The government has confirmed that there will be no change to the carbon price support (CPS) rates set out in the 2014 Budget. The CPS rates will remain capped at £18/tCO2 to 2019-20 and will be uprated with inflation in 2020-2021. This is due to the continued low price of the EU Emissions Trading Scheme (EU ETS) and aims to limit competitive disadvantage to British businesses.

The government intends to take into account the full range of factors affecting the energy market and set out the long-term direction for CPS rates and the carbon price floor in the 2016 Autumn Statement, with a view to including it in the Finance Bill 2018.

(Budget Report, paragraphs 1.191 and 2.174.)

For more information on the CPS in general, see Practice note, Climate change levy (CCL), climate change agreements (CCAs) and carbon price floor (CPF): Carbon price floor (CPF).

The government will be consulting later in 2016 on the priorities and delivery models for the shale wealth fund, and how it can be deployed in local communities and the North as a whole. The shale wealth fund could be worth up to £1 billion over 25 years and will provide additional funds over and above industry schemes and other sources of government funding.

(Budget Report, paragraphs 1.249, 1.299 and 2.335.)

For more information, see Practice note, Shale gas in the UK: environmental issues: Sovereign wealth fund for communities that host shale gas development.

The government will auction contracts for difference (CFD) of up to £730 million during this Parliament for up to 4 gigawatts (GW) of offshore wind and other less-established renewables, with a first auction of £290 million. Support for offshore wind will be capped initially at £105/megawatt hour (MWh) (in 2011-12 prices), falling to £85/MWh for projects commissioning by 2026.

(Budget Report, paragraphs 1.246 and 2.337.)

For more information, see Practice note, Electricity Market Reform (EMR): Contracts for Difference (CFD).

For more information on landfill tax generally, see Practice note, Landfill tax.

The government has announced that the aggregates levy rate will remain frozen at £2 per tonne in 2016-17, in order to support the construction sector.

(Budget Report, paragraph 2.175.)

The government will consult on a new exemption from the aggregates levy for aggregate that is an unavoidable by-product of laying pipes for utilities, with a view to legislating in the Finance Bill 2017.

(Budget Report, paragraph 2.176.)

For more information on the aggregates levy, see Practice note, Aggregates levy.

The government will update the list of designated energy-saving and water-efficient technologies qualifying for enhanced capital allowances (ECAs) during summer 2016, subject to state aid approval.

(Budget Report, paragraph 2.181.)

For more information, see Practice note, Enhanced capital allowances (ECAs) for investment in environmental technologies.

The government will legislate later in 2016 to reduce statutory plastic packaging recycling targets for 2016 and 2017. It will also set new recycling targets for glass and plastic packaging for 2018, 2019 and 2020. For plastic, the existing target will be reduced to 49% for 2016 and then increased by 2% each year to 2020, to 57%. For glass, the existing target of 77% will be maintained until 2017 and then increased by 1% each year to 2020, to 80%.

(Budget Report, paragraph 2.182.)

For more information, see Practice note, Packaging waste regime.

The government has announced that it will increase flood defence and resilience funding by more than £700 million by 2020-21. This will be funded by a 0.5% increase in the standard rate of insurance premium tax on insurers (from 9.5% to 10%). This ensures that the impact of the rate increase is spread broadly across the entire general insurance industry. The government calculates that even if insurers pass the cost of this rate increase on to their business and household customers, the average home and contents insurance would only increase by £1, and the average motor insurance premium by £2 per year.

The government will also spend a further £130 million on repairing transport infrastructure damaged by storms Desmond and Eva, as part of its flood resilience spending.

(Budget Report, paragraphs 1.205 and 2.336.)

For many environmental lawyers, the headline news from the 2016 Budget will be the abolition of the CRC from 2019. The business community has, unsurprisingly, welcomed the abolition of what was widely perceived to be a vastly over-complicated tax (see EEF press release, EEF full Budget Response, 16 March 2016). However, some environmental groups and those in the green business sector have reacted angrily, and with disappointment, to the news that CCL rates, which now include renewable energy sources, will increase as a consequence. This is seen by some as representative of a lack of support for the renewables sector, particularly when taken in contrast to the tax breaks granted to the oil and gas sector and the freeze on fuel duty (see Legal update, 2016 Budget: key business tax announcements: Oil and gas).

More generally, many feel that the 2016 Budget will do little to support the UK in reaching the carbon emissions targets set out in the Paris Agreement in December 2015, as can be further indicated by the absence of announcements on the future of carbon capture and storage (CCS), or the proposed tidal lagoon projects.

The estimated £700 million towards improving flood defences that is expected to be raised by the increase to insurance tax has been welcomed, as has the announcement of a consultation to be held later this year to clarify the scope of landfill tax.

For more information, see Budget 2016: Osborne accused of ignoring Paris Agreement with fossil fuel tax breaks and clean energy tax hike, BusinessGreen.com, 16 March 2016.