The resources industry has reacted with mixed feelings to yesterday’s Budget statement. Chancellor George Osborne announced several measures that will impact the sector, including confirming higher packaging targets, planned changes to the Landfill Communities Fund, and an intended ‘simplification’ to the Carbon Reduction Commitment (CRC) scheme.

Relevant parts of the Budget include:

• Confirmation that higher packaging targets for plastic, aluminium, glass and steel will come into force by 2013. While targets for wood and paper will remain unchanged, later this year, over the period 2013-2017 targets will increase annually by five per cent for plastic, three per cent for aluminium and one per cent for steel; glass recycling targets will be split by end use.
• Plans to consult on simplifying the CRC scheme, which Osborne told Parliament is “is cumbersome, bureaucratic and places unnecessary costs on businesses”. The Budget also states: ‘Should very significant administrative savings not be deliverable, the Government will bring forward proposals in autumn 2012 to replace CRC revenues with an alternative environmental tax’.
• Confirmation that Landfill Tax will rise as previously indicated to £72 by April 2013, but that funds landfill operators can give to environmental bodies under the Landfill Communities Fund will fall from 6.2 to 5.6 per cent.
• Ambition to become a ‘world leading energy sector’ through the launch for the Green Investment Bank and the Carbon Floor Tax. While renewable energy will play “a crucial part in Britain’s energy mix”, according to the Chancellor, the gas sector benefitted the most from the Budget through tax changes to be announced in the autumn.
• Further plans to ‘deregula te and simplify the planning system’ and to bring in new permitted development rights for micro-renewable energy installations.

Industry commentators were quick to praise some aspects of the Budget, while citing missed opportunities in other areas. Ray Georgeson, Chief Executive of the Resource Association praised the confirmation of higher packaging targets, but also noted the Budget missed an opportunity to review the PRN/PERN system: “We remain concerned that the continued existence of the anomaly on the issue of PERNs maintains the in-built disadvantage to UK plastics reprocessors. A reduction in the PERN value for exported mixed plastics to 60 per cent of the weight of mixed plastics exported would have been a welcome boost for UK reprocessors. Without this, the new targets feel like a leg-up, but still with one hand tied behind our backs.”

On the subject of the Landfill Communities Fund, Georgeson commented: “We also note that the Chancellor stated that future decisions on the Landfill Communities Fund will be taken based on an assessment of the ‘level of unspent funds held by environmental bodies’. We reiterate our call for the Government to consider a time-limited restoration and revision of Object C of the LCF, publish their assessment of the unspent fundholdings and repatriate some of these funds to be focused on research and innovation supporting recycled product development as a further boost to UK manufacturing using quality recovered materials in quality products.”

The Chancellor’s intention to simplify the CRC system was likewise received with mixed feelings, with many commentators calling on the government to act prudently. The Environmental Services Association’s Director of Policy Matthew Farrow said: “[L]ike every business sector we would prefer a simpler CRC. But we must not throw the baby out with the bathwater by forgetting that the focus of the CRC must be to drive decarbonisation of the economy.”

Andrew Raingold, Executive Director of the Aldersgate Group, an alliance of individuals and businesses for a sustainable economy, echoed this call, saying: "The Chancellor's emphasis on reducing the bureaucracy associated with the CRC Energy Efficiency Scheme is critical but reform must not be at the expense of investments in energy savings. A more effective regulatory regime would help ensure that businesses reduce both their energy use and bottom line costs."

The Environmental Industries Commission reacted more forcibly, with Director of Policy and Public Affairs Michael Lunn noting: "Despite small green shoots of recovery, investor confidence, instability and uncertainty remain... This can be seen clearly in the Budget’s further attack on the future certainty of the Carbon Reduction Commitment. Having previously diverted funds raised from the scheme from green initiatives into general taxation, the Chancellor has now announced that it must be simplified, or scrapped. This sends a very unhelpful message to those companies working their internal budgets and committing funds to comply with a regulation that may become redundant in just a few months’ time."

The Aldersgate Group also indicated that the Budget didn’t produce ‘a credible growth strategy’ for a green economy. Raingold said: "Over fifty companies and green groups support the Aldersgate Group's call for a credible growth strategy that catalyses investment in clean technologies. While this did not materialise in the Budget, the Chancellor's commitment to develop renewable energy is welcome. Minimising costs will be vital but the associated economic benefits must also be taken into account as other countries pull ahead of the UK in the green economy race."

Friends of the Earth, meanwhile, was more cutting, claiming the Budget 'rejects new green jobs and lower energy bills'. "The Budget sticks two fingers up at David Cameron's promise to build a green future", said Executive Director Andy Atkins, adding: "The UK could be a world leader - investing in clean British energy would create new jobs and free us up from the dirty gas imports responsible for soaring fuel bills." Instead, Atkins noted, this Budget has tied us to airport expansion and gas power, "keeping us hooked on costly fossil fuels for many more decades".