The UK Government’s Budget announcement has legislated for the creation of an infrastructure bank and green finance schemes that could benefit the power industry in the country.
On Wednesday, UK Chancellor Rishi Sunak announced a package of business measures. These included a raise in corporation tax set for two years’ time. Until then, the UK Government will allow companies to deduct 130% of their investments from their taxes.
The chancellor also recapped his previous announcement of a “world-leading” sovereign green bond. This would allow citizens to invest in national renewable energy projects, with one of the first projects expected to be a £20m competition to develop floating offshore wind demonstration projects.
Sunak then announced the creation of a retail savings product for investors to support green projects. He continued: “We will also establish a new group, to establish the City [of London] as a global leader for voluntary, high-quality carbon offset markets. Underpinning all of this will be an updated monetary policy remit for the Bank of England, reflecting the importance of environmental sustainability and the transition to net-zero.”
Green finance schemes aim to accelerate energy transition
As part of wider “accelerated growth deals”, the chancellor said that energy projects in Scotland and Wales would benefit from the budget. These included the Holyhead Hydrogen Hub, the Aberdeen Energy Transition Zone, and the Global Underwater Hub, also in Aberdeen.
This city would also benefit from the North Sea Transition Deal, a government plan to incentivise decarbonisation of its offshore industry. Trade body Oil and Gas UK said that the deal, expected to be implemented in the first half of 2021, would be “essential” to decarbonisation.
In the coming year, the government will form an infrastructure bank to invest in public and private projects in the UK. Sunak said: “Beginning this spring, it will have an initial capitalisation of £12bn and we expect it to support at least £40bn of total investment in infrastructure.
Directly following this, Sunak moved on to offshore wind development, recapping a previously announced pledge to develop the UK’s offshore wind sector. He said: “Offshore wind is an innovative industry, where the UK already has a global competitive advantage. So we’re funding new port infrastructure to build the next generation of wind projects in Teesside and Humberside.”
The scheme would see the government invest £160m in developing ports and infrastructure for offshore wind manufacturing and deployment. At the original announcement, UK Prime Minister Boris Johnson said: “We will not only build fixed arrays in the sea, we will build enough floating turbines to deliver 1GW of energy by 2030.
“By upgrading infrastructure in places such as Teesside, Humber, Scotland, and Wales, we will increase our offshore wind capacity. This investment will create 60,000 jobs in this country.”
However, companies and unions commented that the UK transmission grid would need significant work in order to handle further offshore generation. Alongside this, a representative of the RMT union commented that the UK needed better skill development programmes to live up to the task.
Hydrogen, electric vehicles, and generation schemes not mentioned in Budget speech
After the speech, leader of the opposition Keir Starmer criticised the budget for its lack of mention of national health and care services.
He later said: “This Budget should have included a major green stimulus, bringing forward billions of pounds of investment to create jobs and green infrastructure. Instead, the government is trying to build a new coal mine which we now learn might not even work for British steel.”
Starmer said the opposition welcomed the creation of a national infrastructure bank, which his party had advocated. He continued: “We also welcome the introduction of green savings bonds. The trouble is that the scale of what the chancellor announced is nowhere near ambitious enough.”
Comments from industry also considered the areas not mentioned in the Budget speech.
Green hydrogen provider Protium CEO Chris Jackson said: “We are disappointed to see that the government has not reflected on the advice from industry to use this year’s Budget to put the UK green hydrogen economy on a solid foundation for growth.
“Whilst we welcome the foundation of the UK Infrastructure Bank, this will not provide the scale of investment that the UK needs to capitalise on the hydrogen opportunity. We hope that the Treasury will review their decision.”
Energy companies “disappointed” by lack of investment from UK Budget
On the announcement of an infrastructure bank, legal and business services firm DWF partner Darren Walsh said: “We welcome the Chancellor’s announcement to create the first ever UK Infrastructure Bank. We note that the first projects will cover port infrastructure, but we are hopeful that green energy projects will be prioritised to facilitate the enhancement of the Prime Minister’s ten-point plan for net-zero carbon and a drive towards our green revolution.
“We hope that nascent green technologies such as tidal and hydrogen are supported as well as seeing further development of onshore wind and solar PV. This is further great news for sponsors, developers, and investors and the entire low-carbon supply chain.”
The UK has legislated to make all new cars at least partly electric by 2030. Car leasing comparison website LeaseLoco CEO John Wilmot said: “The lack of any meaningful funding announcement by the Chancellor on the electric car switchover is disappointing.
“With so much to do before 2030 in terms of encouraging car owners to early switch to cleaner, electric cars, and building a charging infrastructure that can cope with growing demand, this is not the time for the government to take its eyes off the ball, despite the obvious distractions.”