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Newsroom & speeches
89/01
25 July 2001
The first stage of the Green Technology Challenge to offer tax relief to businesses investing in environmentally friendly technologies was today launched by Financial Secretary Paul Boateng.
Following the announcements made in this year's Budget about reductions in fuel duty for greener fuels, the Government is also inviting further proposals for pilot projects under the Green Fuel Challenge.
Many environmental improvements by businesses require investment in technology. In recognition of this and in line with its aim to protect the environment, the Government today published a consultation document inviting businesses and environmental groups to suggest specific environmental objectives, together with technologies to help achieve these, that should be considered for enhanced capital allowances.
The Government has already introduced enhanced capital allowances for energy-efficient investments, helping businesses to directly reduce their energy use, as part of the package of measures made available alongside the climate change levy, and the consultation document launched today builds on this.
The Green Fuel Challenge aims to help and encourage industry to develop practical alternative environmentally-friendly fuels. Building on the reductions in duty rates for road fuel gases announced in the Budget, the Government is now inviting applications from those seeking exemptions or reductions from excise duty so that pilot projects can be established to assess the benefits of new, greener fuels such as hydrogen, methanol, bioethanol and biogas.
Together, these initiatives represent an important response by the Government to work with business to help them tackle, and reduce, the environmental challenges facing modern society.
Financial Secretary Paul Boateng said:
?As the Prime Minister said in his speech to World Wildlife Fund Confederation earlier this year, the interests of business, technology and environmental protection go hand-in-hand.
?The Green Technology Challenge aims to encourage, promote and reward green action and facilitate the diffusion of new technologies. It is not just about making the most of the best technologies available today, but about helping industry to develop the next generation of environmentally friendly technologies.
?Allied closely to the GTC, the Green Fuel Challenge builds on the shift to greener fuels encouraged by this Government. Virtually all of the petrol market is now taken by ultra-low sulphur petrol thanks to our policy of duty incentives, and there is a growing market for road fuel gases, again encouraged by duty differentials and helped by companies such as Safeway which are converting their lorry fleets and providing real local air quality benefits as a result. The prospect of securing the environmental benefits of a further move towards greener fuels is very exciting, and the Government is ready and eager to help accelerate that process.
?I am delighted today to launch our invitation to business and environmental groups to participate in these Green Challenges. I strongly encourage all those with innovative ideas in this area to come back to us with imaginative proposals.?
Click on the links below for: (a) a pdf version of the report (b) letter from the FST inviting applications for pilot projects under the Challenge and (c) guidance to assist in making a pilot project application. If you don't have a pdf reader, you can download one by clicking on the link to Adobe.
Green Technology Challenge
1. The Government announced in Budget 2001 that it would consult during the Summer on setting up a Green Technology Challenge, (GTC), with the intention of offering enhanced first-year capital allowances (tax breaks) for investments in environmentally-friendly technologies to help achieve further environmental objectives.
2. Enhanced capital allowances are a particular type of tax incentive which permit businesses to write off a significant proportion of its capital spend against its taxable profit, offering significant cash flow gains to the business.
3. The aim of the GTC is to accelerate technological innovation and facilitate the diffusion of these new environmental technologies into the market place. It builds on the enhanced capital allowances for investments in energy-saving technologies already in place under the climate change levy package.
4. The consultation document launched today invites applicants to put forward proposals for environmental objectives that may be targeted by enhanced capital allowances and to propose technologies which would help achieve this. Environmental issues that can be considered range from climate change and air quality to water quality and land use.
5. A copy of the consultation document is available on this website (click here) or alternatively from the address set out below.
6. Applications will be by formal submission. Electronic applications or paper copies are acceptable. The closing deadline for responses is 28 September 2001. Applications should be sent to:
Green Technology Challenge consultation
Environmental and Transport Taxes
HM Treasury
Parliament Street
London
SW1P 3AG
Facsimile: +44 20 7270 4801
7. The Government plans to consult further in more detail on the most promising ideas and themes to arise from this stage of the consultation.
8. The Green Fuel Challenge was announced in November's Pre-Budget Report (PBR), inviting industry to develop proposals for practical alternative fuels. The PBR stated that, following consideration of these proposals, the Chancellor would announce major reductions in duty rates for the most promising environmentally-friendly alternative fuels.
9. More than sixty outline proposals were put forward in response to the Challenge, covering a range of potential options. A number of promising road fuels were identified which could potentially offer significant environmental benefits in the medium to longer term, but which still require further research and development: hydrogen, methanol, bioethanol and biogas. The Chancellor therefore announced in the Budget that the Government would support research and development into these alternative fuels, by offering duty exemptions or reductions for pilot projects which will begin the process of demonstrating the benefits of these fuels and exploring production issues. Those who responded to the PBR announcement are today being sent copies of an invitation from the Financial Secretary to submit more detailed applications. Anyone else who wishes to apply is also encouraged to do so.
10. Pilot projects are intended to support research into, and the development and demonstration of, novel alternative fuels which have the potential to provide environmental benefits now or in the future. This may include issues relating to the production and use of these fuels. There is no guarantee that the duty exemption or reduction set for the fuel produced from a pilot will continue once the pilot project is completed. However, the pilot process will be used to inform decisions on the longer-term duty rates for the fuels in question.
11. The Chancellor also provided various duty incentives for greener fuels in this year's Budget, by announcing that:
12. A paper setting out the application requirements, evaluation criteria and timetable for pilot projects under the Green Fuel Challenge is available from Customs at the address below.
13. Application will be by formal submission, in two rounds. The closing date for the first round is 5pm on 28 September 2001. A further invitation for applications will be issued for the second round in 2002. Applications should be sent to Pam London at:
HM Customs and Excise
Environmental Taxation Development Division
1st Floor West, New King's Beam House
22 Upper Ground
London
SE1 9PJ
Telephone: + 44 20 7865 4770
Facsimile: + 44 20 7865 5055
14. Electronic applications or paper copies are acceptable. Five copies of each bid are required if they are in paper form. Applicants wishing to have receipt of their applications confirmed should include such a request at the top of electronic applications with a return e-mail address, or a stamped and addressed post card for paper applications. There is no limit on the number of applications that may be submitted.
15. Applications will be considered by an inter-departmental group, which will report to Treasury Ministers. They will decide the appropriate rate of duty for each pilot that they approve. The terms of operation of the individual pilots will be set by Customs and Excise.
16. The successful bids will be announced in the autumn.
