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UK to toughen targets on greenhouse gas emissions for next 15 years

Carbon dioxide to be cut by 78% by 2035 compared with 1990 levels, the prime minister is to say later this week

The UK is to toughen its targets on greenhouse gas emissions for the next 15 years, the first major developed economy to do so, the Guardian understands.

Following recommendations of the government’s statutory climate advisors, carbon dioxide is to be cut by 78% by 2035 compared with 1990 levels, the prime minister will say later this week – an increase from the current target of a 68% reduction by 2030.

The move is intended to help spur further action by other governments, ahead of vital UN climate talks, called Cop26, to be hosted by the UK in Glasgow this November.

At Cop26, nations will be asked to set out national plans for carbon curbs over the next 10 years. Known as nationally determined contributions, or NDCs, these plans form the bedrock of the Paris agreement, but current plans from most countries are far too weak to fulfil the aims of the treaty.

Joe Biden is expected to set out the US’s NDC later this week, ahead of a virtual climate summit of 40 world leaders he is hosting. China is also expected to submit an NDC in the coming months, and new NDCs for Japan, South Korea and Canada are believed to be imminent.

The UK already had an NDC, stipulating 68% cuts by 2030, but by setting out a further target for 2035 the prime minister will fulfil the legal obligations set out in the 2008 Climate Change Act. Under the act, governments must set five-year carbon budgets stretching beyond the term of the current parliament.

The UK’s sixth carbon budget will run to 2035 and was presented last December by the Committee on Climate Change, the independent advisory committee set up under the act.

The Department for Business, Energy and Industrial Strategy refused to confirm the plans, which the Guardian was informed of by independent sources. A government spokesperson said: “We will set our ambition for Carbon Budget 6 shortly, taking into account the latest advice from the Climate Change Committee.”

However, Labour accused the government of setting targets without putting in place the policies needed to deliver them. Ed Miliband, shadow business secretary, said: “The character of this government on climate change is now clear: targets without delivery. So while any strengthening of our targets is the right thing to do, the government can’t be trusted to match rhetoric with reality. Ministers have failed to bring forward an ambitious green recovery. We need a government that treats the climate emergency as the emergency it is.”

The government has caused consternation among senior climate experts around the world in recent months, through a series of measures that have appeared at odds with its commitments to tackling the climate crisis. Senior ex-diplomats told the Guardian that the decision to slash overseas aid was causing particular concern among developing countries ahead of the Cop26 summit.

Observers are also concerned at actions including the green light for a new coalmine, now subject to a public inquiry; new licences for oil and gas exploration in the North Sea; the UK’s support for making Australia’s climate sceptic former minister Matthias Cormann head of the OECD; the scrapping of the green homes grant, the government’s only “green recovery” measure; airport expansion; and slashing support for electric vehicles.

Chris Venables, of the Green Alliance thinktank, said: “It’s great news that the government will put the 2035 target into law, and including aviation and shipping is genuine global climate leadership. But it’s increasingly jarring for this long-term ambition not be backed up by action in the here and now. The clock is running down to Cop26 in November, and a detailed and fully funded net zero plan is needed well before then.”

Ed Matthew, campaigns director for the climate change think tank E3G said: Setting an ambitious emission reduction target would boost the UK’s diplomatic drive to persuade other countries to set out ambitious targets of their own. That is one of the big tests of UK climate diplomacy ahead of the Cop26 climate summit. The UK now has the opportunity to spark a global green industrial revolution but ultimately its credibility will rest on action. It must now put in place the policies and investment needed to achieve the target. That is the mark of true climate leadership.”

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New ratings system for large electrical goods could result in household bills being cut by as much as £100 a year

It is part of a shake-up of the efficiency grading system by the Government for new products such as fridges, washing machines and TVs. It involves new energy labels stuck on the side of ‘white goods’ that must adhere to tougher energy efficiency standards than were previously demanded.

The old labelling system, which ranked goods from a lowly ‘D-‘ to a top rated ‘A+++’, had been criticised for lulling consumers into thinking that products were more efficient than they really were.

