The Budget from an Energy perspective

March 23rd 2011 saw a mixed Budget from an Energy perspective - however, there were some useful Energy-specific provisions and a number of more general provisions which may benefit the industry.
 
Of specific interest:

• Introduction of a carbon price floor for electricity generation from 1 April 2013. The floor is to start at £16/tonne and expand in a straight line to £30/tonne in 2020;
• Initial capitalisation of the Green Investment Bank to be £3 billion, not £1 billion, and it will start operations in 2012/2013 (it was recently confirmed it would be a bank and not a fund);
• Climate Change Agreements to be extended to 2023. The climate change levy discount on electricity for CCA participants is to be increased from 65% to 80% from April 2013. Note that certain existing exemptions from the levy currently need EU state aid approval;
• Commitment to public funding for 4 CCS plants restated (we may not have much choice but to keep the coal plants going). This is to be funded by general taxation as opposed to the proposed CCS levy;
• Increased North Sea oil levy to 32% with a stabiliser mechanism to reduce it and increase fuel duty if oil prices reduce below a certain level; and
  
• Tax relief for decommissioning expenditure to be restricted to 20%.

Of general benefit:

• Reduction in the rate of corporation tax by a further 1%. From April 2011 it will be reduced from 28% to 26%, and from April 2014 it will be 23%;
• Various proposed changes to the methods of calculating corporation tax owed by international groups;
• An increase in the small and medium sized enterprise R&D tax credit to 200% from April 2011, and to 225% from April 2012;
• Various changes to the onshore planning regime (no change to the offshore regime controlled by the the Marine Management Organisation). The main changes are aimed to speed up and localise the process, and we shall see whether they have that impact;
• The Budget also confirmed that the new Major Infrastructure Planning system would go ahead, although this was not really in doubt; 
• Changes to entrepreneur's benefit to make it more attractive, and other provisions to encourage investment in business with high growth potential;
• Measures aimed at reducing regulation;
• The small business rate relief holiday extended by a further year from 1 October 2011;
• Additional funding for apprentices; and
• Increase in the standard landfill tax rate to £64/tonne from 1 April 2012. The lower rate to be frozen at £2.50/tonne. These are unchanged from the June 2010 Budget.
  

If you are interested in the Budget as a whole, you can find a useful summary here.