Budget Analysis – Energy & Environment

They key news in energy and environment is that the Government will replace the current Levy Control Framework, the system through which it controls the cost of carbon. It “will be replaced by a new set of controls” that will be set out later this year. Something that will be welcomed by some who criticised it for lacking transparency and a long-term view.

It does however open up some uncertainty. Despite clarity on the fact that the UK will withdraw from the European Emissions Trading System what is not clear yet is the future of carbon pricing in whatever pricing system the UK will have post-Brexit.

On Air Quality, the Government will consult on a “detailed draft plan in the spring” which will “set out how the UK’s air quality goals be will achieved”. A challenge if you look at the latest air quality statistics. Alongside this, the Government is “exploring” the tax regime for diesel vehicles and “will engage with stakeholders ahead of making any tax changes at Autumn Budget 2017.” Many environmental groups had called for the Government to implement a diesel scrappage scheme.

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