On 6th March, Chancellor Jeremy Hunt laid out plans for the government’s tax and spending in the budget. Let’s look at some of the key energy and sustainability highlights.
Oil and gas windfall tax
The UK’s 35% surcharge on profits of oil and gas companies due to high energy prices has been extended by 12 months and is now due to end in March 2028.
Mr. Hunt said, “Because the increase in energy prices caused by the Ukraine war is expected to last longer, so too will the sector’s windfall profits – so I will extend the sunset on the Energy Profits Levy for an additional year to 2029, raising £1.5bn.”
Nuclear and manufacturing
The government announced £160 million funding with the aim to purchase two sites, one in North Wales and one in south Gloucestershire, from Hitachi for nuclear generation. British Nuclear aims to power one-quarter of the UK’s electricity generation by 2050.
In addition, £120 million was ear-marked for the Green Industries Growth Accelerator (GIGA) to support expansion of low carbon manufacturing supply chains across the UK.
Renewables
£390 million of funding is expected to support supply chains for electricity networks, offshore wind sectors, carbon capture, utilisation, and storage (CCUS) and hydrogen sectors.
Furthermore, during the Spring Budget, the government is offering transparency and assurance for investments in the UK’s renewable energy sector by releasing comprehensive guidelines for the Contracts for Difference Allocation Round 6 (AR6), which includes allocating the largest-ever budget for a single round, exceeding £1 billion.
Climate Change Agreement Scheme (CCA)
The Climate Change Agreement Scheme will run until March 2025 to give eligible business tax relief for energy efficiency measures. CCAs are available for a wide range of sectors including EII industries like chemicals and paper production, supermarkets and agricultural.
Conclusion
The spring budget comes just after the announcement that the UK has fallen into a recession, therefore Chancellor Hunt’s Spring statement highlights recent challenges such as the pandemic, inflation, and rising energy costs.