Osborne to lead “reform of the energy market” to target £200bn

The UK Chancellor George Osborne has vowed to speed up plans for a green investment bank. In the only mention of energy-related issues, the chancellor, in his Budget speech on […]

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By Kelvin Ross

The UK Chancellor George Osborne has vowed to speed up plans for a green investment bank.

In the only mention of energy-related issues, the chancellor, in his Budget speech on Tuesday, vowed to accelerate proposals for the bank, which has been long-called for by many in the energy industry.

However, the official documents of the Budget state that “reform of the energy market and action to attract additional private sector funding” will be needed to raise “£200bn of investment to 2020 to provide secure low-carbon energy”.

It also states the government will “address other barriers to investment in the low-carbon economy”.

The document also reveals that the expenditure limit set for DECC for 2009-2010 of £2.1bn remains unchanged for 2010-2011.

The Budget states that in the autumn, the government will publish proposals to reform the climate change levy in order to provide more certainty and support to the carbon price. “Subject to consultation,” it says, “the government intends to bring forward relevant legislation in the Finance Bill 2011.”

Detailed proposals for the creation of a Green Investment Bank will be put forward following the Spending Review, which Mr Osborne told the Commons would be revealed on October 20.

“The government is considering a wide range of options for the scope and structure of the Green Investment Bank,” states the Budget report. “The options will be evaluated for effectiveness, fiscal affordability and transparency.”

The government is also to establish a ‘Green Deal’ for households through legislation in the Energy Security and Green Economy Bill, to help individuals invest in home energy efficiency improvements that can pay for themselves from the savings in energy bills.

“These improvements provide substantial and cost-effective carbon reductions but the initial cost can be significant, especially for low-income households,” states the report. “The government will also continue to work on green financial products to provide individuals with opportunities to invest in the infrastructure necessary to support the green economy.

“These measures are expected to have positive environmental impacts by enabling investment in low-carbon infrastructure and technologies. The environmental impact of Budget measures will be assessed in more detail as proposals are developed.

Mr Osborne also introduced a bank levy to come into force in January next year, which he said would create £26bn. He said it “was only fair” that the levy was introduced, as “this was a crisis that started in the banking sector”.