The Budget announcement on 3 March has been trailed as a vital test of UK Government's green credentials. In the package of measures announced, there were a number of measures aligned to supporting a 'green recovery'.

A ‘Big Bang’ for offshore wind

In the Chancellor's Budget announcement, a number of measures were announced to support the Government's previously stated commitment to ensure that offshore wind will produce more than enough electricity to power every home in the country by 2030.

Pledging to put green investment at the heart of the UK's economic recovery from COVID-19, Sunak announced £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators, and plans for new port infrastructure to support the next generation of offshore wind projects in Teesside and Humberside.

This has been viewed as a ‘Big Bang’ moment for offshore wind manufacturing in the UK, which will drive investment in a globally-competitive domestic supply chain.

‘Net zero’ ambition

Offshore wind was not the only energy sector to receive a boost. Sunak announced £68 million to fund a UK-wide competition for ‘first-of-a-kind’ long duration energy storage prototypes, alongside £4 million for a biomass feedstocks programme identifying ways to increase production of crops that can be used for energy.

The Chancellor also announced fresh funding for green energy in the North East, committing £27 million for the Aberdeen Energy Transition Zone and up to £2 million to support the continued development of industry proposals for the North Sea Transition Deal and a further £5 million for the Global Underwater Hub in Aberdeen.

Offshore wind and hydrogen supports

In addition to supporting renewable energy in Scotland, the Budget contained a commitment to support the Able Marine Energy Park on Humberside and the Teesworks Offshore Manufacturing Centre on Teesside, both of which are developing offshore wind port hubs.

It also confirmed a commitment to £4.8m of new funding for a Holyhead hydrogen hub, subject to a strong business case study. The Treasury claims that the project could support up to 500 jobs and become the UK’s first commercial scale green hydrogen plant.

The funding for port upgrades and the award of new freeports represent a huge boost to our export ambitions. The possibility of a high-tech centre at the Teesside freeport, focusing on offshore wind, carbon capture and innovative manufacturing capacity is particularly exciting. 

UK Green Bank 

Following the recent establishment of the Scottish National Investment Bank, which has as one of its key missions, the transition of Scotland to net zero by 2045, the Chancellor announced the establishment of the first ever UK green bank, (the National investment Bank “NIB”) to be headquartered in Leeds, with an initial capitalisation of £12bn. It is hoped that this will crowd in private finance enabling projects of up to £40 billion to be supported with a focus on offshore wind. This follows on from the recent allocation of six Round 4 leasing options totaling just under 8GW of potential new offshore capacity. These two measures signal a major vote of confidence in the UK’s green economy. 

It’s worth tempering expectations as we have seen something similar to the NIB before. The Green Investment Bank was set up in 2012, only to be sold to Australian private equity group Macquarie five years later. 

Green bonds 

The Government will offer a green retail savings product through National Savings & Investments (NS&I) in the summer of 2021. This product will be closely linked to the UK's sovereign green bond framework (aimed at institutions) and will give all UK savers the opportunity to take part in the collective effort to tackle climate change. The Treasury will issue ‘green savings bonds’ to allow ordinary savers to participate in helping the UK build back greener and cut net emissions to zero by 2050. Money raised will be used to fund renewable energy and green transport projects. 

The opportunity to purchase the world’s first green savings bonds is a positive development. Investors are increasingly looking for greater choice in the world of sustainable investment, allowing them to earn an ecological return as well as a financial one. 

Aggregates Levy and Carbon Price Support rates frozen

It was confirmed that the Government will maintain the freeze on Carbon Price Support rates at £18 per tonne of carbon dioxide in 2022-23. They reiterated their commitment to drive forward on decarbonisation and will be setting out additional proposals to expand on the UK Emissions Trading Scheme over the course of 2021.

Similarly, the Aggregates Levy rate has been frozen for 2021-22.

Plastic Packaging Tax

It was announced that, from 1 April 2022, Plastic Packaging Tax will come into play with key details as follows:

  • The rate will be £200 per tonne for packaging with less than 30% recycled plastic
  • It will apply to UK manufacturers of plastic packaging, importers, business customers of manufacturing and importers of plastic packaging and consumers
  • There will be an exemption for manufacturers and importers of less than 10 tonnes of plastic packaging per year