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The UK Government has promised to put the “fuel in the tank” of the nation’s economy with a series of new measures in its “Plan for Growth” – but without the focus on a green, low-carbon future many were calling for.

Chancellor George Osborne used his first full Budget to announce details of an increase in capital available to the Green Investment Bank to £3 billion and the introduction of a carbon price floor starting at £16 per tonne of carbon from 1 April 2013 to drive investment in green infrastructure and low-carbon electricity generation.

He also unveiled steps to kick-start the sluggish property market by offering first time buyers interest free loans to help them get a foot on the housing ladder.
Up to 10,000 people will receive loans of up to 20 per cent of the value of new properties. The scheme will be funded by an increased levy on banks and, it is hoped, will provide a boost to the construction industry.

More details were released of the UK’s new Green Investment Bank, aimed at supporting private sector investment into low-carbon technologies.

The scheme will function as a real bank, but won’t be able to borrow until 2015.

Disappointed investors in green technologies had hoped the bank would have the borrowing capability from the start, and the move could potentially create a shortfall in the billions of pounds investment required over the next decade to meet climate change targets.

Osborne told Parliament he was committing an additional £2 billion to the bank, on top of the £1 billion already pledged, enabling it to start operating in 2012.

The Government wants the Green Investment Bank to create confidence in the sector by taking on risks the market can’t adequately finance, to catalyse further private investment into the sector and facilitate the entry of new investors into green technologies such as wave and tidal power and wind energy.

The bank is a key part of government plans to shift the economy to a low-carbon system that will drive economic growth and jobs, cut emissions and reduce the nation’s growing dependence on imported natural gas as North Sea supplies dry up.

Private-sector investment of around £200 billion is required over the next decade if the UK is to meet binding European Union climate change targets for 2020.

But traditional sources of private-sector capital are likely to deliver only £50 billion to £80 billion of investment in green energy technologies and related by 2025, Ernst & Young accountants told a recent inquiry by the UK parliamentary Environmental Audit Committee.

Osborne revealed the Government would set the world’s first-ever carbon floor price to pay for investment in new energy infrastructure.

After telling the Commons he wanted the nation to become a world leader in green energy, he said the carbon tax would be set at £16 per tonne in 2013, rising to £30 per tonne by 2020.

The government is not back pedalling on its green building commitments, according to Housing Minister Grant Shapps in an article in today’s Guardian. He claims that the Zero Carbon Hub’s current consultation is not about watering down the zero carbon agenda. He also defends the decision to abandon the Homes and Communities Agency sustainability and design standards, and claims that it does not mean that the environmental standards of their new homes will be compromised.

Shapps says the government is supporting renewable energy schemes in local areas, district heating schemes, in other words, and the Hub is working closely with green groups to look at how reductions can be achieved beyond the footprint of each individual house. This has already been mooted, in terms of a relaxation of green standards for individual buildings if developments include a centralised efficient heat/power unit.

Shapps claimed ‘ambitious’ standards will be set for the fabric energy efficiency of new homes, in actual fact this will approximate to current Code for Sustainable Homes level 4, according to a previous announcement. Nevertheless, he says the government has not abandoned its zero carbon targets.

As regards the recent decision not to take forward proposed Homes and Communities Agency (HCA) Core Standards for new buildings, Shapps said “These proposed standards were far-reaching, and went far beyond environmental considerations. They included a whole raft of separate standards for new homes built on HCA land and with HCA funding, and would have cost developers an estimated £8,000 per home to meet”.

“The reason for not introducing these standards is quite clear – we want to end the minefield of overlapping and confusing building standards that have built up in recent years, and instead have a system based on building regulations and a clear set of standards. Not introducing an entirely separate set of standards for housing built on some public land is a start to this process”.

The HCA were previously committed to building to CSH level 4, so it will be interesting to see where the government do go with this if a green building agenda is to be maintained.

However, things could get even worse – the future is all electric. A piece in the Sunday Times says Britain’s homes are projected to go all electric by 2030. Consumers will face big increases in their energy bills to pay for a £130 billion plan to create a new generation of allegedly green power stations over the next decade. Ministers will reveal the likely cost and shape of Britain’s energy generation in the next few weeks.

