Shares digital

Talk about kicking them when they’re down, just days after D1 Oils (DOO:AIM) said it would have to close and mothball plants because of the rising costs of biofuel feed stocks the government announced in the budget that it will scrap tax breaks for the greener fuel. Stripping the 20p subsidy is expected to net Darling an extra £500 million to add to the coffers in 2010-11. And this is from the budget that was supposed to be greener.

Left in the lurch

Targets, under the renewable transport fuel obligation (RTFO) requiring at least 2.5% of fuel to be biodiesel or ethanol, rising to 5% by 2010, have been left intact, which beggars the question where on earth is it going to come from? D1 should have been better placed than most with its £80 million deal with BP (BP.) signed last year, so if they are struggling, what hope is there for a UK biofuel industry?

D1 says its problems are down to ‘heavily subsidised diesel from the US’. It did not want to comment directly on the budget but getting rid of UK subsidies is clearly not going to help matters.

Companies that fail to meet the target will have to pay 30p for every litre that falls short of requirements, so there is a chance BP will make a move for the company in the future. In the short term, however, there’s scant consolation for those companies that, egged on by the government, tried to set up biofuel businesses in the UK.

On the whole, the budget was extremely disappointing for anyone looking for positive moves on the green front. Some £26 million is pledged to help homes become greener, sounds good but once you’ve done the maths that’s about 50p per household. A solitary energy-saving light bulb costs north of £3, so maybe each street will get a couple to share, or a few square millimetres of loft insulation each.

Drastic on plastic

The current public enemy number one, plastic bags, did however come in for a hammering with suggestions that from 2009 laws will be introduced that could see taxes slapped on the culprits if shops aren’t seen to be doing enough

to curb their usage.

Not good news on the face of it for poor Symphony Environmental Technology (SYM:AIM), which has invested heavily over the past few years to develop an ingredient that can be added to plastic bags at the development stage to make them oxo-biodegradable. This means they degrade to carbon dioxide, water and biomass within a few months leaving no nasty leftovers. The company has previously been vocal in its objections to government policy on the matter and argues that other options are not particularly beneficial to the environment.

Paper bags it says use 300% more energy to produce and transport, while starch-based bags made from crops are at least 400% more expensive and emit methane at landfill. ‘It is the opinion of the directors of Symphony that it is wrong to use scarce land and water resources to grow crops to make plastic bags, given that it drives up the cost of food for the poorest people,’ it says. The shares have plummeted from around 7p last year to current levels around 2.6p.

There could be some benefit for listed companies from the measures to clobber gas-guzzling cars.

Choking the gas guzzlers

From 2010 the lowest-polluting new cars will pay no road tax in the first year while the highest polluters will pay as much as £950 a year. ‘Companies such as Ricardo (RCDO), which develops engine technologies that minimise the environmental impact of vehicles, should benefit. We would also expect to see bus and train companies do well as more people are encouraged to switch to public transport,’ says Emma Howard Boyd, head of socially responsible investment at Jupiter.

Carbon trading companies may also benefit if the government goes ahead with its considerations to raise the UK target for cutting emissions to 80% by 2050. But with the country struggling to meet existing targets of 60%, it’s hard to see how this would be achieved. Phillip Wolfe, executive director of The UK’s Renewable Energy Association was clearly not impressed. ‘We can only envy the chancellor, who must be living on a planet not threatened by climate change,’ he says. ‘Headline-grabbing targets and consultations have become a dangerous cover for inaction.’

Shares says: There is relatively little for anyone interested in the green economy to get excited about in this damp squib of a mooted ‘Green’ budget.