Monday, 4 August 2008

Panel of MPs backs green car tax

Patrick Wintour and Andrew Sparrow
The Guardian,
Monday August 4 2008

Government plans to impose green vehicle excise duty rates on previously purchased cars have been endorsed by a Tory-led environmental audit select committee.
The all-party committee rejects claims by a narrow majority that the levy can be seen as a retrospective tax. It urges the Treasury to go further to provide a more ambitious reform of the tax and to show how it might impact on the poor.
The committee has a Labour majority but is chaired by Tim Yeo, whose endorsement of the duty clashes with the Tory frontbench position that the changes should be dropped. Two Conservatives on the committee and a Liberal Democrat said they were ineffective and amounted to retrospective taxation.
The reforms were announced in the budget by Alistair Darling, but will not be implemented until next year. Some Labour backbenchers were dissuaded from rebelling on the issue after they were given assurances the reforms would be phased. The reforms have been attacked by the motoring lobby and newspapers such as the Daily Telegraph.
In a report today, the committee proposes the Treasury examine the case for a car-scrapping scheme that would provide payments for taking high-emission cars off the road . It suggests the Treasury should publish research on the effects of widening the differentials. The March budget introduced six duty bands, which apply to cars registered after 2001.
The committee dismisses a Tory charge that the reforms were a retrospective tax. "The secondhand car market dwarfs the market for new cars, with around three vehicles sold for every one sold new each year. Rebranding existing cars could therefore have a bigger effect than increasing the differential for new cars," it says.
But the committee says that it is "seriously concerned" that the gap between the lowest and the highest rates of VED remain "too small to be effective" and that as a result "the projected carbon savings are far less than they could be".
It says that the Treasury should have taken "greater care" to explain its plans when Darling presented his budget.
And it suggests that changes to the VED regime would be "more acceptable to the public" if they were introduced in a "revenue-neutral" way, with the extra money raised from high polluters being matched by discounts for low polluters.
Explaining his committee's thinking, Yeo told the BBC today: "This is quite an urgent issue – emissions from cars are increasing, people are buying cars all the time.
"We don't want them to stop driving, but we want them to choose the greenest car.
"They need the biggest possible incentive, that's why the government should be even bolder – really penal rates for high-emission cars and really attractive 'carrots' so that tax is almost nothing on the greenest models."

Britannia accused of failing to rule waves by not spending energy cash

Published Date: 04 August 2008
By Gerri Peev and Jenny Haworth

NOT a penny of a £42 million pot of cash for new wave and tidal renewable energy projects has been spent over the past four years, The Scotsman can reveal.
The entire budget for the Marine Renewables Deployment Fund – the UK government's fund for helping marine technology firms develop new projects – has remained unspent since it was set up.The Scottish Government, meanwhile, has backed marine energy with all £13.5 million of its support funding. No company has yet qualified for UK funding, which industry insiders say is because the criteria are too strict. Some accuse the government of not supporting wave and tidal energy. This is despite an urgent need for the UK to step up its efforts in order to meet EU targets of 20 per cent of energy to be provided from renewable sources by 2020.

Westminster has now agreed to review the selection process.It currently states that to qualify for the fund, a project must have been operational in the water for three months or more. Marine energy companies say this creates a "chicken and egg" situation because without money to help fund the project in the first place it is impossible to get it off the ground to qualify for the cash.

The Liberal Democrats, who obtained confirmation in written parliamentary answers that none of the funds had been spent, have accused the government of squandering time and money.Jo Swinson, the MP for East Dunbartonshire, said: "Scotland has world-leading potential when it comes to wave and tidal energy, yet the government is idly sitting on the funding which the sector so desperately needs."How can the government hope to meet its targets on renewable energy when it is not even capable of spending the modest funding it has set aside for wave and tidal technology?"This is a vital time for the development of the renewable energy industry. Instead of spending so much time pushing their nuclear energy agenda, the government should be focussing on getting funding for renewable technologies to where it's needed."A spokesman for trade body the British Wind Energy Association said the money has been too difficult to access."Everyone within the sector agrees the entry level criteria are set too high. I think that's the key problem. It's a chicken and egg situation. How do you get it to that research and development level?"He said considerable successes in marine power development in the UK have happened despite a lack of government support, and it was time this support was forthcoming."Everyone who follows renewables can see that this will be a major growth area," he said. "There's no doubt about it now. The sooner the government realises this the better."The reason why the government is not throwing in their twopence worth is because they are being overly cautious. This could slow down the potential for the industry to develop."Paul Jordan, business development director at Ocean Power Technologies, said he understands the need to separate the "wheat from the chaff" in terms of which projects the government chooses to support.Without the three-month criteria, any company could apply for cash even if the scheme was never likely to be successful. But he added that he thinks the criteria should be more flexible and he wants the government to be "bolder" in its support of marine renewables.
He said: "There is nothing else like it. There have always been windmills, but nobody has ever generated energy from the waves."After years of the funds languishing, The Scotsman has learned that the Department for Business, Enterprise and Regulatory Reform has agreed to relax the rules.A spokeswoman for the department said the government would take a more "flexible approach" to the criteria that a project has to be operational for at least three months.