The new system now ranks goods as low as ‘G’ but only as high as ‘A’. Many shoppers may be confused at first as the new grading still uses many of the same letters. But the appliances that were previously being sold with ‘A’ or ‘B’ grade could now only be rated a ‘C’ or below.

Dee Fernandes, of the Association of Manufacturers of Domestic Appliances, says: ‘These energy ratings are starkly different from what were being used before.

‘It leaves more room for improvement at the top end of the scale to encourage manufacturers to make more efficient products that will save customers money.

‘The grades are not just for measuring energy efficiency but whether goods offer eco-modes and replacement parts are easy to buy if you want to repair them. Initially you might find that most goods are rarely ranked much above ‘C’.’

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Britain to be left with just one coal power plant by end of next year

Britain will be left with just one coal-burning power station by the end of next year – bringing the country closer to its goal of ending use of the fossil fuel in electricity generation by 2024.

French energy company EDF announcedplans on Monday to close its coal power plant in Nottinghamshire, which is called West Burton A, by September next year.

This will leave a second Nottinghamshire plant owned by the German energy company Uniper as the only station still burning coal for power in Britain by the end of 2022.

Matt Sykes, EDF’s managing director for the generation business, said in a statement: “West Burton A and its loyal workforce have played a critical role providing power to the UK for 55 years, including during this recent winter. Since 1966, the station has produced enough electricity to meet the needs of all UK households for more than four years, a truly incredible achievement.

“With EDF’s power generation strategy firmly focused on nuclear and renewables – and in this key year for UK leadership on climate change – we now believe it is the right time to provide clarity to our employees and all those connected to the site.”

 

 

The government has set out a blueprint to switch 20TWh

February 2021 saw an 18% drop in energy switching, compared to the same period the year before.

That’s according to Energy UK’s figures, which suggest 457,447 customers moved to a new supplier last month.

That compares to a total of 559,000 customers that switched suppliers in February 2020.

The report shows in total, around 832,000 customers have switched electricity supplier so far this year, down by 17% compared to this time last year.

Emma Pinchbeck, Energy UK’s Chief Executive, said: “Like the hundreds of thousands already doing so every month, it’s worth spending a few minutes to check if you’re on the best deal or whether either by contacting your supplier or looking at other offers in the market you can save money on your energy bills.

“Customers should also see if their new supplier is signed up to the Energy Switch Guarantee so they can feel confident that their switch will be speedy and hassle-free.”

If you enjoyed this story you can sign up to our weekly email for Energy Live News – and if you’re interested in hearing more about the journey to net zero by 2050, you can also sign up to the future Net Zero newsletter. 

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BEIS announces £1bn Industrial Decarbonisation Strategy with key focus on green tech

The government has set out a blueprint to switch 20TWh of the UK industry’s energy supply from fossil fuel sources to low carbon alternatives, as part of its £1 billion Industrial Decarbonisation Strategy.

To “kick start” this transition, the energy secretary today announced that £171 million from the Industrial Decarbonisation Challenge has been allocated to nine green tech projects around Britain.

Additionally, £932 million has been directed to 429 projects across England as part of the Public Sector Decarbonisation Scheme, which will fund low carbon heating systems such as heat pumps as well as technologies such as rooftop solar.

The final key part of the government’s strategy revolves around new measuring rules for energy and carbon performance for commercial and industrial buildings in England and Wales. These could save businesses around £2 billion annually on energy costs by 2030, as well as reducing carbon emissions by 10%, or 2 million tonnes, according to the Department for Business, Energy and Industrial Strategy (BEIS).

Energy secretary Kwasi Kwarteng said that the strategy showed the UK is “taking steps to be the first major economy to have its own low carbon industrial sector”.

“While reaching our climate targets will require extensive change across our economy, we must do so in a way that protects jobs, creates new industries and attracts inward investment – without pushing emissions and business abroad.

“Ahead of COP26, the UK is showing the world how we can cut emissions, create jobs and unleash private investment and economic growth. Today’s strategy builds on this winning formula as we transition low carbon and renewable energy sources, while supporting the competitiveness of Britain’s industrial base.”

