Sunak's fossil fuel super tax break

Rishi Sunak, the UK chancellor. 

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Rishi Sunak's 'super deduction' budget announcement represents a massive tax break for fossil fuel companies - just ahead of the COP26 talks.

The super deduction must be targeted to support new green projects, not the fossil fuels of the past.

The much-lauded ‘super deduction’ policy from Rishi Sunak, the UK chancellor, will leave the backdoor open for continued investment and expansion of fossil fuel infrastructure in the UK, according to environmental campaigners.

The campaign group Green New Deal UK has warned that the move would derail the phase out of fossil fuels in the UK and lock-in carbon emissions for decades to come - at the taxpayers expense. 

Its analysis has found that the ‘super deduction’ represents a new increased temporary tax relief for companies who invest in certain qualifying capital assets from 1 April 2021. It is believed to benefit capital intensive businesses, such as manufacturers, utilities companies and fossil fuel companies, to the tune of £25 billion. 

Investments

This tax relief proposal could derail the phase out of fossil fuels and jeopardise any hope of a green recovery in the UK just as Britain hosts the crucial United Nations Climate Talks (COP26).

This would have major ramifications for prime minister Boris Johnson's international green credibility, as well as shatter any international leadership the UK has ahead of the crunch climate talks. 

Kemi Badenoch, a Treasury minister,  ruled out any green strings on the new super deduction tax break at the Environmental Audit Committee last week, leaving the door wide open to new fossil fuel investments in Britain.

Badenoch said: “What we’re not going to do is to strangle our economic recovery with regulation that’s not necessary.”

Rewire

Hannah Martin, co-executive director of Green New Deal UK, said: “A recovery that allows fossil fuel expansion and accelerates carbon emissions is putting our future at risk.

"Fossil fuel companies are responsible for 89 percent of global emissions and this is yet another example of how this government prioritises the interests of large corporations over communities here and abroad. 

“In the same year as the UN climate talks, we are still waiting to see any kind of leadership from this government - even after all the bombastic language and headline-grabbing promises.

She added: "Now is the time to rewire our economy with a Green New Deal to build the low-carbon industries we need, with millions of good jobs in every constituency in Britain. 

Tax breaks

“A super deduction could be tailored to boost the green industries of tomorrow, helping grow the manufacturing base required to deliver electric vehicles, wind turbines and battery and storage solutions up and down the UK.

"Without green requirements, this tax deduction could de risk the expansion of fossil fuel infrastructure, locking-in destructive climate change with the taxpayer footing the bill.”

Caroline Lucas MP, a member of the Environmental Audit Committee and co-chair of the All Party Parliamentary Group on the Green New Deal, said: "What the Treasury minister had to say at today’s Environmental Audit Committee was deeply alarming.

"This government appears to fail to grasp the simple reality of the climate and nature emergency: the need to reduce our emissions is absolute and should drive all investment and infrastructure spending.

"It is shocking that under the super deduction scheme, the government could be giving tax breaks to companies to invest in fossil fuel projects which take us further away from our chances of reaching climate targets. 

Industrial

She added: "Making sure investments are aligned climate and nature targets would not 'strangle our economic recovery' as the minister claimed.  If the economic recovery is not green, it’s simply not sustainable.

"The super deduction must be targeted to support new green projects, not the fossil fuels of the past." 

The environmental campaigners say the super education directly undermines the governments claims to be preparing the country for a 'green industrial revolution'.

They claim last week's budget also failed to reform and extend the Green Homes Grant to speed up the retrofitting of the 28 million homes in the UK that need urgent improvements to their energy efficiency.

Current estimates suggest that only 50,000 homes benefited from the scheme, while the remainder of the budget was notable for its absence of tangible budgetary commitments for realising the much vaunted green industrial revolution. 

This Author

Brendan Montague is editor of The Ecologist. This article is based on a press release from Green New Deal UK.

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