UK Budget pledges cash for CCS, green gas, fusion, EVs and more

New UK Chancellor Rishi Sunak delivered his first Budget today and pledged investments in carbon capture, nuclear fusion and electric vehicle infrastructure.

“Carbon capture and storage is precisely the kind of exciting technology where Britain can lead the world over the next decade,” he told the House of Commons this afternoon, going on to pledge à‚£800m ($1bn) to set up two CCS clusters by 2030 – one in England and another in Scotland.

The money will come from a new CCS Infrastructure Fund. The first of the CCS hubs will be set up by the mid-2020s and the second by 2030.

The Budget document released after Sunak’s speech states that “using consumer subsidies, the government will also support the construction of the UK’s first CCS power plant”.

The document also states that because “the heating of our homes will need to be virtually zero carbon by 2050ࢀ¦ the Budget accelerates the greening of the gas grid by announcing a new support scheme for biomethane, funded by a Green Gas Levy”.

The government is also to support the installation of heat pumps and biomass boilers by introducing a Low Carbon Heat Support Scheme, plus it is providing à‚£270m of new funding to enable new and existing heat networks to adopt low carbon heat sources.

Sunak also vowed to “invest now in the technologies of the future”.

“Ours is a history filled with ideas, invention and discovery,” he said. “A Welshman invented the first hydrogen fuel cell. And Jocelyn Bell Burnell, born in Northern Ireland, discovered the first radio pulsars. To compete and succeed over the next decade and beyond, we need to recapture that spirit.”

He then announced that he was increasing investment in R&D to à‚£22bn a year, plus more than à‚£900m into nuclear fusion, space and electric vehicles.

In his speech, Sunak vowed to “support the most energy-intensive industries to transition to net zero, by extending the climate change agreements scheme for a further two years”.

To encourage businesses to operate in what the government calls “a more environmentally friendly way”, the government is raising the Climate Change Levy on gas in 2022 and 2023, however it is freezing the rate on electricity.

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Sunak also promised to spend à‚£500m to support the rollout of new rapid charging hubs for electric cars, which he says will ensure that drivers are never more than 30 miles away from being able to charge their vehicle.

Commenting on the Budget, Neil Cornelius, Managing Director at consulting firm Berkeley Research Group, said: “What wasn’t addressed are the CO2 emissions from domestic gas supplies, which are huge. Given that it would be environmentally appropriate, and a large revenue item, the Government is clearly restraining itself because of the unpopularity of a natural gas carbon tax and the limited set of options that consumers would currently have to make material adjustments to their natural gas use.

Mark Smith from business performance consultancy Ayming said: “There’s little doubt that we’re on the cusp of a climate disaster, so it’s encouraging to hear such intentions to make the UK a green economy. There has been lots of ambitious talk of carbon neutrality from the government, with legally binding targets to become net zero by 2050, and rightly so.

“But without support from businesses, these ambitions will remain a fantasy. Whether it be carbon capturing technology or more sustainable food cultivation, business-led innovation is going to have to play a pivotal role in getting us through what lies ahead. Not only should we be incentivising research in environmental technology, but the government must create the friendliest possible environment to facilitate the transition to a green economy.

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“For example, we have known about the need to increase investment in electric vehicle infrastructure for a long time. We have to be much quicker to adapt to the economic requirements of the time or we risk being left behind.” 

Smith said the UK “could be the next world leader in some of these green technologies, which would provide a huge opportunity after Brexit. The future is sustainable, and businesses at the forefront of that trend will benefit enormously.” 

UK trade body the Carbon Capture and Storage Association welcomed today’s à‚£800m announcement.

Its chief executive Luke Warren said it was “a very significant step forward. The government has clearly recognised that CCS is an essential tool if we are to achieve the net zero target and they have now taken action to make CCS a reality.”

He added: “With the UK hosting COP26 this year, we have today sent a strong signal to industry and the world, that the UK is committed to achieving its net zero target and aspires to become a global leader in the development of CCS as part of the global response to climate change”.

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Darren Walsh, energy partner at law firm DWF, detected “a number of subtle positives announced by the Chancellor in today’s Budget in connection with energy and the low carbon economy”.

“It is pleasing to see still further expansion of the Energy Innovation Programme, as this covers a broad cross section of low carbon initiatives, including renewables, smart energy system technologies, nuclear, and built environment.”

He added that while there was “clear support for a carbon capture and storage power station by 2030, there remains a lack of clear direction for new nuclear build which, as part of the overall energy mix, is essential in meeting the country’s decarbonisation targets by 2050 ” or earlier.”

And Chris Hewett, chief executive of the Solar Trade Association, said: “Unfortunately this Budget is thin on measures to tackle climate change and support the transition to a low-carbon economy. Renewables are vital to reaching net zero, and without good policies in place to support the uptake of solar we will fall well short of the 40 GW needed by 2030 to keep on track. Time is running out to act.

He said it was “particularly disappointing” that there was a “lack of any meaningful policy on energy efficiency and green improvements for existing homes, such as solar and battery storage.”

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