Spring Budget 2023: A Missed Opportunity in Attracting Low Carbon Investment

The REA (Association for Renewable Energy and Clean Technology) has responded to Chancellor Jeremy Hunt’s Spring “budget for growth”, saying that the statement marks a missed opportunity to unlock green growth in the UK, as we see an increasingly competitive international investment environment.

We welcome government’s commitment to advancing carbon capture and storage – this is a long awaited and welcome step forward. The REA notes that it is now particularly essential that today’s announcements deliver a route to market for bioenergy with carbon capture and storage (BECCS) at a range of scales.

The REA also welcome moves to change pension investment rules to allow and enable pension fund investment in renewables and clean technology, something the REA has advocated for.

However, we had called for reforms to the Electricity Generator Levy (EGL) which would incentivise vital investment in renewable and clean technologies and will importantly mirror the investment incentive provided to the oil and gas sector within the Energy Profits Levy. Furthermore, the REA questions why the measure to extend existing fuel duty freeze is not matched with reducing the cost of running Electric Vehicles (EVs) through reducing the rate of VAT at public chargepoints in line with domestic charging rates.

Without these actions, government risks losing out on the opportunity to address barriers blocking deployment of renewable and low carbon infrastructure, to deliver a secure, affordable and decarbonised power system.

Further welcome measures include the extension of the Climate Change Agreement scheme for a further two years to encourage energy efficiency, along with the extension to the Energy Price Guarantee that is much needed to protect households from the devastating impacts of the ongoing energy crisis.

The REA highlights that this urgent intervention must be accompanied by robust support for renewables to tackle the fundamental problem of the volatile price of fossil fuels in the long term, so that consumers will continue to be protected going forward. A renewable energy and clean technology transition, not more of the same, is the route out of this crisis.

Frank Gordon, Director of Policy at the REA (Association for Renewable Energy and Clean Technology) said: “Government’s commitment to advancing carbon capture and storage is a long awaited and welcome step forward, helping to reaffirm the UK’s global position as leaders in this innovative technology, and see it built at commercial scale. However, government must now set out how further bioenergy with carbon capture and storage (BECCS) projects will be taken forward across all scales. There are over 60 Biomass power sites in the UK, representing over 4500 MW of capacity, all of whom could be looking to CCS to deliver carbon removals.

“The industry and investors are ready; they now need Government to confirm details on a reasonable route to market in order to push ahead.

“While we welcome this support and acknowledge the tough economic backdrop, it was disappointing that the Budget offered no new support for moving to long-term solutions to tackle the energy crisis such as decarbonising heat, energy efficiency, securing investment in Net Zero supply chains in response to US and EU support, no compensatory measures for EV drivers from the fuel duty freeze and nothing on moving to a more Circular Economy.

“Much attention will turn to the Autumn Statement where there was a commitment to respond to the supply chain investment requirements in response to the likes of the US Inflation Reduction Act.

“Overall, today’s statement marks a missed opportunity as the US and EU push forward in attracting low carbon investment, while the UK risks falling behind.”