Utility Week

12 | 20TH - 26TH MARCH 2020 | UTILITY WEEK Policy & Regulation Analysis E ven before the dramatic escalation of the coronavirus crisis, the omens for the energy and climate agenda were not good heading into last week's Budget. A few days before the Treasury's annual setpiece event, it emerged that the National Infrastructure Strategy (NIS) would no longer be published this month as promised in December's Queen's Speech. Government sources briefed that this was because more work was needed to ensure the infrastructure blueprint reflected the net- zero emissions 2050 target, which was unan- imously adopted by Parliament last summer. Of course, it could be politely noted, the net-zero target shouldn't really have come as that much of a surprise to the government that had introduced it. For some, last week's Budget lived up to these low expectations. Solar Trade Associa- tion chief executive Chris Hewett, for exam- ple, describes it as "thin on measures" to tackle climate change. Nor did the Budget make the strides needed to "fully unleash the potential of the sector and pave the way to net zero", accord- ing to Nina Skorupska, chief executive of the Renewable Energy Association. Simon Markall, head of public affairs and engagement at Energy UK, on the other hand, believes the government should be cut some slack given the coronavirus crisis. "Because of corona, we gave them the ben- efit of the doubt," he says. But Richard Black, director of non-profit organisation the Energy and Climate Intel- ligence Unit (ECIU), admits to being under- whelmed by last week's package. "It was a bit like opening a box with 'cake' written on it and finding a fairly small muffin inside," he says. But it was an "adequate" budget to kick off the year leading up to the COP26 climate change summit, which is still scheduled to take place in Glasgow this November, Black adds. "What they have done is all necessary, and there is nothing retrograde like slashing air passenger duty," he points out. Rob Jeffery, director of public affairs firm Field Consulting, believes the government's critics are being "slightly too harsh", adding: "This is one of the greenest, if not the green- est, Budgets to date. Across all areas there's something." He notes that the Budget set out ways to decarbonise heating, industry and transport. And the measures came on top of the previ- ous week's surprise move by the govern- ment to allow onshore wind and solar back into the CfD (contract for difference) subsidy regime. Carbon capture The big winner from last week's Budget was carbon capture and storage (CCS), which has been back in fashion in government circles since the clean growth strategy in 2017. The Budget confirms the Conservative manifesto commitment to establish CCS clus- ters in "at least" two UK sites by 2030. Their introduction will be supported by a new CCS infrastructure fund, worth at least £800m – the budget will be finalised in the compre- hensive spending review later this year. A bigger surprise was the Budget announcement that the government wants to see the construction of at least one gas-fired CCS power station by 2030. While privately financed, this plant will be supported by bill- payer subsidies, such as CfDs, an arrange- ment the industry had been pushing for And Jeffery is heartened that the govern- ment's commitment to CCS has grown from the single cluster it wanted a couple of years ago to "at least" two today. "The implication is that £800m is a start," he says. "They are moving in the right direction." Black says the timetable for delivering CCS is "exactly" in line with what the Committee on Climate Change (CCC) says it needs to be. But he points out that even if a CfD-type deal can be agreed, there are practical diffi- culties, such as carrying out geological sur- veys to ensure it is safe to lay pipework and build storage facilities to keep carbon diox- ide trapped safely underground. Transport The picture on transport is rather less favour- able than on CCS. The plug-in car grant has been extended for another year into 2022/23, providing £403m worth of subsidies next year for the purchases of new electric vehicles (EVs). In addition, £129.5m worth of plug-in grants will be made available for vans, taxis and motorcycles to 2022/23, while zero-emission cars have been exempted from vehicle excise duty's expensive car supplement. Both moves will help to sustain the shiª to low-carbon motoring at a time when EVs remain substantially more expensive than their fossil fuel-powered counterparts. The Budget confirmed the award of £500m, announced by transport secretary of state Grant Shapps in January, over the next five years to support the rollout of a fast- charging network. And the Office for Low Emission Vehicles will conduct a "compre- hensive" review of EV charging infrastruc- ture, covering the strategic road network and other key locations. Jeffery says that while the moves on EVs are welcome, they have to be balanced with moves to maintain the freeze on fuel duty and to boost roadbuilding, both of which will do little to stem the increase in emis- sions from transport, now the biggest con- tributor to UK greenhouse gas production. Black argues that this funding will be less important than decisions taken by the government on whether to bring forward the phasing out of internal combustion engine vehicles. Heat As for heat, that other big carbon reduction conundrum facing the UK, the Budget shows little sign that the government is really get- ting to grips with the issue. Black describes the issue as the "biggest hole" in the whole Budget. Last week's announcement included an extension until 31 March 2022 of the domes- tic renewable heat incentive (RHI), which had been scheduled to be withdrawn at the end of the current financial year. When the RHI extension ends, the govern- ment will consult on introducing a new low- carbon heat scheme from April 2022. This will Hold the applause The Budget poured billions into the economy but showed much less appetite for green measures. With all attention now on fighting coronavirus, climate action is on hold, as David Blackman reports.

• Cover