July 21, 2014 9:28 pm

Chancellor backs down on cutting carbon targets

Drax Power Station As Profit Drops On Carbon Costs And Biomass Conversion...Vapour rises from cooling towers at Drax Power Station, operated by Drax Group Plc, at night in Selby, U.K., on Tuesday, March 11, 2014. Drax Group Plc, the operator of the U.K.'s biggest coal-fired power station, reported a 23 percent slump in full-year profit as carbon prices rose and it prepared to convert two more units to burn cleaner fuel. Photographer: Chris Ratcliffe/Bloomberg©Bloomberg

Drax power station in Selby, Yorkshire

George Osborne has been forced to back down from an attempt to weaken measures to tackle global warming, the Financial Times has learnt.

The Tory chancellor had sought changes to Britain’s “fourth carbon budget”, which sets a limit on greenhouse gas emissions through the 2020s, after claims it would make British businesses less competitive than EU rivals.

But on Tuesday the coalition will announce there will be no change to the targets, which were agreed three years ago after a bitter fight between the Tories and their Liberal Democrat governing partners.

The budget effectively commits the UK to a 50 per cent cut in greenhouse gases, compared with 1990 levels, by 2025.

The announcement will form part of an energy “package” agreed by both sides of the coalition, which will incorporate an agreement on fracking and on fuel poverty.

The news on the carbon budget will delight green campaigners but will prompt disappointment from manufacturing groups such as the Engineering Employers Federation.

The question of carbon budgets has been the focal point for a war of attrition between Mr Osborne and Ed Davey, the Lib Dem energy secretary.

Mr Osborne wanted to alter the target because he feared it could make it harder to achieve his plans for up to 40 new gas-fired power stations to come on stream over the next 15 years. He had argued Britain should not be “further ahead of our partners in Europe” when it came to green energy.

But Mr Davey had sought to keep the carbon budget – introduced by his predecessor Chris Huhne – untouched. He had been supported by the Committee on Climate Change, the statutory group set up to advise the government under the 2008 Climate Change Act.

The CCC repeatedly insisted there was no economic or legal reason to change the policy and warned that changing the carbon budget could damage investor confidence in low-carbon energy generation.

In depth

Climate change

Climate Change And Global Pollution To Be Discussed At Copenhagen Summit...GRANGEMOUTH, UNITED KINGDOM - NOVEMBER 17: Grangemouth oil refinery emits vapours near the Firth of Forth on November 17, 2009 in Longannet ,Scotland. As world leaders prepare to gather for the Copenhagen Climate Summit in December, the resolve of the industrial nations seems to be weakening with President Obama stating that it would be impossible to reach a binding deal at the summit. Climate campaigners are concerned that this disappointing announcement is a backward step ahead of the summit.

The latest news and analysis on the world’s changing climate and the political moves afoot to tackle the problem

Ruth Davis, UK political director for pressure group Greenpeace, said the announcement would be a victory for responsible policy making over political point-scoring.

“George Osborne has done everything in his power to water down the UK’s keystone climate change policy, putting at risk vital investment in our energy system and our credibility in global climate negotiations,” she said.

“Ed Davey deserves praise for standing up to the Treasury’s wrecking efforts, and the prime minister credit for holding firm on this crucial commitment.”

Last week the CCC warned that Britain was falling behind on its target to cut emissions, in part because of the slow take-up of household insulation schemes.

The UK has a legally binding target of reducing emissions by 80 per cent by 2050.

Gareth Stace, head of climate and environment policy at the EEF, said the Treasury was right to carry out its own review of the evidence before committing itself to the 2025 target.

“This was the correct approach to take in opposition to voices who wanted the chancellor to simply accept the target without even examining the evidence and carry on regardless,” he said.

“We support the government’s decision today, but would urge that future targets must emanate from clearer strategies for how each sector of the economy will contribute to meeting our shared goals. Concern remains about calls for an increased EU 2030 target whilst the Committee on Climate Change is already warning of a major policy gap in achieving our targets as they stand.”

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE