Budget 2021: the low carbon announcements
Green investment was a core feature of Chancellor Rishi Sunak’s Budget announcements – but other key elements of the UK’s net zero transition were notable by their absence, including green transport plans such as electric vehicle infrastructure, and energy efficiency in buildings.
Here’s our quick summary of the green announcements:
Green finance
- A new UK Infrastructure Bank was first announced in November; to support the net zero transition and boost regional growth. A few more details were published today, and more details are due ahead of its launch in late spring 2021. The Bank will have £22 billion of financial capacity, consisting of £12 billion of equity and debt capital and the ability to issue £10 billion of guarantees.
- Sunak confirmed a £1bn Net Zero Innovation Portfolio, as first pledged in the autumn, which will include funding to be allocated on a competitive basis to sectors including long-duration energy storage, floating offshore wind; biomass and regenerative agriculture.
- The “world’s first” sovereign green bond – or green gilt – was announced, due this summer, with a further issuance to follow later in 2021 as the UK looks to build out a ‘green curve’. Green gilt issuance for the financial year will total a minimum of £15 billion.
- A green retail National Savings and Investment (NS&I) product will be launched in summer 2021. The Budget report said this will “give all UK savers the opportunity to take part in the collective effort to tackle climate change.”
Transport
- Sunak announced that fuel duty will be frozen for the 11th consecutive year, but the Budget report warned that “Future fuel duty rates will be considered in the context of the UK’s commitment to reach net-zero emissions by 2050.” Transport is the UK’s largest source of emissions, and accounted for 34% of emissions in 2019.
- Other transport taxes went up in line with inflation, except for the HGV Vehicle Excise Duty which was frozen for another year to support the haulage industry post-pandemic. The HGV levy was suspended for another 12 months.
- £30 million support was pledged for a “Global Centre for Rail Excellence” in Wales to support innovation in the UK’s rail industry, including “the testing of cutting-edge, green technology”.
Carbon offsetting
- A carbon markets working group was announced, led by Dame Clara Furse, with the aim of “positioning the UK and the City of London as “the leading global market for high quality voluntary carbon offsets”.
Environmental taxes
- The Aggregates Levy rate for 2021-22 will be frozen, but the government intends to return to index-linking in future. The freeze on Carbon Price Support rates also stays, at £18 per tonne of carbon dioxide in 2022-23. Additional proposals for expanding the UK Emissions Trading Scheme are on the way over the course of 2021.
Green jobs and energy infrastructure
- The Budget announced £27 million, for the “Aberdeen Energy Transition Zone”, helping to support North East Scotland to play a leading role in meeting the UK’s net zero ambitions. A further £5 million for the Global Underwater Hub has been pledged, on top of the £1.3 million committed last year, and up to £2 million to further develop industry proposals as part of the government’s support for the North Sea Transition Deal (NSTD). Taken together, the government says these proposals will support areas like Aberdeen transition to a low-carbon future.
- £4.8 million for a hydrogen hub in Holyhead was also announced; this will pilot the creation of hydrogen from renewable energy and its use as a zero emission fuel in HGVs, and support up to 500 jobs.
- Funding for offshore wind ports infrastructure was also earmarked, with offers of support made to the Able Marine Energy Park on Humberside and Teesworks Offshore
Manufacturing Centre on Teesside to support the development of another offshore wind port hub.