By Melanie Kendall-Reid, Director of Consultancy Services
The Chancellor of the Exchequer, Rishi Sunak, made his first Budget speech on Wednesday. He announced a multi-billion-pound plan to escalate the UK’s efforts toward its Net Zero Carbon emissions target.
Environmental provisions were heavily featured to include investment in renewable energy generation, low-carbon transport, carbon capture and storage and natural climate solutions.
Sunak was clear in his speech that he saw the protection of the planet as a significant need to support future prosperity as he committed to create a further 1.5 million high-skilled low-carbon jobs of the future. The Budget allocated an additional £10m to support the design and delivery of net-zero policies and programmes.
Low Carbon Transport – A comprehensive package of tax and spend reforms will deliver a new charging infrastructure and grants for electric and hybrid vehicles. The Chancellor stated that drivers of electric vehicles will never be more than 30 miles from a rapid charging station. There will be new Rapid Charging Funding to help businesses to connect charging points to the grid. The Government will also continue to consult on the phasing out of polluting vehicles. Zero-emission cars will also be exempt from the Vehicle Excise Duty expensive car supplement.
Fuel duty – Relief on red diesel will end in 2022 to encourage the development of cleaner vehicles however this will not impact agricultural or rail sectors.
Carbon Capture and Storage – £800m has been pledged to develop the Carbon Capture and Storage infrastructure at least two UK sites by 2030.
Climate Change Levy (CCL) – Gas CCL will rise due to the lack of progress in decarbonisation to 0.568p /kWh in 2022 and 0.672p /kWh in 2023. Relief will be provided for clean electricity producers. There will be a freeze on increases of CCL for other electricity suppliers. Support has also been given to the energy intensive sectors to deal with the rising costs of CCL by extending the Climate Change Agreement (CCA) scheme, due to close in 2023, to 2025.
Cleaner Gas and Heat – The Government has pledged a Low-Carbon Heat Support Scheme for the installation of heat pumps and biomass boilers through a grant system from 2022 aimed at householders and SME businesses. Funding for the Heat Networks Investment Project is also guaranteed to 2022 to enable new and existing heat networks to adopt low-carbon heat sources. The government will also extend the Domestic Renewable Heat Incentive until 31st March 2022 and introduce flexible tariff guarantees to the Non-Domestic Renewable Heat Incentive in March 2021.
Plastics Tax – A plastics tax will be introduced for all packaging that has less than 30% recycled materials in the products from April 2022 to incentivise manufacturers to develop packaging with a lower carbon footprint. The rate is set at £200 per tonne of plastic packaging.
Flood Defences – The Government will invest £5.2bn from 2021 on a six-year investment programme to improve the resilience to flooding in the worst hit areas. The Environment Agency will also receive £39m in investment for a network of water supply and water navigation assets.
Air quality – Local Authorities will receive an additional £304m to reduce nitrogen dioxide emissions.
Natural climate solutions – A Nature for Climate Fund will be created to invest £640m in tree planting and peatland restoration in England. It is estimated that this will increase the rate of tree planting by more than 600% over 5 years. A Nature Recovery Network Fund will also be developed for businesses and local communities to collaborate on existing wildlife restoration projects and funding for the Darwin Plus programme to protect and conserve biodiversity in UK Overseas Territories.
Whilst these long-awaited green measures were welcomed, the Chancellor was criticised for committing more than £27bn to a five year Road Investment Strategy and the continuation of a freeze on fuel duty for an 11th consecutive year – policies which are totally at odds with the measures to protect the environment.
The Treasury is due to review the Government’s Net Zero Carbon Emissions Policy in November 2020 so it is hoped that there will be further pledges later in the year to address the climate emergency.
Featured on our Energy Legislation Hub: http://www.energylegislation.co.uk/budget-2020-small-step-right-direction/