Process escapes cuts

The UK government’s spending review was anticipated with much apprehension in many quarters, but it was not all bad news.

Certainly the decision not to recycle revenue from allowance sales under the Carbon Reduction Commitment (CRC) was a bitter pill, as it effectively translated into a £1 billion tax rise (see News Analysis, p10). The full implications of this decision are not yet clear, but it does hit companies that have acted responsibly with what now appears a straightforward carbon tax.

From a more positive viewpoint, the science and research budget is to be maintained at its 2010-2011 level for the next four years.

Also welcomed was the commitment made to apprenticeships. Government is to boost spending on adult apprenticeships by £250 million a year, providing up to an extra 75,000 places a year by the end of the review period.

Chemical Industries Association boss Steve Elliott described this step as “a much-needed stimulus to the critical technical skill requirements faced by many within manufacturing”.

Perhaps the best news from the review was a commitment to the Renewable Heat Incentive (RHI), with £860 million of funding promised in anticipation of a 10-fold growth in the sector. Industry was also relieved that this would be funded from general taxation rather than a levy on fossil fuels.

Gaynor Hartnell, chief executive at the Renewable Energy Association, said that tens of thousands of jobs could now be created over the coming decade as a result of renewable heat moving to the heart of UK energy policy.

Tariff rates for the various technologies will not be known until the end of the year, but Hartnell believes the level of funding is sufficient for the development needed in each sector.

At the Combined Heat and Power Association, however, director Graham Meeks said the details of the RHI needed to be clarified. He added: “There are many important biomass CHP schemes in development, but the uncertainty over the future of the RHI has caused most of these to be put on hold.”