UK: Budget 2012: Environment Related Aspects

Last Updated: 23 March 2012
Article by Paul Sheridan and Valentina Keys

Yesterday the Chancellor delivered his speech on the 2012 Budget. "Environmentally sustainable must always be fiscally sustainable" was the soundbite. The Chancellor made a series of announcements pledging to reduce environment related red tape and cut administrative burdens. A brief summary of some of the key announcements made in the Budget are set out below (a separate LawNow summaries key features relating to clean/renewable energy).

Energy Efficiency

The following key measures are to be used to promote energy efficiency:

Green Investment Bank (GIB): The GIB is to promote and finance clean energy and energy efficiency. It will make its first investments in April 2012 (subject to State Aid approval). GIB's priority areas include commercial and industrial waste processing and recycling; generation of energy from waste; non-domestic energy efficiency; and supporting the Green Deal.

Enhanced capital allowances: The list of designated energy efficient (and water-efficient) technologies qualifying for enhanced capital allowances will be updated during summer 2012 (again subject to State aid approval).  This may be subject to change once the Green Deal Financing measures are announced.

Environment and construction

The following announcements were made with regard to built environment and real estate:

CRC Energy Efficiency Scheme : The Government will continue to consult on how to simplify the CRC Energy Efficiency Scheme (CRC) in order to reduce administrative burdens on business. If significant administrative savings are not deliverable, the Government will bring forward proposals (in autumn 2012) to replace CRC revenues with an alternative environment related tax. Allowances sold with respect to 2012–13 emissions will be £12 per tonne of carbon dioxide.

Zero-carbon homes relief: The stamp duty land tax relief for zero-carbon homes will end on 30 September 2012.

Planning and the presumption in favour of sustainable development: On the 27th March 2012 the Government is due to publish the National Planning Policy Framework (NPPF). This will feature the much debated "presumption in favour of sustainable development".

Aggregates levy: The Government is to delay the planned increase in the aggregates levy rate (from £2.00 to £2.10 per tonne) until 1 April 2013. This will avoid putting additional pressure on the aggregates industry in Northern Ireland, following the suspension of the aggregates levy credit scheme.


The following announcements were made with regard to waste:

Landfill tax rate: standard rate of landfill tax is to increase by £8 per tonne to £72 per tonne from 1 April 2013. The lower rate of landfill tax will remain frozen at £2.50 per tonne in 2013–14.

Landfill Communities Fund: the value of the landfill communities fund for 2012–13 will remain unchanged at £78.1 million. As a result, the cap on contributions by landfill operators will be amended to 5.6 per cent. Future decisions on the value of the fund will take into account the level of unspent funds held by environmental bodies.

Scottish Landfill Sites: the Government is to introduce retrospective legislation in the Finance Bill 2012 to correct landfill tax legislation concerning the definition of a landfill site applicable in Scotland so as to align the position in Scotland with the rest of the UK (to be effective from 21 March 2000).

Packaging waste: The Government will legislate later in 2012 to increase packaging recycling targets between 2013 and 2017. Targets will increase annually by 3 per cent for aluminium, 5 per cent for plastic and 1 per cent for steel. Glass recycling targets will be split by end use: to achieve the best environmental outcome from the recovery activities, the intention is to encourage more glass to go to re-melt applications and reduce the amount of glass going into aggregates over time.


The following announcements were made with regard to transport:

Company car tax rates 2014–16: The appropriate percentage of list price subject to tax will increase by one percentage point for cars emitting more than 75 grams/kilometre of carbon dioxide (to a maximum of 35 per cent in 2014–15), and by two percentage points (to a maximum of 37 per cent) in both 2015–16 and 2016–17.

Zero carbon and ultra low carbon emission vehicles: From April 2015, the five-year exemption for zero carbon and ultra low carbon emission vehicles will come to an end (as legislated in Finance Act 2010). The applicable percentage for zero emission and low carbon vehicles will be 13 per cent from April 2015 and this will increase by two percentage points in 2016–17.

Air passenger duty: An 8% rise in air passenger duty will come into force on 1 April 2012. This will be followed by another increase in April 2013.

Airport expansion: The Government has signalled that steps may be taken to address the lack of airport capacity in south-east England. The transport secretary is expected make an announcement in this regard this summer. 


Climate change levy (CCL) rates: CCL rates will increase in line with the RPI from 1 April 2013. In particular, energy used in certain metal recycling processes will be liable to a reduced rate of 20 per cent of the main rates from 1 April 2012.

Climate Change Agreements (CCAs): CCAs will be extended to 2023. As announced at Autumn Statement 2011, the climate change levy discount on electricity for CCA participants available from 1 April 2013 will be increased to 90% as part of a package of measures to support energy-intensive industries exposed to international competition.

Environment related deregulation

The Government has pledged to cut environment related red-tape. The following are envisaged: 

  • Consultation on simplifying the system for recording waste transfers;
  • Develop an electronic system for registering waste transfers and consider allowing electronically uploaded hazardous waste returns;
  • Reduce burdens on small businesses from producer responsibility obligations (for example, exempting more small batteries producers from having to join a Battery Compliance Scheme);
  • Consultation on excessive compliance costs for business in relation to the Waste Electrical and Electronic Equipment Regulations;
  • Simplify and speed up application procedures for environmental permits;
  • Introduce new statutory guidance on contaminated land to focus on high risk land and clarify what land won't be caught by the contaminated land regime;
  • Work with the European Commission to revise guidance on data sharing under the Chemicals (REACH) requirements;
  • Simplify and strengthen air quality legislation, including removing obsolete regulations and modernising others;
  • Focus Environment Agency enforcement on high risk cases and take forward trials of auditing by accredited third parties;
  • Launch sector-based reviews of regulation with a view to enforcement at the lowest possible cost to business; starting with chemicals manufacturing, volunteer events, and small businesses in food manufacturing.

Reduce the cost, complexity and delay to businesses from application of the Habitats Directive. The Government will establish a Major Infrastructure and Environment Unit to engage at an early stage with nationally significant infrastructure projects on potential Habitats Directive issues, ensuring evidence plans are agreed upfront and identifying where the test of "over-riding public interest" may apply.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 22/03/2012.

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