Green tech winners: The hydrogen and CCS industrial clusters

The nine projects receiving a cut of the £171 million Industrial Decarbonisation Fund focus predominantly on hydrogen and carbon capture and storage (CCS). This builds on the National Infrastructure Strategy announced last November, which also had hydrogen and CCS at its core.

In Merseyside, HyNet North West will receive almost £33 million funding for 2 projects that look at capturing and storing carbon emissions from the operations of a low carbon industrial cluster and creating a hydrogen economy in the North West. This will include repurposing old oil and gas facilities in the area for the transport and storage of carbon.

It will reduce carbon dioxide emissions by a million tonnes a year from 2025, which will the increase to 10 million tonnes by 2030 and beyond. Local homes and businesses will benefit from green energy through blending hydrogen with natural gas.

“This is a once-in-a-generation moment to effect real change,” said Steve Fraser, CEO of Cadent, one of the consortium partners in HyNet.

“Replacing fossil gas with hydrogen will achieve incredible carbon savings, create thousands of jobs and position the North West as a world-leader in this technology. Cadent and the whole HyNet consortium is determined to make that happen.”

Beyond HyNet, Scotland’s Net Zero Infrastructure project based in St Fergus in Aberdeenshire has received over £31 million to conduct offshore and onshore engineering studies focused on accessing safe carbon storage resources in rock deep below the North Sea.

The Net Zero Teesside and the Northern Endurance Partnership is to get over £52 million for two projects set to decarbonise the Teeside industrial cluster in the mid-2020s. This will include both a world-first flexible gas power plant that uses CCUS, as well as offshore carbon transport and storage. These are set to capture around 2 million tonnes of CO2 annually from 2026 and decarbonise 750MW of power.

Zero Carbon Humber will get over £21 million to turn the Humber region into a net zero cluster by 2040. It will include H2H Saltend, one of the world’s first at-scale low carbon hydrogen production plants, as well as CO2 and hydrogen pipelines.

An addition £12 million will be awarded to project Humber Zero, which will create a CCS and hydrogen hub at Immingham, North East Lincolnshire. This will enable cost-effective and low carbon energy supply and storage, capable of providing services to National Grid.

The final project is the South Wales Industrial Cluster, which is to receive nearly £20 million to create a decarbonised industrial zone that includes deployment of hydrogen and the development of CCUS. It will create a sustainable plan for the region, utilising CCS for cleaner electricity production alongside hydrogen-rich nature gas.

Industrial Decarbonisation Challenge UK Research & Innovation challenge director, Bryony Livesey, said the £171 million funding is a “significant step” for largescale decarbonisation efforts, and they are “looking forward to working alongside the projects as they put their revolutionary plans into action”.

“The benefits to these regional clusters will be substantial, both in terms of the environmental impact, as well as the opportunity for jobs and increasing the global competitiveness of industry in the areas. It once again demonstrates the UK’s industry as being at the forefront of innovation and creating greener solutions for the future.”

Public Sector Decarbonisation Scheme: Solar and heat pumps key technologies

BEIS has identified over 400 projects that will receive a cut of the £932 million allocated for the Public Sector Decarbonisation Scheme across four key areas. The scheme was first announced in October 2020, when the government stated £1 billion of grant funding would be made available for heat decarbonisation and energy efficiency measures across the public sector, central government departments and non-departmental public bodies.

Greater Manchester Combined Authority is to received £78,236,986 for 15 bodies in the Greater Manchester public estate, including transport, fire and rescue services, police and the Royal Northern College of Music, as well as community buildings including 36 schools and 22 leisure centres.

These buildings will see significant green upgrades including air source heat pumps and solar installations, along with new lighting systems.

Leicester City Council will receive £24,253,008 to allow it to upgrade 93 buildings including 53 schools. Similarly, this will include replacing natural gas heating with air source heat pumps, installing solar panels and improving insulation.

Hertfordshire County Council will use £24,007,737 to upgrade 182 council buildings, including 74 schools and 23 emergency service buildings. Heat pumps, battery storage and solar panels will be installed at the sites, along with energy efficiency improvements.

