Budget focus: A boost for the green economy?
There was a lot to interest business in today’s Budget, the first from new Chancellor Rishi Sunak.
Unsurprisingly, the impact of the coronavirus (Covid-19) dominated the start, with Sunak pledging £30bn of support.
This includes funding for workers, small and medium-sized enterprises (SMEs) and the leisure and hospitality industries, to help offset the financial impact caused by the “disruption to our economy”.
He acknowledged that the UK’s “productive capacity will shrink for a while” and that there will be a “significant impact” on the UK economy. But that this “will be temporary”.
But, after focusing on “security today”, the Chancellor then unveiled a bumper package of spending and investment to support “prosperity tomorrow”.
This includes many billions in planned infrastructure projects to improve roads, housing, further education colleges, broadband and flood defenses, which Prime Minister Boris Johnson said marked an “infrastructure revolution”.
A mixed bag of energy measures
As far as energy and low-carbon measures are concerned, there was a mixed bag of promises.
While the Chancellor promised “considerable steps” to incentivise cleaner forms of transport, fuel duty will remain frozen for another year – and there are plans to invest £27bn in new roads.
These steps include £500m to support the rollout of new rapid charging hubs for electric vehicles (EVs), which Sunak says will ensure that drivers are never more than 30 miles away from being able to charge their vehicle.
And he’s promising “a comprehensive package of tax and spend reforms to make it cheaper to buy zero or low-emission cars, vans, motorbikes and taxis."
These include £403m to extend the Plug-in Car Grant to 2022-23, plus a further £129.5m to extend this grant for vans, taxis and motorcycles.
There is also £1bn to help develop UK supply chains for the large-scale production of EVs, as announced in September last year.
CCL on gas to rise
While the Climate Change Levy (CCL) on electricity will not increase, it will rise for gas in 2022/23 and 2023/24. The Chancellor claims this is “another step towards equalising the rates and encouraging energy efficiency”.
He also said: "I will support the most energy-intensive industries to transition to net zero, by extending the Climate Change Agreements (CCA) scheme for a further two years.”
Diesel tax relief to be scrapped
Business tax relief for red diesel will be scrapped from April 2022, raising the duty from just over 11p per litre to around 58p – although agriculture, fish farming, rail and non-commercial (including domestic) heating will be excluded.
"It’s been a £2.4bn tax break for pollution that’s also hindered the development of cleaner alternatives. So I will abolish the tax relief for most sectors,” said Sunak.
Investment in carbon capture and storage
To help offset carbon emissions, there is £800m to invest to create two more carbon capture and storage clusters in the north of England and Scotland.
And to help natural carbon capture and storage, the government will plant 300,000 hectares of trees to create a forest “larger than Birmingham” and restore 35,000 hectares of peatland (a natural carbon sink).
Interestingly, energy efficiency doesn’t feature specifically.
More to come on energy efficiency?
For example, nearly £1.1bn has been pledged to build 70,000 new homes, but there’s no mention of any measures to ensure they meet Net Zero goals on efficiency.
Although in the full Budget statement, a Future Homes Standard is promised “in due course”.
As today’s Budget was the result of it being deferred from last year, another will follow in the Autumn as normal.
We are also waiting for more on the government’s plans to deliver Net Zero by 2050 in an Energy Whitepaper, also due later this year.
So there is clearly more to follow – and we will keep you posted.
In the meantime, if you would like to know more on how the Budget will impact your energy costs, do get in touch with your Client Lead (for existing customers). Or email us via nBS@npower.com.