For example if a company had three projects each operational for a month, it could qualify for future funds.She added: "We are now taking a more flexible approach towards the criteria and will judge each application on its merits. "We anticipate the Marine Renewables Deployment Fund's demonstration scheme will receive its first successful applications for support early next year."Scottish support for marine energy leaving rest of UK behindIN CONTRAST to Westminster, the Scottish Government is providing strong support to marine energy, enabling it to flourish in this country, say experts.Unlike the situation at Westminster, where funds remain unspent, Holyrood's Wave and Tidal Energy Support Scheme, initiated by the former Scottish Lib Dem leader Nicol Stephen, has had all its £13.5 million claimed. Some experts predict support from the Scottish Government could encourage the industry to flock to this country at the expense of other parts of the UK.
One industry insider said there was far more support from the Scottish Government than from the UK government's Department for Business, Enterprise and Regulatory Reform (Berr). "The Scottish Government definitely is leading the way in terms of wave and tidal and it would be nice to see Berr being as supportive as the Scottish Government has been," she said."Berr might lose out if they don't put in place more supportive mechanisms because otherwise the industry will focus itself in Scotland."She said she believed Westminster's determination to follow the route of nuclear energy played a part in its lack of support for renewables. "Obviously, the Scottish Government isn't interested in nuclear at all, and that means if we want to cut down on our carbon dioxide emissions we are going to have to look at renewables," she said."Combine that with the fantastic conditions for wave and tidal renewables in Scotland and they are really leading the way."Scotland has an estimated potential to generate a quarter of Europe's marine energy and nine projects have been given direct funding from the Scottish Government, compared to none by Westminster. Many are based in Orkney, at the European Marine Energy Centre.Paul Jordan, business development director at Ocean Power Technologies, agrees that the UK is at risk of losing out to other countries, including Scotland."Portugal and parts of America are waking up to the benefits of marine energy, so if we are not careful we will lose out to other countries," he said.

British Energy still on Centrica’s agenda

By Rebecca Bream
Published: August 3 2008 16:55

Centrica, owner of British Gas, plans to revive the idea of an all-share merger with British Energy if EDF’s proposal to buy the UK nuclear group falls through.
EDF’s plans to buy British Energy and become the UK’s largest power generator were thwarted at the 11th hour last week when Invesco and M&G, two of British Energy’s largest shareholders, rejected EDF’s bid of 765p a share as too low.

After recriminations on Friday about who was to blame for the last-minute collapse of the deal, both sides are expected to take some time off and it was not clear yesterday whether EDF would come back with a higher offer.
Earlier this year, Centrica proposed an all-share merger with British Energy. This plan was rejected because the UK government, which owns 35 per cent of British Energy, preferred the idea of a cash bid as this would allow it to exit its investment and raise much-needed funds. British Energy held talks with energy companies including RWE, Iberdrola and Vattenfall, but EDF emerged as the front-runner in May after making an initial cash offer of about 680p per share.
Several institutional investors that own shares in Centrica also hold stakes in British Energy, including Invesco, which owns 5 per cent of Centrica and 15 per cent of British Energy.
A person close to Centrica said the group would be visiting its investors in the coming weeks following the publication of its results last week, and it was “inevitable” that the question of reviving Centrica’s merger plan with British Energy would come up.
But the person said that the plan was in its early stages and would only proceed if talks between EDF and British Energy on a cash takeover were conclusively ended. It could be several weeks before it is clear whether a deal between EDF and British Energy can be salvaged, according to a person close to EDF.
Centrica needs to increase its upstream gas and power assets to reduce its exposure to the volatile wholesale markets.
If EDF’s bid for British Energy succeeds, the French group is considering selling a minority stake in the nuclear group to Centrica, as well as offering it a long-term power supply contract.
Copyright The Financial Times Limited 2008

