Budget 2018 – Issues for Environmental Business

EIC Executive Director Matthew Farrow commented on the Budget announcement of 29th October 2018:

“The environmental content of the Budget was focused on plastics – its important that this issue does not suck up all the political airtime available for green issues.  That said, the proposal for a tax on plastic packaging with less than 30% recycled content, plus a review of PRNs is welcome, but is only a modest start on what needs to be a fundamental shift towards meaningful producer responsibility.

We will be looking at the carbon tax proposals – the intention to freeze carbon price support looks questionable given the need to deliver a net zero carbon economy on just over 30 years time.

There was also a lack of action on air quality – the apparent lack of any announcement on ‘red diesel’ is a real missed opportunity, we urgently need to end the practice of construction machinery and transport refrigeration units being able to use untaxed diesel when low pollution alternatives are available.”



Below is a summary of issues for environmental business in the Budget:


FUEL DUTY Fuel duty will be frozen for a ninth successive year saving the average driver a cumulative £1,000 by April 2020,14 compared with what they would have paid under the pre-2010 fuel duty escalator.

ALTERNATIVE FUELS Following review, the government will maintain the difference between alternative and main road fuel duty rates until 2032 to support the de-carbonisation of the UK transport sector, subject to review in 2024.


Uprating – From 1 April 2019 VED rates for cars, vans and motorcycles will increase in line with RPI. To support the haulage sector, the government will freeze the Heavy Goods Vehicle (HGV) VED for 2019-20.

Vans – The government will shortly publish a summary of responses from the consultation on VED reform for vans, published in May 2018. The response will set out proposals to introduce environmental incentives from April 2021. Bands and rates will be set out ahead of Finance Bill 2019-20.

AIR QUALITY £20 million additional funding for local authorities to meet air quality standards


CARBON PRICE SUPPORT The government will freeze the CPS rate at £18/tCO2 16 for 2020-21. From 2021-22, the government will seek to reduce the CPS rate if the Total Carbon Price remains high. (64)

CARBON PRICING IN THE EVENT OF NO DEAL In the unlikely event no mutually satisfactory agreement can be reached and the UK departs from the EU ETS in 2019, the government would introduce a Carbon Emissions Tax to help meet the UK’s legally binding carbon reduction commitments under the Climate Change Act. The government is also legislating so it can prepare for a range of long-term carbon pricing options.

CLIMATE CHANGE LEVY The Budget sets the CCL main rates for 2020-21 and 2021-22 and continues with the government’s commitment to rebalance the main rates paid for gas and electricity.

INDUSTRIAL ENERGY TRANSFORMATION FUND £315 million investment to support businesses transition to low carbon and cut bills through energy efficiency

BUSINESS ENERGY EFFICIENCY Call for evidence on Business Energy Efficiency Scheme, focused on smaller businesses.



PLASTICS The government will introduce a tax on the production and import of plastic packaging from April 2022. Subject to consultation, this tax will apply to plastic packaging which does not contain at least 30% recycled plastic, to transform financial incentives for manufacturers to produce more sustainable packaging.

£20 million in support measures to tackle plastics and boost recycling. £10 million more for plastics R&D, and £10 million to pioneer innovative approaches to boosting recycling and reducing litter, such as smart bins.

PACKAGING PRODUCER RESPONSIBILITY to be reformed, with more details in the Waste & Resources Strategy

SUPPORTING ABANDONED WASTE SITE CLEARANCE – Up to £10 million for the Environment Agency to clear abandoned waste sites.

INCINERATION TAX Should wider policies not deliver the government’s waste ambitions in the future, it will consider the introduction of a tax on the incineration of waste

DISPOSABLE CUPS No levy to be introduced

AGGREGATES LEVY RATES The government will freeze Aggregates Levy rates for 2019-20, but intends to return the Levy to index-linking in future



R & D £1.6 billion to strengthen UK’s global leadership in science and innovation including up to £78 million for the Stephenson Challenge, supporting innovation in electric motor technology, making vehicles lighter and more efficient than ever before.

ENHANCED CAPITAL ALLOWANCES (ECAs) – The government will end ECAs and First Year Tax Credits for technologies on the Energy Technology List and Water Technology List from April 2020.


FLOOD RISK MANAGEMENT – £13 million to tackle risks from floods and climate change



By |2018-10-30T14:34:53+00:00October 29th, 2018|EIC News|