It will entail the construction of new nuclear plants and supposedly ‘cleaner’ gas-fired and coal-fired power stations. Several billion pounds are also to be spent on building a national grid for carbon dioxide – a network of pipes to collect the waste gas from such power stations and pump it underground.

Charles Hendry, the energy minister, said consumers could expect to pay significantly more for their power in coming years as the nation’s ageing coal-fired and nuclear plants have to be replaced.

Over the past 12 months, we’ve seen the devastation that unchecked climate change could bring – floods in Pakistan, forest fires in Russia, mudslides in China. And yet over the same 12 months we’ve seen a growing despondency about international efforts to protect our planet. Copenhagen was a disappointment for everyone who cares about climate change.

Though some important steps were taken, simply not enough progress was made. But today, as the world looks to Cancún, I want to argue that everyone who cares about climate change should take heart – because I believe there are three clear reasons to have hope for the future.

The first is that multilateral action is far from dead. British ministers are going to Mexico this week with an approach that is both realistic and optimistic. Realistic, because we don’t expect a global deal to be struck in Cancún, but optimistic too, because we are viewing this as a stepping stone to future agreement. The momentum for action is with us. Last year, all the major economies, including the US and China, put forward together, for the first time, the actions they would take to limit emissions.

This year is about building on that and bringing a global deal closer, maintaining momentum through to next year’s summit in South Africa and beyond. It is vital that we demonstrate that progress is being made and the responsibility rests with all of us to put our shoulder to the wheel and push things forward. Moving step by step might be frustrating, but the consolation is that we are clearly going in the right direction.

The second reason to take heart is that there is a compelling economic case to be made for fighting climate change that is barely out of the blocks yet. The green effort should not be downgraded or swept under the carpet because of spending cuts and austerity. On the contrary, both developed and developing countries have the potential to make massive gains from a green economy; the low carbon market is already worth up to £3.2 trillion and is forecast to grow by around 4% a year over the next five years.

I passionately believe that by recasting the argument for action on climate change away from the language of threats and punishments and into positive, profit-making terms, we can have a much wider impact. That’s why this government has set up the Capital Markets Climate Initiative – to help trigger a new wave of green investment in emerging economies and make the City of London the global capital of the fast-growing green investment sector.

That brings me to the third cause for hope – Britain’s ability to make change directly, even outside the progress made on multilateral decision-making. Yes, climate change is a global threat and yes, the UK accounts for less than 2% of the world’s emissions, but that doesn’t mean we have to wait around for a global deal in order to make a difference. For a start, there’s a lot we can do bilaterally, both through government and through business. Earlier this month, Britain and China agreed to work together to pilot low-carbon initiatives. The UK-India Business Leaders Climate Group has published its first report, full of ideas on joint research programmes and skills exchanges. We are providing technical assistance to Indonesia to tackle deforestation. And within the EU we are driving work to promote investment in low-carbon infrastructure. In so many ways, we are already working directly with our friends to good effect.

We can also lead change with unilateral action – setting a shining example domestically for other countries to follow. When this coalition was formed, I set out our ambition to be the greenest government ever and we are wasting no time in trying to achieve that. In the coming weeks and months, we’ll be taking forward some major commitments including a new Green Deal that will insulate millions of homes, a Green Investment Bank to drive low-carbon growth and £850m funding for a renewable heat initiative. This initiative alone is going to make a massive difference to our environment and to our economy. It will drive by more than tenfold the increase of renewable heat over the coming decade, radically reducing carbon emissions and creating thousands of jobs.

Another major way the UK can make a difference is through our aid programmes – and our commitment to ring-fencing aid means we’re able to help the poorest countries cope with a changing climate and get access to clean energy.

So these are real causes for hope. The opportunity to make progress towards a global climate change deal. A compelling case to be made for countries the world over to move to low-carbon economies. A chance for Britain to make a difference both at home and in direct partnership with major economies. For all these reasons I believe we can be optimistic about the future. In the past decade, we have seen a move in public attitudes to climate change and a hardening of political will to deal with it; over the next decade, I am convinced we can make a real difference.