George Osborne has pulled the plug on the £1bn carbon capture and storage fund, lengthening the odds of the technology and associated infrastructure reaching maturity in the UK.
The news was not contained in the Autumn statement. Instead the government yesterday notified the stock exchange. It was not a move the CCS industry had seen coming.
The statement held some good news for energy intensive users, which will be exempt from the cost of environmental policies going forward, as the government had already indicated.
Renewable heat budgets avoided the axe, with funding set to increase to £1.15bn in 2021. However, the Chancellor also announced that the scheme would be reformed to save £700m. How that might work remains to be seen.
Osborne said the Department of Energy and Climate Change’s innovation budget would be doubled to £500million. Half of that will be spent on small nuclear reactors research, some will go to shale gas.
Meanwhile, the government also announced a £1bn shale slush fund for communities in which fracking goes ahead. Earlier this year the departments of energy and climate change and communities and local governments moved to change the planning process after rejections by local authorities of Caudrilla’s applications in Lancashire.
See the statement here.
