Budget pledge to double investment in energy innovation

Government is to invest billions in energy innovation projects to support the UK’s net zero ambitions, Chancellor Rishi Sunak revealed in the Spring 2020 Budget.

The Budget on 11 March 2020 included some significant announcements for the energy and environmental sectors, including an increase in R&D spend from £18bn to £22bn per year. As part of this increase, the government will double its investment in an energy innovation programme.

It will also consult on introducing levy-funded support for biomethane production, to increase the proportion of green gas in the grid.

Other announcements include the introduction of a Low Carbon Heat Support scheme, which will help to support the installation of heat pumps and biomass boilers across the country.

The Climate Change Levy on electricity will be frozen at the current levels, while the levy on gas will be raised in 2022-23 and 2023-24.

An additional £10m will be allocated this year to support the design and delivery of net zero policies and programmes.

Ian McCluskey, IGEM’s head of technical services and policy, said: “IGEM welcomes the announcement in today’s government budget of a doubling of investment in energy innovation, to support the UK’s journey towards net zero carbon emissions.

“We also welcome the government’s acknowledgement that the UK needs reliable low carbon power from technologies such as gas, with carbon capture and storage (CCS), and hydrogen. Natural gas continues to have an important role in providing power and heat across the UK and, as we transition to a decarbonised energy sector, the scaling up of biomethane, hydrogen and CCS will underpin a successful transition.

“As such, it is promising to see £800 million being committed to establishing two carbon capture clusters, one by the mid-2020s and one by 2030. We would urge that immediate action is taken to get these projects off the ground.

“We note that the Green Gas Levy is a proposal that will go through consultation. We eagerly await its publication and details of how it will be funded, in order to formulate a response on behalf of our members.”

The Energy & Utilities Alliance gave a lukewarm response to the Budget investment, saying that the commitments to invest £800m in CCS are not enough.

Isaac Occhipinti, EUA’s head of external affairs, said: “EUA is, of course, pleased that Chancellor Sunak’s has included green gas, heat pumps and heat networks, in addition to a Low Carbon Heat Support Scheme in his first budget, but in all honesty, it’s not enough.

“An affordable, secure and sustainable energy system is of paramount importance to the UK. If we are to achieve it, we must put in what we seek to get out.

“EUA has long championed the need for CCS as a means of allowing the UK to use flexible energy sources such as hydrogen, to meet seasonal variations, dictated by the UK climate whilst supporting carbon reduction.

“EUA believes that carbon capture is one of the most significant potential contributors to reducing carbon emissions while continuing to use the UK’s most valuable asset – the gas grid.”