Finally, Hull University Teaching Hospitals NHS Trust will use £12,640,760 to install solar panels, heat pumps and roof insulation. A mass replacement of lighting will also be undertaken, inefficient air compressors replaced and a new supply point to Castle Hill Hospital created.

Carbon pricing, skills training and ‘Project Speed’

Beyond these key areas of funding, the Industrial Decarbonisation Strategy has a number of key commitments for government and business. The government will use carbon pricing as a tool to ensure industry take account of their emissions within key decisions.

It will work to establish the right policy framework to ensure fuel switching is taken up by industry, while a targeted approach to mitigate against carbon leakage must be taken.

New products standards will be developed to allow manufacturers to clearly distinguish their products as low carbon. The government will explore coordinated action on public procurement for green industrial products to help also drive down costs.

The Infrastructure Delivery Taskforce, named ‘Project Speed’, will work to ensure land planning is fit for building low carbon infrastructure, and the Steel Council will help to set targets for near-zero emissions by 2035 to further help this buildout.

The skills transition will be supported, to ensure the current and future workforce benefit from new green jobs, with up to 80,000 jobs over the next three decades expected to be created as part of the green industrial revolution.

By following the pathway set out in the Industrial Decarbonisation Strategy, industrial emissions are expected to fall by two-thirds by 2035, and by at least 90% by 2050 on 2018 levels according to BEIS. Additionally, 3 megatons of CO2 are expected to be captured by 2030, compared to the minimal levels of today.

“The Industrial Decarbonisation Strategy marks another vital step in the UK’s plans to achieve its net zero emissions target,” added CBI chief economist Rain Newton-Smith.

“Creating and championing competitive low-carbon industries will ensure the benefits of a green economic recovery, and the longer-term transition to net zero, are shared across the whole country.

“Ahead of COP26, this is a welcome demonstration of the UK’s commitment to act on climate change, to make our post-pandemic recovery a green one, and to give businesses the certainty they need to invest in the technologies of the future.”

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Ofgem awards licence for grid link to world’s largest wind farm

  • Ofgem’s regulatory framework secures £1.2 billion investment in grid link connecting the world’s largest offshore wind farm
  • Framework provides revenue certainty to investors while saving consumers hundreds of millions of pounds on their energy bills
  • Ofgem is helping to deliver government target of 40GW offshore wind by 2030 at the lowest cost to consumers

Ofgem has awarded a licence for the grid link to the world’s largest offshore wind farm after securing a record £1.2 billion investment.

Diamond Transmission Partners, a consortium led by Mitsubishi Corporation, the Japanese industrial group, was selected by Ofgem to own and operate the offshore transmission system linking Hornsea One to the British mainland.

The grid link for the 1.2GW wind farm off the coast of Yorkshire can deliver enough electricity to power more than one million homes.

The UK government has set a target of 40GW offshore wind capacity by 2030, almost quadruple the existing capacity, to help reach net zero emissions by 2050. New electricity grid links are needed to deliver this power to homes and businesses in Britain.

Under the regulatory framework, bidders compete to buy these links from the wind farm developer. In return the winning bidder receives a guaranteed level of income which is set by Ofgem for running the link for up to 25 years.

Providing certainty in this way allows bidders to price very keenly, reducing the costs of offshore wind and saving consumers money.

Ofgem has awarded 21 licences through this process, with a total of £5.7 billion being invested in grid links for 7.8GW of offshore wind capacity.

The first 15 licences alone have delivered at least £700 million in savings to consumers.

Ørsted, which built the Hornsea project, has built 12 offshore wind farms in Britain in total.

Rebecca Barnett, deputy director for commercial and assurance at Ofgem, said: “Today’s record investment demonstrates the appetite of global investors to support the UK’s transition to net zero emissions.

“Ofgem’s regulatory framework ensures that this investment can be attracted at the lowest possible cost, saving consumers hundreds of millions of pounds on their energy bills.”

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Energy networks make it easier for companies to provide flexibility services

ENA has made it easier for companies to provide flexibility services to the energy sector by refreshing and streamlining a common contract used across the sector.

The updates, published today, offer more transparency and will unlock liquidity in local markets for flexibility, ultimately pushing down energy bills in the long term.

