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What the 2017 Autumn Budget means for Renewables

Tue, 12/05/2017 - 13:10

The no carrot and no stick approach

Now that the dust has settled on the Budget, it's worth thinking about what it will mean for the energy market, and in particular green energy. Delivered just a couple of weeks ago, Chancellor Philip Hammond's announcement blandly passed muster, but the general sigh of relief at its lack of controversy (after the blunders of the 2017 Tory Manifesto) was not shared by the renewables sector. 

True, the little red book’s emphasis on boosting ultra-low emission and autonomous vehicles is enticing. The Government will for instance be investing £200m in charging points, reviewing fuel duties on vehicles using alternatives to diesel and petrol, and pouring a further £100m into the Plug-In Car Grant until 2020, to help consumers buy new batteries for electric cars. It will also begin carving out regulation for self-driving cars, while the National Infrastructure Commission (NIC) will be handing out a prize for innovative plans for roads in a self-driven world. So far, so perky.  

Yet these measures are not counterweighed by any further curbs to fossil fuels – for which tax credits will remain the same. Nor are they matched by boosts to low-carbon heat and power. Crucially, the Government will not be introducing any new low-carbon electricity levies until at least 2025; neither will it increase carbon prices (Germany and France are currently in talks over a carbon floor-price for the EU). So where is the incentive for solar, wind or nuclear to grow in the UK, or for the private sector to go low-carbon?

The Budget also omitted any follow-up to the Department for Business, Energy and Industrial Strategy’s Clean Growth Strategy, published only last month. BEIS Secretary Greg Clark MP had promised a £2.5b low-emissions’ funding programme which would cover agriculture among other sectors, and to improve the energy performance of homes – yet these do not reappear in the Budget.

Aside from a sprinkle of investment in R&D, Hammond expressed no intention of cultivating less developed technologies, such as waste-to-energy, or tidal. And yet their promise is growing- Welsh tidal power has made such strides that it was recently awarded a £4.2m boost from the EU. Where support for such projects will come from after Brexit, the Budget will not tell you.  

Failing much of a carrot, the most ‘stick’ the Budget shows is on waste crime and new diesel car owners. The latter group will now pay an increased vehicle excise duty should their cars not meet emissions standards, which will go to a £220m Clean Air Fund eligible to local authorities. According to the Chartered Institute of Environmental Health, this is but “a drop in the ocean” of what councils need. Decarbonising local domestic heating systems is a challenge of goliath proportions which £220m is unlikely to make much of a dent in. Let’s also not forget that London, accountable for 40 % of Britain’s most polluting roads, will not be eligible for the fund, to the acrimony of Mayor Sadiq Khan MP.

To look at this year’s Budget, you would struggle to see the UK well on its way to achieving its 80% carbon reduction target for 2050. It clearly envisages a future of electric and eventually driverless vehicles, however renewable heat and power providers are none the wiser as to their route to the wider UK market. Much will depend on the longevity of this Government- for those disappointed by the delay of levity reform, Christmas is likely to come earlier than 2025.