A budget to support carbon reductions?
UK Chancellor Rishi Sunak presented his Budget for the UK finances yesterday and whilst the main focus of his plans centred around repairing the national finances in the midst of the Covid-19 pandemic, there were a number of notable announcements regarding the energy industry in general and the promotion of the UK’s green ambitions in particular ahead of the UK hosting the COP26 UN climate summit late in the year.
A commitment to green growth
Having stated that the budget would provide a “real commitment to green growth” which would help to build a strong, fair and resilient future economy, the Chancellor unveiled several new initiatives, including:
- A National Investment Bank to be headquartered in Leeds with an initial capitalisation of £12bn dedicated to environmentally focused projects in both the public and private sectors to stimulate the green industrial revolution
- A world-first National Savings & Investment (NS&I) retail savings bond specifically for the UK public to invest directly in environmentally friendly projects
- The issue of £15bn of green gilts in the next financial year to help finance critical projects which tackle climate change and other environmental challenges, fund important infrastructure investment, and create green jobs across the UK
- New “green” mandate for the Bank of England to reflect the importance of environmental sustainability and the UK’s transition to net zero
- £68 million to fund a UK-wide competition to deliver first-of-a-kind long-duration energy storage prototypes that will reduce the cost of net zero by storing excess low carbon energy over longer periods
- £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators and help support the government’s aim to generate enough electricity from offshore wind to power every home by 2030
- £4.8 million to support the development of a demonstration green hydrogen hub in Anglesey
- £4 million for a biomass feedstocks programme in the UK to identify ways to increase the production of green energy crops and forest products that can be used for energy
- Continuation of the Carbon Price Support rate at £18t/CO2e for 2022/23 in addition to the commitment of a UK Emissions Trading System later in the year
The Chancellor also announced additional support for the UK offshore renewables sector, with port facilities in the North East of England to receive infrastructure funding from Government to support the development of the offshore wind industry supply chain. Sunak stated that:
“Offshore wind is an innovative industry where the UK already has a global, competitive advantage, so we’re funding new port infrastructure to build the next generation of offshore wind projects in Teesside and Humberside.”
Some critical voices
Critics of the Chancellor’s policy statement noted however that there was no mention of the government’s much vaunted £1.5bn Green Homes Grant which had only been launched last year but is to come to an end in March after only £94.1 million worth of grants were issued. Further criticism of the budget came after Sunak again announced the cancellation of fuel duty escalator for the 11th year running with environmental groups claiming that the UK’s climate emissions are up to 5% higher than they would have been had the escalator been maintained since 2010 at a cost to the Treasury of over £11bn for 2019/2020.