The standard contract has been created through ENA’s leading Open Networks project, with input from distribution network operators and National Grid Electricity System Operator, to provide a consistent GB-wide core agreement for those wishing to provide vital flexibility services to the networks. It will help take the transition to the smart grid to the next level and marks another step forward in bringing consistency across the industry.

The new contract has been developed with feedback from a range of industry stakeholders including Ofgem and the Department for Business, Energy and Industrial Strategy.

Key updates include:

  • simplifying the core contract, providing increased alignment with ESO approach
  • making clauses more accessible across the agreement
  • making the process more accessible to aggregators

The energy networks have made significant progress on flexibility services since the launch of a dedicated workstream as part of ENA’s Open Networks project at the beginning of 2019. With over 2GW of flexibility tendered by distribution network operators last year, the workstream has played a key role in helping all distribution network operators prioritise and deliver their flexibility commitments.

Farina Farrier, Head of Open Networks Project at Energy Networks Association, said:

“The UK is already a world leader when it comes to energy flexibility and as part of the UK’s commitment to Net Zero, the whole of the energy industry is behind making it easier and more accessible to work with network operators. We’ve got lots of work ahead of us but by really focusing on providing a consistent, accessible way of working together, we can maintain that world-leading position and power towards Net Zero emissions.”

Alex Howison, Flexible Solutions Manager at Scottish and Southern Electricity Networks said:

“It’s brilliant to be able to take the lead in actioning another positive step towards a ‘whole industry’ standard agreement being finalised. Flexibility is critical for enabling the UK to reach Net Zero and is vital to help customers get the most from new technologies – while helping networks to manage their systems better and plan investment.

“The momentum ENA’s Open Networks project has built, and the pivotal role it plays in the energy transition, will continue into 2021 and this will be another year of action and delivery for the flexibility services workstream.”

A public consultation on the next version of the common contract will follow in August, with plans to launch at the end of the year. Its associated contractual evolution report will be launched later this month.

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Budget 2021: Key climate and energy announcements

The UK’s chancellor Rishi Sunak has delivered his second budget under the cloud of the coronavirus pandemic and his last ahead of the country hosting the COP26 UN climate talks. 

In contrast to last year’s offering, Sunak’s speech and budget “red book” gave much less space to climate change and the UK’s net-zero target. The red book uses the word “climate” only nine times, against 31 last year, with seven appearances for “net-zero”, down from 17.

Nevertheless, climate change and net-zero do feature relatively prominently in the red book, which says: “The budget lays the foundations for a strong recovery and greener economy, levelling up the country and spreading prosperity across every part of the UK.”

Significantly, net-zero has been made part of the government’s overall “economic policy objective”. This puts it into the remit for the Bank of England’s monetary and financial policy committees. The budget also launched a new National Infrastructure Bank, which has £22bn of “financial capacity” as well as tackling climate change as one of two core objectives.

Other climate-related announcements were relatively few and far between. As expected, the budget froze fuel duty for the 11th year. Sunak also pledged the release of at least £15bn of “green gilts” this financial year. These are government bonds dedicated to supporting net-zero.

Below, Carbon Brief summarises all the key climate and energy announcements from today’s budget:

Green finance

In what is being seen as one of the most significant parts of this year’s budget for climate action, Sunak announced that the UK’s net-zero goal will be added to the remit of the Bank of England, having become part of the government’s overall “economic policy objective”.

In one of two letters to the Bank of England’s governor Andrew Bailey, Sunak writes:

“I am today updating the MPC’s [the bank’s monetary policy committee] remit to reflect the government’s economic strategy for achieving strong, sustainable and balanced growth that is also environmentally sustainable and consistent with the transition to a net-zero economy.”

In the second letter, regarding the bank’s financial policy committee, Sunak uses much stronger language to describe the challenge of climate change than he did in his budget speech. He writes:

Update 4/3: The Financial Times reports that the Bank of England has already responded to the chancellor’s budget by saying that it would adjust its approach to buying corporate debt, to take climate risks into account. Bloomberg also reports the news, saying the bank “will seek to start greening its corporate bond-buying program from the end of the year”.

