Wednesday’s Budget contained several significant policy announcements regarding energy which we believe will be of interest to Here’s the Plan clients & network.
It is worth pointing out that UK Chancellor Jeremy Hunt failed to mention the term ‘climate change’ at all while setting out the Government’s spring budget – the first since it was confirmed that 2023 was Earth’s hottest year on record. Analysts described the budget as a “missed opportunity” for boosting low-carbon industries and accelerating the transition away from fossil fuels in the UK.
Fuel Duty
The Government is freezing fuel duty rates on petrol and diesel for 2024-2025 for the 14th year in a row.
Looks like we are moving towards more nuclear power
The Chancellor confirmed that the Government has agreed a deal with a Japanese company Hitatchi to buy both the Wylfa nuclear site on Angelsey and the Oldbury site in South Gloucestershire.
He also confirmed that Great British Nuclear, the public funded body set up to scope areas for new nuclear power stations, will begin the next phase of selecting mini-nuclear power station designs with six companies expected to submit their tender responses by June 2024.
Better rates for wind export
The Government also announced plans for a £1 billion renewable energy subsidies auction with £800 million allocated to offshore wind. Rates for wind generation were very low last summer leading to little interest from off shore developers, so this is intended to re-energise that sector.
Electricity Grid Reform
In order to facilitate and speed up connecting renewable energy projects such as Solar PV, the Government will implement a new stringent connections process from January 2025 and work with the Electricity System Operator to outline further interim reforms to the grid queue process by summer 2024. The Government will establish the National Energy System Operator in 2024, and will publish new community benefits guidance by June.
Green Industry Incentives
A further £120 million was announced for the Green Industries Growth Accelerator (GIGA) to support expansion of low carbon manufacturing supply chains across the UK.
Of the over £1 billion of total funding available, up to £390 million is expected to support supply chains of offshore wind & electricity networks and the same amount for supply chains of Carbon Capture Utilisation and Storage (CCUS) and hydrogen.
In addition, the Government used their Spring Budget to provide clarity and certainty for investment into the UK’s renewables sector, publishing the full parameters for the Contracts for Difference Allocation Round 6 (AR6), including setting the largest ever budget for a single round of over £1 billion.
Regulation of Environmental, Social and Governance Ratings
Currently there is no accepted ‘gold standard’ format for ESG reporting. Going forward the Government will regulate providers of Environmental, Social and Governance (ESG) ratings to users within the UK. ESG ratings providers will be brought into the regulatory perimeter of the Financial Conduct Authority.
What was missing?
There were two main areas that the Chancellor did not speak about in this budget, with no new policies to help boost the rollout of key low carbon technologies such as electric vehicles and heat pumps, and no further changes to the Government’s long term regime of maximising oil and gas production.
