The 20p per litre government fuel duty incentive for firms that invest in bioethanol and biodiesel is being withdrawn from spring 2010, saving the treasury an estimated £550 million. In its place, the Renewable Transport Fuels Obligation (RTFO) will set a minimum legal threshold that, by 2010, at least 5% of all fuel sold in the UK will have to be made from material from sustainable sources. Suppliers who fail to meet their targets will be fined.
"It would appear that this government intends to remove an attractive incentive and replace it with another regulatory control," said the FPB's Chief Executive, Phil Orford. "There appears to be a future strategy of using the stick rather than the carrot to implement green initiatives .This will not only force businesses to comply with yet more red tape, but also removes any financial benefits for ‘going green'. This is yet another long term issue that is being addressed by short-term cost-saving policies."
As part of a pre-budget survey carried out for Referendum, the FPB's quarterly ballot of members, 78% of respondents agreed that ‘green' tax incentives would encourage them to invest in sustainable initiatives. Many will feel that the 2008 Budget, despite the inclusion of a raft of green measures, falls short of this aim, and that the benefits of investing in sustainability are outweighed by the costs.
FPB member Tracy Hoather, of Sameday Plc, a courier firm based in Knutsford, Cheshire, said that the lack of availability of biofuels was only one reason her firm had not yet invested in them.
"We need to be confident that we can fill up wherever we are in the country. However, like any incentive offered by this government, there is a chain attached allowing them to yank it back at any moment." she said. "These incentives are untrustworthy. When they set them up, they should put a lifespan on them so everybody knows where they stand. Combined with other proposals, such as congestion charging, it's getting to the stage where I just despair about what they have got planned for us."
The Tenon Forum, a leading think tank, estimates that implementing green practices has already cost small businesses £3.1 billion over the past year.
According to its latest research, the majority of respondents were cynical about politicians' enthusiasm for environmental policies – 60% believing they are hijacking green issues in a bid to win votes rather than out of concern for the environment.
The steep costs of complying with green initiatives has discouraged many small businesses from investing in sustainable incentives. Almost half (42%) of those questioned have failed to implement environmentally-friendly measures, and 19% said they have no plans to do so. Many do not see recycling and improving energy efficiency as worthwhile, with 27% believing that the cost outweighs the benefits.
However, almost half (45%) of owner-managers who took part in the survey agree that the UK's tax regime should be used to encourage green practices among businesses, but 44% believe this revenue should be ring-fenced to fund environmental initiatives. In addition, 21% agree that displaying green credentials gives a business a competitive edge.
The European Commission recently proposed that member states should use at least 10% biofuels by 2020. The FPB believes that, if it expects small firms to make the appropriate changes and cut to their carbon emissions, the Government must provide them with more support, not less.
"If you were a cynic, you would say that by removing the 20p per litre tax incentive, and introducing new targets for suppliers with financial penalties for non-compliance, the Chancellor is looking to claw back every bit of tax revenue he can," said Rod Prowse, of the Federation of Petroleum Suppliers, which is also based in Knutsford. "In any case, it is not in line with the Government's stated plans to encourage the use of biofuels."
The Government is also looking at the wider economic and environmental impacts of producing fuel from plants, in order to inform the post 2010 biofuels policies of both the UK and the EU. It has stated that it will not exceed current UK targets for biofuel production until it is satisfied it can be done sustainably. |
