Rishi Sunak has allocated around £100 million of new cash for testbed energy projects in a Budget that has otherwise been branded a “missed opportunity” to take forward the Prime Minister’s green recovery plan.
In a Budget dominated by continued emergency measures to support the economy as it emerges from lockdown and tax-raising plans to restore the battered public finances, the chancellor the exchequer brought forward projects in line with a commitment to double spending on energy innovation.
The biggest chunk is £68 million for a UK-wide competition to deliver long-duration energy storage prototypes or technology demonstration projects.
These would be designed to reduce the cost of net zero by enabling excess low-carbon energy to be stored over longer periods.
Sunak announced £20 million to fund a competition to develop floating offshore wind demonstration projects.
Further backing announced today (3 March) for the sector includes support “in principle” to upgrade port infrastructure at the Able Marine Energy Park on Humberside, which is being developed as a facility for North Sea offshore wind projects.
The government has also signed a memorandum of understanding with Teesworks Offshore Manufacturing Centre to support the development of another offshore wind port hub on Teesside.
In Scotland, £27 million has been earmarked for the Aberdeen Energy Transition Zone to help support north east Scotland’s transition to net zero.
In Wales, Sunak has identified £4.8 million to support the development of a demonstration hydrogen hub in Holyhead, Anglesey, which has recently been hit by Hitachi’s decision not to proceed with plans for a new nuclear power station on the island.
The hub will pilot the creation of hydrogen from renewable energy and its use as a zero-emission fuel in HGVs.
The Budget also contained £4 million for a biomass feedstocks programme to identify ways to increase the production of green energy crops and forest products.
Non-spending green announcements included further details of the National Infrastructure Bank.
A paper published alongside the Budget says the new institution will be launched this spring at its base in Leeds with a remit to provide seed corn investment for priorities identified by the National Infrastructure Commission, including clean energy.
The government has also said it will launch the world’s first sovereign green savings bond for retail investors.
And the Budget outlined fresh details of plans to kickstart from this summer the issuance of a minimum of £15 billion of green gilts in the upcoming financial year.
Other announcements include a continued freeze of the Carbon Price Support rates at £18 per tonne of carbon dioxide in 2022-23.
Reaction
However, the announcements sparked widespread disappointment that there had not been more support for green measures in what is expected to be the last Budget before the UK hosts the UN COP 26 climate change conference in November.
Business, Energy & Industrial Strategy (BEIS) committee chair Darren Jones MP said: “The sad reality is that climate change and net zero were barely mentioned in today’s Budget and major policies such as the Green Homes Grant seem to have been cancelled altogether.
“The Budget appears to signal a rejection by the chancellor of the prime minister’s 10-point plan for a Green Industrial Revolution. In the year of the UK’s COP26 Presidency, this does not deliver the domestic leadership necessary to make the climate summit a success nor does it signal the required ambition on decarbonisation and green jobs needed in the decades ahead.”
Luke Murphy, head of the IPPR (Institute of Public Policy and Research) thinktank’s Environmental Justices Commission, said: “What should have been the firing of the starting gun on a decade of decarbonisation was more of a false start in the race to net zero.”
Ex -BEIS director of clean growth Tim Lord tweeted that a “big opportunity” in the Budget to build on the promising 10 point plan “hasn’t been grasped” with “very little on further support for decarbonisation of buildings, industry and agriculture”.
Environmental groups were dismayed at the lack of any announcements by the chancellor on energy efficiency funding following recent reports that the troubled, flagship Green Homes Grant scheme is due to be axed.
Dr Joanne Wade, chief strategic officer at the Association for Decentralised Energy, expressed disappointment at the “lack of clarity” on how the government plans to accelerate the uptake of retrofit measures.
“Upcoming strategies will need to be strong on the detail if momentum is not to be lost from the rollout.
“We call on ministers to urgently fix the administrative problems hampering the Green Homes Grant and also to commit to a long-term programme that supports supply chain growth and public confidence in home energy refurbishment.”
Andy Bradley, director of energy consultancy Delta-EE, said: “In the last budget before COP26, we hoped for evidence the green recovery rhetoric would be delivered on. Yet, despite hints of green policy such as the new investment bank, we lack the ambition needed to reach net zero. We know cutting VAT is politically possible for hospitality, so why not for green home improvements – especially when the Green Homes Grant is as good as scrapped?”
Maria Connolly, partner at UK law firm TLT, said: “This Budget represents a missed opportunity to put the green economy and sustainability at the heart of the economic effort to recover from the Covid-19 crisis.
“Actions speak louder than words and unfortunately the rhetoric on the green industrial revolution continues to outweigh the policies.”
But the chancellor’s moves to support the offshore wind deployment were hailed as a “gamechanger” for the sector by RenewableUK chief executive Hugh McNeal.
He said: “This is a big-bang moment for offshore wind manufacturing in the UK which will drive investment in a globally competitive domestic supply chain. The Government is putting its support squarely behind the kind of strategic approach to securing supply chain investment which the industry has been making the case for.”