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Autumn Budget: ‘real disconnect’ between climate change goals and financing

The Budget contained little new funding information for the energy transition. Image: HM Treasury.

The Budget contained little new funding information for the energy transition. Image: HM Treasury.

Yesterday’s (27 October) Autumn Budget and Spending Review provided a welcome change to business rates for technologies like solar and domestic batteries. However, beyond this little new financing was announced for the energy sector, leading many in the sector to brand it a “disappointment”.

Companies and trade associations gave Current± their reactions to the Budget, particularly in light of the looming COP26 conference.

Dr Nina Skorupska CBE, chief executive of the Association for Renewable Energy and Clean Technology (REA)

“We can’t hide our disappointment that this Budget did not go much further by providing some of the fiscal measures needed to deliver the ambitions laid out in last week’s Net Zero Strategy, especially given that COP26 starts in just a few days’ time. Straightforward measures such as removing VAT on domestic renewables and clean technologies would have provided a catalyst for businesses and the economy, offered households long-term protections against volatile energy bills, and signalled a real statement of intent.

“In addition, while recognising the financial challenges faced by many motorists, any fuel duty freeze should have been accompanied by extra support to make electric vehicles more affordable and accessible. Similarly, although it was accompanied by investment last week in the ‘Jet Zero’ transition, a fuel duty cut for domestic aviation duty undermines the government’s green credentials ahead of COP26.

“In short, while we welcome the progress that has been made, this Budget was a missed opportunity. We are in little doubt - unless decisive and substantial action is taken soon, the government runs the risk of failing to meet its net zero targets.”

Dan McGrail, CEO of RenewableUK

“It’s great to see the Chancellor backing the growth of our world-leading offshore wind industry in the run-up to COP26 with this funding which will help to increase UK manufacturing in this sector even further. It builds on the support Ministers have provided to upgrade UK ports to turn them into offshore wind manufacturing hubs and new centres of excellence as part of the Prime Minister’s Green Industrial Revolution.

“Already this year we’ve seen over £900 million of private investment in new factories to manufacture offshore wind turbine blades, foundations, towers and cables in Teesside, the Humber, Newcastle and Blyth, delivering more than 2,500 new direct jobs in parts of the country which urgently need levelling up”.

Business rates exemption for low carbon technologies

Chris Hewett CEO of Solar Energy UK

"Today the government have given rooftop solar a big endorsement by finally removing the perverse business rates treatment for onsite solar and energy storage, originally imposed in 2017. Companies and public sector bodies which have taken action to cut carbon by installing solar, will now also be rewarded with a cut in their business rate bills in the future."

Madeleine Greenhalgh, policy lead at Regen and the Electricity Storage Network

“The industry has been battling for fairer business rates for some time, so this change is very welcome and will encourage more businesses to invest in rooftop solar and storage. In an otherwise disappointing Budget for net zero, this offers a glimmer of hope and the rectification of a distortion which has penalised businesses who invest in decarbonisation.”

Maria Connolly, head of Energy and Renewables at law firm TLT

“The announcement on business rates exemptions for green property investments is clearly a highlight from this Budget and is very welcome. It ought to spur businesses to take charge of their environmental sustainability by incentivising them to invest in their properties. Previously businesses that invested in clean energy sources, such as solar panels, for their buildings were penalised by a subsequent rise in business rates as such investments can inflate property value. With this absurd disincentive done away with, businesses up and down the country should invest in their own clean energy supply, decarbonising their energy while reducing their reliance on the grid at a time of rising energy costs and even allowing them to sell excess power onto the grid at a profit. It’s a win-win that companies should jump on.”

Failure to make changes to VAT

AceOn Energy managing director Richard Partington

“There are many green measures in this speech which we welcome, such as the Net Zero Strategy to invest £30 billion in green industries, but the fact that there is no promise to bring in a zero VAT rating for zero and low carbon products is deeply disappointing.

“We used to be told that the government could not act freely on VAT because it was tied in with EU regulations. But that is not the case now so we wonder why this simple change which could do so much to help our fight against climate change has not been introduced.

“It is beyond belief that energy storage batteries can currently carry 20 per cent VAT while domestic coal carries just five per cent, or that the government can give nearly £12 billion in annual tax breaks to fossil fuel producers while providing only £8 billion to drive uptake of renewable energy.

“[Batteries] have to be given a level playing on which to compete and deliver the change which is now urgently needed if we are going to avoid an environmental catastrophe.”

Electric vehicle commitments

Jon Slowe, director at Delta-EE

“This Budget has shown a shortage of commitments that will bring the UK’s energy policy in line with its ambitious sustainability targets. With the current energy price crisis hitting consumers hard, no commitments were made to improving the energy efficiency of UK homes. By failing to invest in energy efficiency, the government has missed an opportunity to support an effective, sustainable and long-term approach to dealing with the energy crisis.

“EVs used to be the headline makers, but now financial support is hidden in the detail of the budget documents. The UK is in an international race to attract EV manufacturing with over 25 gigafactories due to be active across Europe by 2025. The UK can’t let up in its commitments to become a global EV leader. As such, we are pleased to see £800 million pledged to support electric vehicle manufacturing. Alongside EV policy seen in the Net Zero Strategy and 2030 petrol and diesel car ban – the UK is firing on all cylinders with EVs. However, more investment will be required to ensure the chargepoint rollout continues at its current pace as vehicle sales are currently outstripping infrastructure installations and we predict the EV to public chargepoint ratio to increase by almost 40% by 2030.”

Maria Connolly, head of Energy and Renewables at law firm TLT

“The multi-billion funding boost to bring public transport services up to speed is encouraging, although most of that money is recycled from past spending pledges. The issue is that it does little to accelerate the broader shift needed from fossil fuel to electric personal vehicles and while investments to expand the use of electric vehicles and increase charging points across the UK have been announced in recent weeks these still do not go far enough.

“While the Budget delivered a few good announcements, it was very much lacklustre on the energy transition. It may have followed the Net Zero and Industrial Decarbonisation strategies of recent weeks, which pledged positive albeit still insufficient action, but this does not change the fact that this was a disappointing Budget from the climate perspective. The absence of focus on COP26 and tackling climate change was striking – so much so that one wonders whether Mr Sunak accidentally lost a page from his speech.

“There remains a real disconnect between the government’s supposed ambitions on climate change and the methods and financing it is putting in place to achieve its goals. With every passing year progress is being made, but the issue is now the speed of that progress. Just when the government needs to put its pedal to the metal it seems that unfortunately the Chancellor is taking his foot off the gas.”

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