On 29 October 2018, the government delivered the Autumn 2018 Budget. The key environmental announcements are set out here

Carbon price support (CPS) and climate change levy (CCL) 

The government will freeze the carbon price support (CPS) rate for 2020-21 at £18 per tonne of carbon dioxide (t/CO2).From 2021-22, the government will seek to reduce the CPS rate if the total carbon price remains high. The total carbon price is currently made up of the EU Emissions Trading System (EU ETS) price and the CPS rate.

 

The Autumn 2018 Budget also sets the climate change levy (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. The electricity rate will be lowered in 2020-21 and 2021-22. The gas rate will increase in 2020-21 and 2021-22, so that it reaches 60% of the electricity main rate by 2021-22. Other fuels, such as coal, will continue to align with the gas rate. The discount for sectors with climate change agreements will change to reflect the change in CCL main rates.

Carbon pricing following Brexit 

In the event of a no-deal Brexit, the government would introduce a carbon emissions tax to help meet the UK’s legally-binding carbon reduction commitments under the Climate Change Act 2008. The tax would be introduced through the Finance Bill 2018-19.

The tax would apply from 1 April 2019 to all stationary installations currently participating in the EU ETS. A rate of £16 would apply to each t/CO2 emitted over and above an installation’s emissions allowance, which would be based on the installation’s free allowances under the EU ETS.

Enhanced capital allowances (ECAs) for energy and water

The government will legislate by statutory instrument to update the Energy Technology List (ETL) and Water Technology List (WTL) that qualify for a first-year allowance (FYA).

The government will end ECAs and FYAs for technologies on the ETL and WTL on 31 March 2020 for companies and 5 April 2020 for unincorporated businesses. The First Year Tax Credit (FYTC) will end on 31 March 2020.

Tax on plastic packaging with insufficient recycled content

The government announced that it will introduce a new tax on produced or imported plastic packaging.Subject to consultation, this will apply from 1 April 2022 to all plastic packaging that does not include at least 30% recycled content. The aim is to encourage businesses to ensure that far more packaging can be recycled and to use more recycled plastic in their packaging. Recycled plastic packaging is currently more expensive to produce.

This will work alongside planned reforms to the packaging producer responsibility system as announced in the 25-year plan for the environment. The system reforms will be to the packaging waste regulations to incentivise producers to take greater responsibility for the environmental impacts of their products. This will include exploring whether to extend producer responsibility requirements to plastic products not currently covered by existing regimes to create a better market for recycled plastic

Funds to tackle plastics and boost recycling

The government will allocate £20 million to tackle plastics and boost recycling. This will be made up of£10 million for plastics research and development to assist business transition away from single-use plastics, and £10 million to pioneer innovative approaches to boosting recycling and reducing litter, such as smart bins.

No tax currently on disposable cups

Following its call for evidence in spring 2018, the government has concluded that a levy on all cups would not currently be effective in encouraging widespread reuse as businesses are already taking voluntary steps to reduce the impact of disposable cups. The government will return to the issue if sufficient progress is not made. In the meantime, the government will consider the best way to tackle the environmental impact of cups in the Resources and Waste Strategy due to be published later in 2018

Possible future incineration tax

The government expects incineration to continue to play a significant role in waste management in the UK. However, in the long term, the government wants to maximise the amount of waste sent to recycling instead of incineration and landfill. Should wider policies not deliver the government’s waste ambitions in the future, it will consider introducing a tax on the incineration of waste, operating in conjunction with landfill tax and taking account of the possible impacts on local authorities.

Landfill tax

On 29 October 2018, the government published a tax information and impact note (TIIN) explaining the increases in landfill tax rates for disposals on or after 1 April 2019. The government will include provisions in the Finance Bill 2018-19 to amend section 42 of the Finance Act 1996, which sets the rates of landfill tax. Both the standard and lower rates of landfill tax will increase in line with the RPI, as announced in the Autumn 2017 Budget. The TIIN sets out the new rates.

Abandoned waste site clearance

A government pilot scheme will make available up to £10 million to the Environment Agency to work with partners to clear the worst abandoned waste sites.

New business energy efficiency scheme for smaller businesses

The government announced that it will issue a call for evidence on introducing a new business energy efficiency scheme, primarily for smaller businesses. The call for evidence will seek views on a range of possible delivery options.Larger businesses are currently encouraged to improve their energy efficiency through the CRC Energy Efficiency Scheme. However, the government is abolishing the CRC from the end of the 2018-19 compliance year. The CRC is not being replaced with a new scheme. Instead, themain rates of the climate change levy (CCL) are increasing from April 2019 in order to recover the revenue lost from abolishing the CRS, and the Government is extending current requirements for reporting on CO2 emissions and energy use in company annual reports. The additional reporting requirements will apply to many private sector CRC participants, although it will not apply to public sector organisations.

Industrial Energy Transformation Fund 

As part of the Industrial Strategy, the government will establish an Industrial Energy Transformation Fund, backed by up to £315M of investment, to support businesses with high energy use to transition to a low carbon future and to cut their bills through increased energy efficiency.

Aggregates levy

The government will freeze aggregates levy rates for 2019-20 but intends to return the levy to index-linking in future

Air quality

The government will allocate £20 million additional funding to support more local authorities to meet their air quality obligations.

Enhanced capital allowances (ECAs) for electric vehicle charge points 

The government will legislate in the Finance Bill 2018 to extend ECAs for companies investing in electric vehicle charge points. This will extend ECAs until 31 March 2023 for corporation tax and 5 April 2023 for income tax purposes.

Fuel duty rates on alternative fuels

In the Autumn 2017 Budget, the government said it would review whether the existing fuel duty rates for alternatives to petrol and diesel are appropriate, ahead of the Budget in 2018. Following review, the government announced in the Autumn 2018 Budget that it will maintain the difference between alternative and main road fuel duty rates until 2032 to support the decarbonisation of the UK transport sector, subject to review in 2024.

Vehicle excise duty (VED) for cars and company car tax

The government will review the impact of the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) (the new CO2 emissions testing procedure) on VED and company car tax, and report in spring 2019. As announced in the Autumn 2017 Budget, the government will legislate in the Finance Bill 2019-20 to confirm that, for the purposes of VED and company car tax, the applicable CO2 figure for cars will be based upon WLTP. For cars registered before 6 April 2020, HMRC will continue to use the current New European Driving Cycle (NEDC) test procedure for the purposes of collecting company car tax. Similarly, cars first registered before 1 April 2020 will maintain their current VED treatment.

Flood risk management

The government is allocating £13 million to tackle risks from floods and climate change, through pilot projects to ensure property owners have the best information on protecting their homes and expanding the flood warning system to an additional 62,000 at-risk properties.