The budget promises that the government will issue its first “sovereign green bond – or green gilt” in summer 2021, a move it had already announced last November. At least £15bn in government debt will be specifically earmarked for supporting “green objectives”, with further details of how it can be spent coming in June.

In another move trailed before today’s budget, Sunak also announced a “green retail savings product” in summer 2021, which will “give all UK savers the opportunity to take part in the collective effort to tackle climate change”. The money raised will be spent according to the same rules as the government’s new green gilts.

Infrastructure

The budget includes a variety of commitments to spending on infrastructure projects across the UK, as well what Sunak called the nation’s “first-ever” infrastructure bank.

In his speech, Sunak said the UK’s“future economy needs investment in green industries” and, to this end, he said the bank would be established in Leeds “to finance the green industrial revolution”.

He added that it would begin in the spring, with an initial provision of £12bn of money and the ability to guarantee up to another £10bn of debt, with the expectation that it would support at least £40bn of investment in infrastructure

The budget was accompanied by an additional document outlining the policy design of the new bank, laying out its main objectives to “support regional and local economic growth”, as well as help meet the net-zero emissions target. Describing the bank’s ability, it says:

“It can bolster the government’s lending to local government for large and complex projects and help to bring private and public sector stakeholders together to regenerate local areas and create new opportunities.”

According to the policy design document, the bank will have £22bn of “financial capacity” to deliver on its objectives, consisting of £12bn of equity and debt capital mentioned by the chancellor as well as the ability to issue £10bn of guarantees.

A further document released to accompany the budget, titled “Build back better – our plan for growth”, paints a positive image of the government’s plans for infrastructure.

It includes references to the government showing low-carbon leadership at the COP26 climate summit and the supposed “transformational opportunity” for infrastructure provided by Brexit.

The report emphasises the need to “deliver infrastructure projects better, greener and faster”. It adds that the government is committed to ramping up capital spending, as the chart below shows.

It also references the large disparities across the UK in terms of contributions to the national economy, with London and the South East contributing around 24% and 14% of national output, respectively, while the North East and Northern Ireland contribute around 2.5% each.

The budget contains various chunks of money aimed at boosting infrastructure in some overlooked regions. 

Teesside and Humberside were mentioned as the location for new port infrastructure to build “the next generation of offshore wind projects”. (Sunak mentioned “Teesside” four times in his speech.)

This support was previously mentioned as part of the £160m spending on manufacturing and ports infrastructure in the prime minister’s 10-point plan.

There was also an investment of £57m to support jobs and green growth in Scotland. This includes £27m for the “Aberdeen energy transition zone”, which aims to transition northeast Scotland into a hub for offshore wind and hydrogen, and £5m for a “global underwater hub” in Aberdeen to improve its subsea engineering capacity.

A “Holyhead hydrogen hub” in Anglesey will receive £4.8m to “pilot the creation of hydrogen using renewable energy and its use as a zero-emission fuel for heavy goods vehicles”, something the government says would create “high-skilled green jobs”.

There is also a mention of the £5.2bn flood and coastal defence programme for England from last year’s budget, which will start in April this year with schemes in Waltham Abbey, Sunderland, Preston, Warrington, Salisbury, Rotherham and Doncaster.

Fuel duty

Sunak confirmed that fuel duty will remain frozen for yet another year. The tax, levied on sales of petrol and diesel, has remained at a rate of 58 pence per litre, plus VAT, since 2011.

Alongside the continued freeze, however, the Treasury’s budget “red book” signals potential rises in the future. It says: “Future fuel duty rates will be considered in the context of the UK’s commitment to reach net-zero emissions by 2050.”

The latest freeze will cost the Treasury nearly £1bn a year in lost revenue, according to the government’s own policy costings, which take account of “an increase in [fuel] consumption in response to lower fuel price increases”.

