It was never positioned as a ‘green budget’. That much could be gathered from the now customary leaks ahead of the official unveiling, which seemed to offer little prospect for clean energy.
There were few surprises, then, when the Chancellor unveiled new measures of fiscal support for the North Sea gas industry.
Having inflicted some rather heavy taxes on the sector last year, the UK Chancellor appears to have reversed his commitment to leaning on oil and gas businesses in favour of giving more opportunities to renewable developers.
The Chancellor has perhaps been spurred into action following a reported 25% decline in gas production in the second quarter of last year – a slump blamed on the tax imposed on the industry in last year’s budget.
Unfortunately, the move does seem a little short sighted. Even official figures from the Oil and Gas lobby – Oil And Gas UK – suggest that there are only 14 – 24 ‘equivalent barrels of oil’ (to use industry barometres) remaining. Whilst this represents a security for what some estimate to be the next forty years, and there is of course always the prospect of future discoveries, gas’s green credentials are poor.
Contrast this with other European states, particularly Germany, which has just announced it will invest $263billion in renewables. And whilst Germany does have some sources of natural shale gas, it has held off the temptation to exploit this rather more risky resource.
Natural gas can be a solution – but only a short term one. What Osborne risks is a slow down in renewable developments – notably wind – that means there is a shortfall in generating capacity when the gas eventually runs out.
The Inflation Reduction Act has sparked major optimism in the US renewables sector, but wind installations still fell 37% last year.