The announcement of the new £12 billion UK Infrastructure Bank and green bonds were marked highlights in yesterday’s Budget. Chancellor Rishi Sunak presented the financial statement to parliament (3 March), outlining his economic plans as the nation looks to a route out of the COVID-19 lockdown and towards ‘Building Back Better’.
However, despite Sunak stating “a real commitment to green growth” is needed, many in the energy sector were disappointed that wider support for renewables and other green technologies wasn't given.
Companies, groups and charities operating in the energy and environmental space gave Current± their reactions to the Budget.
Energy UK’s chief executive, Emma Pinchbeck
“We need to unleash billions of pounds of capital investment to drive decarbonisation, so we welcome the creation of the National Infrastructure Bank. In a globally competitive renewables industry, upgrading our port infrastructure to support expansion of offshore wind will help our regional hubs attract jobs and realise the benefits of the energy transition.
“However, meeting the most ambitious climate change targets of any major economy will require more ambition than was in today’s Budget. We need a concerted, cross-Government approach to deliver on the Prime Minister’s 10 Point Plan and the Energy White Paper - particularly on how to make our buildings energy efficient and low carbon.
“The energy sector is ready to continue reducing emissions, supporting jobs all around the country, and driving economic growth – the question is how the Government plans to turn their ambition, and our willingness to invest, into a plan of action.”
Peter Emery, CEO of Electricity North West
“To truly set a path for that [green] recovery, we urge the Government to build on the 10 point plan announced late last year with even more focused incentives for businesses to invest in green growth.
“A city the size of Manchester, for example, could transform itself into the equivalent of a sizeable power station if enough businesses installed just one 5kW solar panel on their roofs and sites. The Chancellor’s Superdeductor will help this, but making changes to business rates could do even more, by encouraging more business owners to invest in significant solar arrays without increasing the amount they pay in taxes.
“Furthermore, if we are to hit the nation’s ambitious net zero carbon targets, we are going to have to invest in the energy efficiency of our housing stock sooner rather than later.”
Dr Nina Skorupska CBE, chief executive of the Association for Renewable Energy and Clean Technology
“I can’t help but feel that, despite the mitigating circumstances, this Budget was a missed opportunity for our country. It lacked the detail to provide a watershed moment for businesses in our sector and new ‘green’ projects are limited to only a few regions and countries of the UK.
“There are straightforward measures that could and should have been taken. The reduction of VAT on a range of renewable energy and clean technologies; clarity over the future of the Green Homes Grant; and a targeted extension of the Renewable Heat Incentive to boost bioenergy, geothermal and other renewable heat schemes.
“The Chancellor had the opportunity to make a bold statement with regards to the UK’s Net Zero ambitions, but this budget shows that much more needs to be done to put the green agenda at the heart of Government.”
The Investment Bank: 'the devil is 'in the detail
Dan Mikulskis, investment partner at LCP
“Reaching Net Zero is going to involve an eye-watering expansion of new infrastructure and technology. The National Infrastructure Bank could be good news, acting as a cornerstone investor on key projects and helping to provide financing for newer technologies that at the moment are un-investible to institutional asset owners because of their risk and unproven nature. With the bank being a backer of bonds issued to finance projects it makes some of these projects eligible for the large-liability investing programs pursued by many DB pension schemes and which amounts to over £700bn in assets. The model is already there in the Network Rail bond issue, which is popular with many schemes.
"As ever the devil is in the detail and there could be some unintended consequences and missed opportunities if the bank isn't used in the right way. First, there is a risk that the cheap public-sector financing could crowd out the private sector, particularly if the speed of decision making was misunderstood as a lack of demand. Second, low cost debt financing could result in projects borrowing excessively which makes the equity investment more risky than it needs to be. The government could also use this Bank to invest in new technologies that are deemed too risky by the rest of the investment community – with consumers picking up the bill if these projects fail.
"Finally, if this is to be successful it can't follow the fate that befell the Green Investment Bank, which was sold off in 2017 and now bids against UK investors To make sure it facilitates the transition to Net-zero and unlocks investment rather than becoming competition for investors, the government needs to take steps to ensure that the National Infrastructure bank can't be sold off."
Green Bonds: renewable energy has long term appeal
Chris Holmes, co-lead investment adviser, JLEN Environmental Assets Group
“The opportunity to purchase the world’s first green savings bonds is a positive development. Investors are increasingly looking for greater choice in the world of sustainable investment, allowing them to earn an ecological return as well as a financial one. Renewable energy and clean transport in particular offer an attractive long term opportunity, given the government’s repeated commitment to greening the UK’s economy and reaching net zero carbon emissions by 2050.
Freeports: development must be sustainable
Adam Bond, CEO of AFC Energy
“Freeports have the opportunity to become significant commercial centres for the UK, boosting inward investment, creating jobs and driving the country’s economic recovery. As part of the Government’s drive to “build back better”, we believe it is crucial that these freeports are developed in a sustainable way and capitalise on the opportunity to reduce GHG emissions by adopting zero-carbon technologies - particularly in port-side operations and the maritime sector as demanded by the UK’s Maritime 2050 Strategy.”
Battery competition: no 'silver bullet'
Ed Porter, business development director at Invinity Energy Systems
“Longer duration energy storage has an essential role to play in delivering the UK’s energy transition, enabling renewable energy to be stored and valued at times of excess generation and then delivered at times of high demand capping peak prices for consumers. Today, several technologies, including vanadium flow batteries, are proving technological readiness through displacing fossil fuels on the UK grid by unlocking dispatchable, low-cost, low-carbon renewable power that will be essential in a Net Zero market.
“A £68m boost is welcome to the industry but it clearly does not deliver a silver bullet to address Net Zero. To provide a sustainable boost to the sector, government and regulators must create a market that rewards participants for better utilising low carbon generation to displace carbon intensive, fossil fuel generation. Such a rethink includes aggressive carbon price escalation to create a sustainable market for storage and renewables and a review of the need for long duration storage services to prevent non-frequency driven outages, linked to fundamental energy imbalances.”
Apprenticeships: a boost that 'cannot come soon enough'
Iain Bevan, commercial manager at Daikin UK
“Now, prioritising investment in training in particular is essential if we are to build the highly-skilled workforce required to realise a greener future. For the heat pump market alone, we estimate around 17,000 new installers will be required to meet anticipated demand within the next ten years.
“The boost for apprenticeships cannot come soon enough. However, training at all levels, from apprenticeships through to experienced tradespeople, is needed if people are to acquire the skills they desperately need to develop a career in the green sector.”