In a bid to foster economic growth, Chancellor Jeremy Hunt has unveiled his Autumn Statement, which comprises 110 growth measures. But what measures help achieve net zero?
According to Hunt, the measures introduced will halve inflation, grow the economy and reduce debt and that it will “growth measures to back British business” and “measures to make work pay”.
But what does the statement do for net zero?
Hunt reiterated the government’s previous announcement of support for key manufacturing sectors, with a funding package totalling over £4.5 billion between 2025 and 2030.
This includes dedicated allocations of over £2 billion for the automotive industry, £975 million for aerospace, supporting the manufacturing, supply chain and development of zero emission vehicles, and investment in energy efficient and zero-carbon aircraft equipment.
Alongside this, the government has committed to £960 million for a Green Industries Growth Accelerator to support clean energy manufacturing, including solutions for hydrogen, nuclear, offshore wind and carbon capture, utilisation, and storage (CCUS). This package will also be open to those manufacturing components for electricity networks.
Streamlining the grid
Hunt also announced, the government has released its detailed response to the Winser Review and Connections Action Plan. The review, conducted by UK’s Electricity Networks Commissioner Nick Winser, focused on streamlining the grid connection process in order to bring new renewable generation sites online faster.
According to the Chancellor, the Connections Action Plan will significantly reduce the time it takes to connect to the grid and offer savings on electricity bills for those living near new transmission infrastructure. These reforms are estimated to encourage an additional £90 billion in business investment over the next decade.
One measure includes addressing the current “first-come, first-served” planning system, which has resulted in a lengthy backlog of projects exceeding the actual energy needs. Ofgem has outlined plans to expedite grid connections and reduce ‘zombie’ projects which hold up the process.
Renewable energy levy exemption
Hunt also announced a new investment exemption for the Electricity Generator Levy (EGL) for renewable energy providers. This windfall tax was originally introduced to raise funds to support households and businesses facing rising energy costs. However, the levy will now no longer apply to projects approved after November 22, 2023.
While welcoming the EGL investment allowance and capital expensing provisions introduced in the Autumn Statement, Scottish Renewables chief executive Claire Mack emphasised the need for more “consistent policies” to foster the necessary investment scale.
More broadly, the Chancellor presented what he called the “biggest business tax cut in modern British history.” Costing the government £11bn a year, it would allow businesses to claim back a quarter of any investments made into IT, machinery, and equipment.
Companies can do this in one go, rather than having to offset the cost against corporation tax over a longer period. While not directly contributing to the path toward net zero, these tax cuts will provide much-needed relief to businesses grappling with rising costs, a significant barrier to sustainable practices adoption.
The Autumn Statement has been met with mixed reactions, raising hopes and doubts about the UK’s path to net zero emissions. Many anticipated a comprehensive, long-term green industrial strategy that would mirror the US Inflation Reduction Act (IRA) and the EU’s proposed Net-Zero Industry Act (NZIA), instilling confidence in investors, accelerating the growth of green industries, and positioning the UK as a global leader in the race to net zero.
However, the statement fell short of these expectations. Stuart Lemmon, CEO of climate consultancy EcoAct, expressed concerns that the UK’s approach to achieving net zero “remains unconvincing”, stating that the lack of messaging about the country’s own high-carbon activities is undermining its position as a climate leader.
On the other hand, some view the announcement as a positive step. David Whitehouse, chief executive of offshore energy trade association, OEUK, commented that, “the fiscal announcements, allowances, apprenticeships, planning, and grid reforms will aid firms in investing in low-carbon infrastructure, R&D, and the UK’s world-class workforce.”
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