacity to cope and adapt to climate change impacts. Even if strong mitigation and adaptation measures are taken, the residual cost of climate change may be in the order of £208 trillion between 2000 and 2200 for all countries. For Africa alone, loss and damage is estimated at the equivalent of a staggering £76 bn per year by 2050 if global temperatures are below 2oC and £152 bn per year by 2040 for above 4oC7.
Please use the 2017 Autumn Budget to:
Advocate internationally for the introduction of a global carbon levy on big oil, coal and gas producers to fund the loss and damage mechanism. This funding would be used to assist the poorest and most vulnerable communities suffering the worst impacts of climate change. This fossil fuel extraction levy needs to be part of a general phase out of fossil fuels.
End all UK subsidies to dirty energy. The coal phase-out date should be brought forward to 2023 at the latest.
I very much look forward to your response and to an Autumn budget that shows principled and strong leadership in rising to the environmental and climate challenges we face.
Yours sincerely,
Caroline
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