Budget: What has Rishi Sunak done for energy and transport?


Chancellor Rishi Sunak’s multi-billion budget drive towards a net zero UK targets transport, carbon capture & storage, and aims to create 1.5 million “high-skill, high-wage, low carbon jobs of the future”.

But the Budget also sent mixed messages, with fuel duty unchanged for an eleventh year, contrary to pre-Budget briefings, plus £27 billion earmarked over five years to improve Britain’s roads.

Transport and EVs

The mooted £500 million investment fund to boost EV charging was confirmed by Sunak.  Overseen by the Office of Low Emission Vehicles (OLEV), a Rapid Charging Fund will incentivise operators to connect their fast charge points to the grid.

A further £403 million will extend the Plug in Grant for private vehicles out to 2023. A total of £130 million has been earmarked to offer a similar grant for vans and taxis.  The government will consult on bringing forward the 2040 deadline for phasing out sales of ICE vehicles.

That was welcomed by operators attempting to decarbonise their fleets.

Simon King, sustainability director at Mitie, welcomed the new money, but with reservations. “It’s gratifying the Chancellor has heard our calls for improved rapid charge point infrastructure and financial reforms to support the electric car and van market,” said King. “However, if we are to make the most of these commitments,.. investment must focus on areas where no off-street parking is available.”

Network operators, which will be increasingly challenged by electrification of heat and transport, sounded a note of caution.

“What needs to follow soon is the EV charging infrastructure review. We have the technology but the industry and government need to move fast on developing a clear plan,” said Western Power Distribution DSO projects manager, Roger Hey.

Electrifying Britain’s road transport will require “the equivalent of London’s electrical energy fourteen times over”, he added.

Heat, gas and EU ETS

The Chancellor confirmed the ‘levelling up’ of green taxes applied between power and gas will continue. George Osborne’s 2016 Budget targeted parity between power and gas within the Climate Change Levy by 2025.

Yesterday’s Budget confirmed from April 2022 gas producers will pay £0.00568 per kWh , rising to £0.00672 per kWh in 2023-24. Electricity rates over the period will remain frozen. Users in energy-intensive sectors will receive support with the transition, the Chancellor promised.

Meanwhile, government will consult on a ‘Green Gas’ levy on consumer bills, to fund research into greener fuels.

Heat pumps and biomass boilers receive support through a Low-Carbon Heat Support Scheme. £100 million of new government funding will underpin their installation by SMEs and households, under a grant scheme from April 2022.  The domestic RHI will be extended until March 2022. Injecting greater certainty for businesses using clean heat, the non-domestic RHI in 2021 will receive a new allocation of flexible tariff guarantees.

There was also confirmation of £96m for the final year of the Heat Networks Investment Project, which finishes in 2022. After that, some £270m is earmarked to make heat networks green, including connecting them up to waste heat sources.

As detailed in the Treasury’s supporting documents, the Carbon Price Support scheme continues unchanged until 2022 at £18 per tonne.

In the post-Brexit transition, the government will aim to apply an ‘ambitious carbon price’, possibly linked to the EU’s Emissions Trading System.

The Chancellor made no mention of wind or solar as new power sources. The Solar Trade Association’s chief executive Chris Hewett accused the Budget of being ‘thin on measures to tackle climate change”. “Without good policies to support the uptake of solar, we will fall well short of the 40 gigawatts needed by 2030 to keep on track, ” Hewett added.

CCS and new technology

At least two industrial CCS ‘clusters’ are pencilled to start trials from the mid-2020s, the Chancellor announced, supported by £800 million in a dedicated Carbon Storage Infrastructure fund.

Air quality

Local authorities will receive £304 million over five years for action to reduce nitrogen dioxide emissions.

Full supporting documents are available here.

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