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In the final week of October, the first female Chancellor took to parliament to deliver the government’s budget, ending weeks of speculation. But what does the budget mean for green energy, and most importantly how will it support net zero goals?
Investing in green energy
One of the key messages in the budget was that Labour aim to grow the UK’s economy and bring jobs alongside growth. With a wealth of job opportunities expected as a result of net zero energy projects, any planned investment would certainly be welcomed.
It’s a budget the new government says is about fixing the foundations, through their growth mission. Net zero features as one of the 7 pillars that will achieve this mission, alongside economic and fiscal stability; investment, infrastructure and planning; place; people; industrial strategy and trade; and innovation.
Creating a clean energy superpower
Increasing contributions from oil and gas companies to support the energy transition was one notable addition written into the budget. Plans to increase the Energy Profits Levy (EPL) from 35% to 38% whilst removing the 29% investment allowance, forms part of the government’s plan to make the UK a clean energy superpower - with plans to extend the levy until 2030.
Supporting greener travel
The shift to electric vehicles (EV) was also given a further push, with commitments to widen the differentials in Vehicle Excise Duty first year rates. Company car tax for electric vehicles was also mentioned in the budget, extending the 100% first year allowance for zero emissions cars and EV chargepoints for a further year.
Taking a deep dive into the finances
Within the full budget release, total department expenditure limits were shared, which include depreciation. Energy Security and Net Zero’s £6.4 billion spend in 2023-24 is set to increase to £9 billion in 2024/25, with £10.3 billion planned for 2025-26. It represents an increase of 22% compared with current 2023-24 expenditure and is the most significant increase across any government department. No other government department has been granted an increase of more than 10.2% in comparison, with Transport, the Home Office and Cabinet Office seeing a decrease in expenditure up to 2025-26.
Money has also been included in the budget, subject to decision, for construction costs for carbon capture, utilisation and storage.
The budget in a snapshot
Reserving the de facto ban on onshore wind in England
£34.8 billion of private investment secured in the UK’s clean energy industries
£163 million Industrial Energy Transformation Fund over 2025-26 to 2027/28 to support decarbonisation
£3.9 billion in 2025-26 for Carbon Capture, Utilisation and Storage Track-1 projects
£2 million funding for 11 new green hydrogen projects
£2.7 million funding for Sizewell C through 2025-26
Supporting the first round of electrolytic hydrogen production
Accelerating connections to the grid and building new network infrastructure
Reducing household energy bills by creating greener homes
£200 million allocated in 2025-26 to accelerating electric vehicle chargepoint rollout
£120 million in 2025-26 to purchase new electric vans through the plug-in vehicle grant
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