Today’s budget provided around £130 million in new green public investment, mainly focused on industrial decarbonisation. The chancellor has provided new money for a hub in Holyhead to generate hydrogen for use in HGVs; an ‘energy transition zone’ to move the North Sea oil and gas industry towards greener fuels and technologies; and some new innovation investment for floating offshore wind and energy storage tech. He also announced two new finance mechanisms to encourage private investment in green spending: a new green sovereign bond and a green retail national investment and savings product. Changes are afoot at the Bank of England as well – including a new ‘net zero’ remit for the Monetary Policy Committee – although there’s some confusion as to what that will mean in practice.
Where is the green recovery?
Those were the positives. Other than that, there was very little in the budget for the environment. There was no more detail on the Green Homes Grant, the future of which remains uncertain after the government threatened to axe its funding. There were also no new announcements on electric vehicles, restoring our natural environment or new renewable power.
Fossil fuel taxes are still frozen, including the continued freeze on fuel duty rise, on air passenger duty for short haul flights, on the carbon price floor and on rates of vehicle excise duty for HGVs. This is the wrong signal to businesses and individuals as the economy recovers from the pandemic. There were some hints of future policy announcements on carbon pricing, for example, that they might increase the fuel duty “in line with net zero commitments”, and extending the UK emissions trading scheme (ETS) to more industries in the future.
How green will the National infrastructure Bank be?
The National Infrastructure Bank, as promised over the weekend, will be given a sizeable endowment of £12 billion to spend on “helping tackle climate change” and improving local and regional growth. This has the potential to drive thousands of green jobs, and help our economy shift to a low carbon future. With the bank going through a three phase set up however this money won’t hit the ground for a while, raising the importance of direct government spending to make up the £13.5 billion shortfall in our low carbon infrastructure now.
What’s missing however is a promise that funding won’t lock in high carbon infrastructure or negative practices. In theory, money to support local development could go to incinerators, coal mines or airports: all of which will hold back progress to net zero. Although the initial focus will be on climate mitigation there’s a promise to explore investment in nature. Again, though, this will only help if other projects funded by the bank aren’t also causing nature destruction. The environment needs to be embedded in how the bank does business, not just as one of its programmes.
[Image: The Chancellor Rishi Sunak leaving No11 Downing Street on his way to deliver his budget speech, courtesy of HM Treasury.]