A weakly green budget ...
Last week saw the Spring Budget. We looked for how much the Chancellor had used his green crayons.
While Jeremy Hunt’s budget speech last week only mentioned the word ‘green’ four times1, ‘sustainable’ just three times and ‘Net Zero’ exactly once, the speech wasn’t devoid of green content. Well, not totally, at least.
For one, Jeremy announced a second round of the City Region Sustainable Transport Settlements (CRSTS) – one of CRSTS’s three objectives being to decarbonise transport - allocating £8.8 billion over the next five-year funding period. He also announced up to £20 billion of support for the early development of CCUS, starting with projects on the East Coast, Merseyside and North Wales, “paving the way for CCUS everywhere across the UK as we approach 2050”.
There was also good news, we assume, for the nuclear programme:
[T]o encourage the private sector investment into our nuclear programme, I today confirm that subject to consultation nuclear power will be classed as “environmentally sustainable” in our green taxonomy, giving it access to the same investment incentives as renewable energy.
Alongside that will come more public investment [a]nd secondly, I am launching the first competition for Small Modular Reactors. It will be completed by the end of this year and if demonstrated as viable we will co-fund this exciting new technology.
Source: HM Government
Then there was news of further investment in the Government’s push to get Britain to the top of the artificial intelligence (AI) class, with the announcement of an AI sandbox to trial new, faster approaches to help innovators get cutting edge products to market; funding for a new AI supercomputer; and a new strategy aiming to make the UK world-leading quantum-enabled economy by 2033. All good stuff for enabling a brave green world, we assume.
But, all in all, we found the budget speech to be, shall we say, lightly shaded around a few of the edges where the green crayon provided a nice enhancement to the bold strokes afforded to the themes of Growth, Security and the four E’s of Enterprise, Employment, Education and Everywhere.
Certainly, some green commentators have not been happy. James Murray of Green Business wrote:
For the green economy there was nothing on renewables, planning reforms, offshore wind port infrastructure, electric vehicle manufacturing, charging infrastructure, nature-based solutions, tree-planting, climate resilience, green finance, domestic energy efficiency, green skills, electricity market reform, green trade deals, carbon pricing, heat pumps, flexible grids, or farming subsidy reform. There was, however, confirmation the budget for walking and cycling infrastructure has been cut by two thirds.
Source: BusinessGreen
Similarly, Ørsted, the Danish energy giant behind the construction of Hornsea 3, an offshore wind farm in the North Sea that will be capable of generating enough electricity to power something like 10% of the UK’s domestic housing stock, was similarly unimpressed, saying, “It is disappointing that the Government has not put in place a full package of support for the renewables industry in the Spring Budget.” Apparently, Ørsted is so disappointed that it’s reviewing its UK project pipeline. We also hear that Claire Mack, Chief Executive of Scottish Renewables, expressed similar disappointment, saying “We urgently need a framework that will encourage investment in what is one of the UK’s most dynamic and fastest-growing industries and is at the forefront of the clean energy transition.
While not part of the budget speech, a drill into the budget detail and a scoot around other recent Treasury activities produces a mixed bag. We learn, for instance, that to support energy efficiency the Government will extend the Climate Change Agreement scheme for a further 2 years. We also find a new call for evidence for views on further reform to VAT relief rules on Energy Saving Materials (ESMs) for energy efficiency improvements in domestic and commercial buildings; and we’re told that that the UK Infrastructure Bank can now invest in nature-based solutions. Plus, we hear that Sir Patrick Vallance’s report and recommendations on green industries is expected some time over the coming weeks; and we understand that something like £10bn-worth of green gilts are being issued. But, as James Murray said earlier, we recently learned from Mark Harper that the remaining active travel budget, which stood at around £300m, is now being reduced to £100m. ‘Economic headwinds’ is given as the reason, so fewer opportunities to tackle the cycling headwinds as a result.
So, not too much green in the budget, it seems. Admittedly the new Net Zero Strategy is coming before the end of March, along with the Government’s response to the Skidmore Review, so perhaps we’ll find out more then. We might even be pleasantly surprised to find that the new Net Zero Strategy is closer to what we’re seeing coming out of Europe, with its Net Zero Industry Act 2023 and the US’s Inflation Reduction Act 2022. We shall see.
At the very least, we’d like to hear something concrete on funding for retrofit. Let’s not forget that we still have 19m homes in the UK needing some kind of retrofit and we know that could generate and support around 200,000 jobs. Surely, Jeremy, that’s worth splashing a bit of cash.
In fairness, the full budget text contains many more references to ‘green’ than the speech itself. We counted 32 mentions in the full text, with 22 of those being related to green gilts.