Budget recap: What was in Hunt’s spring statement on net zero?
The UK’s Chancellor of the Exchequer, Jeremy Hunt (above), presented his Spring Statement yesterday, unveiling the government's financial plans for the year ahead.
Net Zero Investor scrutinised the policies and identified three significant announcements in the Budget which should help boost energy security and accelerate progress towards net zero targets.
Firstly, climate change agreements provide energy intensive businesses with climate change levy discounts on their energy bills of 92% for electricity and 88% for gas.
Discussing Hunt's plans with Jayne Harrold, tax partner at London wealth manager Evelyn Partners, said "eligible businesses will have been pleased" to hear that the current climate change agreements are to be extended by a further 2 years to 31 March 2027, and they have been reopened to new entrants.
Consultation on a future replacement of the scheme is also to take place.
Moreover, Hunt confirmed yesterday that the UK will class nuclear power as “environmentally sustainable” as Sunak's government looks to encourage investment in the sector.
Harrold thinks this was a smart and sensible move by the government.
"Investment in nuclear energy received a significant boost with announcements in the speech that there will be a consultation on classifying it as sustainable energy, meaning that it will be able to access the same finance and subsidies as renewable energy," she explained.
Nuclear energy is a controllable low carbon energy source, representing a vital plank in the Government’s energy security strategy," Harrold added.
Great British Nuclear will also be seeking to drive down costs of new nuclear energy and secure 25% of electricity supply from nuclear by 2050.
A competition of small modular reactors will run to the end of 2023 and the Government will co-fund development if the technology is proven viable.
The new position will put the UK in step with the EU, which earlier controversially put both nuclear power and natural gas within its taxonomy of sustainable activities.
However, national attitudes towards nuclear are divided on the continent, with majority support for the energy source in France and majority opposition in Germany.
The government's plans are not entirely new, however.
In March 2022, then UK Prime Minister Boris Johnson told nuclear industry bosses that the government wants the country to source a quarter of its electricity from nuclear power.
Hunt's support for CCS and nuclear is largely welcomed by the sustainable finance sector
Currently, the UK has five generating nuclear power stations, providing around 15% of the country’s electricity from 5.9 GW of capacity.
Hartlepool and Heysham I stations will retire by March 2026, and Heysham II and Torness will retire by March 2028, leaving only Sizewell B, with 1.2 GW of generating capacity.
In reaction to the announcement, Tom Greatrex, Chief Executive of the Nuclear Industry Association, told Net Zero Investor yesterday that “this is a huge step forward for UK energy security and net zero.
He said that "nuclear’s inclusion in the UK Green Taxonomy is a vital move, following the example set by other leading nuclear nations, and will drive crucial investment into new projects, making it cheaper and easier to finance new reactors."
Carbon capture and storage
Finally, Hunt also confirmed news that leaked earlier this week, namely a pledge of £20bn towards carbon capture and storage (CCS).
“Carbon capture and underground storage has been in development for a long time without any successful projects to date," Harrold said.
The Chancellor announced support for early development projects, supporting up to 50,000 jobs. A shortlist of projects will be announced later this month with further clusters and expansion to be announced later.
The investment will be in stages of £1bn a year for the next two decades, and is to go towards projects aiming to store 20-30m tonnes of carbon dioxide a year by 2030, equivalent to the emissions of 10-15m cars.
Green label ‘huge step forward’ for net zero, says UK nuclear sector chief