Centrica said may revive British Energy offer

Published: August 3, 2008

LONDON: Centrica may revive plans for a 22.5 billion pound all-paper merger with British Energy after French group EDF's takeover of the nuclear operator stalled on Friday, The Sunday Telegraph reported.
Utility Centrica was to have been a junior partner in the EDF deal, which was derailed by leading British Energy shareholders because of concerns that the price was too low, sources told Reuters on Friday.
Centrica, which is Britain's largest electricity and gas supplier, will discuss its proposal with key investors, the Telegraph said, citing sources close to the company.
It also wants the backing of the government, which owns 35 percent of British Energy, before launching a formal offer, the newspaper said.
The EDF deal would have netted the government around 4.6 million pounds -- officially to go towards the clean-up of Britain's declining nuclear power sector.

Industry sources previously told Reuters that Centrica put forward an all-share merger proposal earlier in the year, but it was rejected due to an absence of cash in the offer.
Centrica and British Energy declined comment on Sunday.

Green energy help for poor: Poorest targeted with energy-saving schemes

· Ministers aim to speed up home insulation plans · Winter fuel payments for elderly may be changed
Patrick Wintour, political editor
The Guardian,
Monday August 4 2008

Cert scheme would direct savings towards low-income families. Photo: PA/Kirsty Wigglesworth
Ministers are examining a raft of green energy measures, including bringing forward a £2.75bn home insulation programme funded by energy companies, to protect Britain's poorest from the impact of rising gas and electricity prices.
They are looking at the idea of front-loading a scheme known as the carbon emissions reduction target (Cert) so that more money is spent sooner by energy companies, with a greater proportion of the funding going to the fuel-poor.
The three-year programme promotes reductions in carbon emissions for households by installing energy efficiency measures such as cavity wall and loft insulation in the homes of people on low incomes and the elderly. It is designed to raise more than £2bn from the energy companies over three years, but could be front-loaded so that more is spent this year and next.
Under Cert, suppliers are set carbon savings targets and must direct at least 40% of savings to a priority group of low-income and elderly customers. The scheme runs between 2008-2011, but ministers are arguing in discussions with the energy companies that they can bring forward their spending in view of their huge profits.
Ministers may also publish a general consultation paper on windfall taxes on the profits of the energy utility companies, but that is not the preferred option of the chancellor, Alistair Darling, or of the Department of Business and Enterprise and Regulatory Reform (Berr) led by John Hutton.
Last week Centrica, the parent company of British Gas announced a 35% price increase, sending shudders through Whitehall. The average British household now faces annual gas and electricity bills of more than £1,200, driving tens of thousands into fuel poverty.
Ministers are also looking at restoring cuts in the Warm Front programme, a package of measures worth up to £2,700 for vulnerable homeowners or for those on benefits. Funding for the programme, designed to cover insulation and central heating, has been cut by 16% from £350m in 2007-8 to £295m in 2008-9, a cut already criticised by the Berr select committee and one that Gordon Brown has already hinted he may reverse.
An option described as the middle of the pack by ministers is to increase the proportion of EU emission trading permits that must be auctioned for money from the proposed 7% to the maximum permissible of 10% - so raising an extra £500m in the next 12 months.
Ministers are also examining whether it is possible to switch the £2bn winter fuel poverty payment so that it is not targeted solely at pensioners, but also at the poor. The annual tax-free payment of between £100 and £300, depending on age and circumstances, only goes to those over 60, roughly 11.7 million people. The 2008 budget announced that this winter there would be an additional payment of £50 for households with someone aged between 60 and 79 and £100 for someone aged over 80. Ministers are doubtful that it would be wise to tamper with the universal winter fuel payment unless they were sure how the money could be better targeted at the fuel poor. The fuel poverty advisory group has told the government that discontinuing winter fuel payments for higher-rate taxpayers would raise £200m.
The government defines the fuel-poor as anyone that spends more than 10% of their income on fuel.
Cabinet ministers, such as the skills secretary, John Denham, argued yesterday that by using the state to protect the poor, Labour would send a stronger signal than the Conservatives, who, he said, have little to say about the economy, and are reluctant to use levers of the state in pursuit of fairness.
Labour party pressure to impose a windfall tax is meeting fierce resistance from the CBI and business ministers, who warn that it would mean the profits required to invest in renewable energy would be eaten up in protecting the poor from rising fuel prices.