Coalition Government misses first opportunity to boost green industries
June 24th 2010 Commenting on the Budget, Danny Stevens, policy director of The Environmental Industries Commission (EIC) [1] said: “In the run up to today’s budget the UK’s environmental industry was optimistic that the Government would today lay the foundation for low carbon and sustainable economic growth, driving investment in new high growth green businesses, helping to create new jobs and putting the UK at the forefront of a £3 trillion global market place for environmental goods and services. Sadly, this afternoon it is left ruing a missed opportunity.
“Reductions in public spending and the urgency with which the Government has committed to tackling the budget deficit severely restricted the tools the Treasury had at its disposal to drive investment in green industries. Even so, today the Chancellor sidestepped the most effective tool he has – using the tax regime to put an effective price on pollution. By failing to translate environmental damage into immediate price signals today’s Budget simply reinforces the huge market failure that continues to allow the exploitation of our environment free of charge - cost of pollution is borne by the British public, not by the polluter.
“Putting a fair and predictable price on environmental damage means developing market mechanisms that price in the true environmental costs of doing business. This could have been achieved at a low cost to the Treasury through innovative funding mechanisms such as Tax Increment Financing [2]; mobilising private sector investment through, inter alia, an Environmental Investment Institution; and targeted fiscal and monetary incentives for green technologies.
“The Green Investment Bank is, of course, a welcome step forward but there is a risk that the Bank will institutionalise a narrow understanding of the economic opportunities of “green investment”. If the Government limits the Bank’s mandate to helping the “UK meet the low-carbon investment challenge” the UK risks forfeiting the huge investment opportunities that exist across the whole of the environmental sector.
“In opposition both David Cameron and George Osborne highlighted the importance of developing market mechanisms that price in the true environmental costs of doing business. In 2009, the then Shadow Chancellor called on “the Treasury [to] put a fair and predictable price on environmental externalities...” As he recognised at the time, this would mean that the UK, economy and society, will reap the “positive externalities” – notably a world leading environmental industry that can compete in a worldwide £3 trillion (and growing) market place. As a first test of the Government’s commitment to low carbon and sustainable growth, today’s Budget is left wanting.”
“EIC will continue to call on HM Treasury to put an appropriate price on pollution. By doing so the Government can harness the power of markets to find effective, efficient and equitable responses to the environmental challenges we face.” More articles from Environmental Industries Commission: | 
