Budget 2020: Climate and clean energy predictions

The new chancellor, Rishi Sunak, is expected to deliver ‘one of the most expansionary Conservative budgets in a generation’ next week. We take a look at what the Spring Budget 2020 will likely mean for the clean energy transition and climate emergency in the UK.

Budget 2020

Infrastructure spending is expected to be a high priority of the upcoming Budget, with the Queen’s Speech in December including a commitment to spending £100 billion on infrastructure.

COP26 is the most important summit the UK has hosted since the G8 met at Gleneagles in 2005. For this reason, as well as the government’s net zero 2050 pledges, most pundits predict the 2020 Budget will have a strong climate and clean energy emphasis.

However, it’s worth noting that due to the recent outbreak of coronavirus, the chancellor is expected to re-work the Budget to mitigate against the anticipated economic impacts. This could therefore delay some announcements until the spending review in autumn.

Energy Storage

• On Monday, the government launched a consultation on how to best support low carbon electricity generation. Energy storage was highlighted as playing a key role in the energy transition, supporting intermittent renewables and increasing flexibility.
• Additionally, during his election campaign, Boris Johnson pledged to build a Gigafactory in the UK in the next three years, suggesting a focus on energy storage spending in the coming years.
• It’s anticipated that government support for energy storage could be included in the upcoming Budget.

Hydrogen

• The UK Hydrogen taskforce launched in parliament recently, recommending £1 billion of public support for trials in storing, distributing and making hydrogen by low carbon hydrolysis, as well as suggesting 100 hundred hydrogen re-fuelling stations to be built before 2025.
• These recommendations were welcomed by the Minister of State for Business, Energy and Clean Growth, Kwasi Kwarteng.
• Last year, the Conservative party also outlined in its election manifesto plans to increase funding for research in ‘new’ technologies, including hydrogen.
• It’s predicted that funding for hydrogen could be included in the Budget.

Biomass

• Low carbon bio-energy – such as crops for vehicle fuel or wood chips for boilers – will play an important role in the government’s plans to shift away from fossil fuels.
• The Telegraph has hinted that support for biomass could be included in the Budget.

Energy Efficiency

• The government has hinted that it will focus on improving energy efficiency in the 2020 Budget.

The i is reporting that this could include:

• £9.2 billion towards improving the energy efficiency of homes, schools and hospitals.
• £500 million on helping energy intensive industries convert to using cleaner energy.

Carbon capture

• Another pledge made in the Conservative’s manifesto that could feature in the Budget next week is the investment of £800 million towards building the UK’s first fully deployed carbon capture storage cluster by the mid-2020s.

Electric Vehicles

• Accelerating the UK wide transition to electric vehicles (EVs) looks to be a core part of the government’s strategy. It is highlighted as an important priority in the government’s election manifesto as well as in the announcement to bring forward the ban on internal combustion engine vehicles. It’s therefore very likely that the government is planning to introduce measures to support the switch to EVs.
• Early indicators of the Budget support this. BEIS secretary, Alok Sharma, yesterday confirmed plans to ‘supercharge the manufacture of electric cars, planes and ships with a £36.7 million investment’ including £30 million on research and development into how to make essential components more cheaply, and efficiently use digital manufacturing techniques.
• Transport Secretary Grant Shapps also recently announced £10 million of funding for electric vehicle charge points on residential streets. The new chancellor may confirm this in the Budget.
• It’s widely predicted that long-term support to the plug-in government grant will be upheld in the new Budget.
• The Times is reporting that investment in measures to support the adoption of electric vehicles are part of a £1.8 billion government pledge towards tackling climate change. More details are likely to be confirmed in the Budget.

Fuel duty

• One of the more persistent rumours is that the chancellor might announce a rise in fuel duty, a tax that remained frozen throughout George Osborne’s Budgets.
• On the one hand, Boris Johnson had repeatedly claimed during the election campaign that he did not intend to hike fuel duty. On the other, if the UK is to meet its climate pledges, then it will have to take steps to cut petrol and diesel car use. The FT is suggesting that Rishi Sunak is ready to end the freeze on fuel duty in the Budget.
• Fuel duty may rise by as much as 2p a litre, if this rumour is true.

Follow us on Twitter to stay up to date on the 2020 Budget next week and find out what it means for the UK’s clean energy and climate plans ahead of COP26 in November.

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