21/03/2012 11:40 GMT | Updated 21/05/2012 06:12 BST

Budget: Government Backs Wrong Horses for Economic Growth

Today's Budget will prompt much debate in the weeks ahead about misplaced priorities, missed opportunities and the larger question of whose interests this Budget really serves. But from my perspective, the Chancellor has failed to put the green economy where it should be - firmly at the centre of a plan for growth.

Today's package was one of confidence and assurances for high-carbon infrastructure and fossil fuels, with an alarming pledge to drill 'large and deep' to reach oil and gas reserves to the west of the Shetlands. As the disaster in the Gulf of Mexico proved, hard-to-reach oil is a difficult and dangerous way forward with the potential for a messy and costly outcome.

According to the Chancellor, 'gas is cheap'. When one takes into account the grave costs to our environment and climate of failing to meet our targets to reduce carbon emissions, I beg to differ.

The government rightly held firm on air passenger duty (APD). The long-awaited Green Investment Bank opens next month (but its ability to borrow remains unclear). However, with signals that they may increase airport capacity in the South East, build more roads and reduce environmental safeguards in planning, this is a Government backing the wrong horses for economic recovery.

Last weekend WWF joined more than 50 leading businesses, trades unions and other groups in a letter to George Osborne in support of a greener economy, pointing out that smart regulation can actually reduce business costs and drive much-needed innovation and growth. Economics and ecology are interdependent - now more than ever before - as the consequences of poor environmental management and over-consumption of our stock of natural resources are posing real constraints on business.

But it is no longer just environmental campaigners and scientists sounding this warning. Both McKinsey & Co and Accenture have recently warned of a looming disaster if we don't break the nexus between economic value creation, environmental damage and over-reliance on scarce resources.

I find it very odd that a government that's tightened financial regulation to prevent systemic failure is simultaneously loosening environmental regulation, without any apparent regard for the environmental or longer-term economic consequences. Our environmental risks are increasingly systemic, and in some areas the threats of ecosystem failures are very real.

This sidelining of environmental regulation to me reflects the persistence of the 'flat earth' mentality within the Treasury and certain parts of the Conservative party who seem to refute that environmental protection and economic growth can be compatible goals. This constituency see the environment solely as a cost to business and the economy, and fail to recognise the opportunities to grow new industries, jobs, exports and wealth by fostering a strong domestic clean technology sector. In contrast, Finland and Denmark have joined Germany in establishing 'cleantech' as a vital part of their foreign investment drive. Instead, this government's solution for putting the UK in a leadership position seems to be based on building a new airport.

Before the 2010 election, David Cameron seemed to 'get' the need for truly sustainable development - that respects the needs of future generations as much as those of today. I still believe in his heart he wants to show real leadership. But, as Steve Hilton obviously found, there are many powerful forces in the Treasury and in parts of the Conservative Party to whom the very concept of 'natural capital' is foreign. It's time for the prime minister to re-engage and live up to his ambition to lead the 'greenest government ever'.

However, at a time when the green economy offers a clear path to recovery, the Chancellor seems to remain firmly in the old Treasury mindset of supporting old, dirty industries at the expense of clean, green ones. From his speech, you'd think the only emissions he's keen on tackling are those from smokers.