Instead of rising with inflation, fuel duty has now been frozen for more than a decade, as the chart below shows. This is a large tax cut for motorists, with successive freezes adding up to more than £10bn a year and having cost the Treasury more than £100bn in total.https://cbhighcharts2021.s3.eu-west-2.amazonaws.com/budget/fuel_duty.htmlThe actual rate of fuel duty, in pence per litre not adjusted for inflation, between 2008 and today (thick red line). Planned increases, cancelled at successive budget statements over the period, are shown in shades of blue. Note the truncated y-axis. Source: Institute for Fiscal Studies and Department for Business, Energy and Industrial Strategy. Chart by Carbon Brief using Highcharts.

In an October 2019 report on the taxation of motoring, the Institute for Fiscal Studies said: “There is no case for the recurrent ritual…when planned inflation uprating of fuel duties has been repeatedly cancelled for one more year.”

In contrast to the real-terms cut in the price of driving, public transport fares have often gone up faster than inflation, creating an ever-increasing cost differential. Confirming the latest increase in rail fares of 1% above the rate of inflation, the government said in December that it “reflected the need to continue investing in modernising the [rail] network”. 

According to the Zero Carbon Campaign, which is calling for “a proper price on carbon…more broadly across the UK economy”, there is widespread support among the British public for a carbon tax. It says there is much lower support for fuel duty increases, because of a perception they are an ineffective way to cut emissions.

Carbon Brief analysis published last year found that, overall, UK carbon dioxide (CO2) emissions were up to 5% higher than they would have been without a decade of fuel duty freezes.

The latest freeze was briefed to the media prior to the budget speech, with the Sun on Monday claiming “a major victory for the Sun’s legendary Keep It Down campaign”.

In his blog at the Tony Blair Institute for Global Change, former government advisor Tim Lord writes that fuel duty raises around £30bn a year for the Treasury. He argues that while the cost of the fuel duty freeze is large, a bigger problem is the rise of electric vehicles: “[This] is going to eat into fuel duty revenues quickly and we have no plan for how to respond.”

Alongside the fuel-duty freeze, the budget also freezes the rate of vehicle excise duty (VED, often referred to as “road tax”) for heavy goods vehicles. However, the general rates of VED for cars, vans and motorbikes will rise with inflation, as will air passenger duty on flights.

In last year’s budget, Sunak set out stiff restrictions on the availability of reduced-duty “red diesel”, which is used on farms and construction sites. This year’s budget includes further details, following consultation, including slightly more generous ongoing exemptions.

Innovation

The budget contains a handful of smaller funds as part of the government’s “commitment to double spending on energy innovation”.

They are part of its £1bn net-zero innovation portfolio, outlined in the energy white paper, which previously only contained a competition to fund direct air capture and emissions removal technologies.

Three competitions to develop new technologies to help achieve net-zero emissions have now been added, specifically £20m to develop floating offshore wind projects, £68m for green energy storage systems and £4m to boost clean energy crops and forestry.

Separately, the government announced funding of up to £30m that will provide match-funding for the Global Centre for Rail Excellence in South Wales.

This money is intended to “support innovation in the UK’s rail industry, including the testing of cutting-edge, green technology”.

Green homes grant

A centrepiece of plans for climate-focused government spending over the past year has been the “green homes grant”, which allows people to apply for vouchers to cover the cost of home insulation or installing low-carbon heating.

The chancellor first announced the £2bn in grants for home-efficiency upgrades, as well as £1bn for improvements in public buildings, as part of his “green recovery” plans in July 2020, although his party’s election manifesto had previously promised £9.2bn for energy efficiency.

This was then given a boost in the prime minister’s 10-point plan published last November, when a further £1bn and an extra year was added to the existing scheme for home improvements.

However, at the same time, stories emerged of a scheme beset by difficulties, with companies going unpaid and customers waiting months to take advantage of the grants.

After much speculation, reports surfaced in February that the government did not intend to roll over most of the unspent grants to the next financial year, effectively withdrawing £1bn in funding and leaving just £320m for 2021 to 2022.

Just 6.3% of the £1.5bn set aside for households has been spent in 2020/21, according to the i newspaper. (The remaining £500m from the original £2bn is for local authorities to spend on low-income households.)

While the government attributed the lack of uptake to the public’s “understandable reluctance” to “welcome tradespeople into their homes” due to Covid-19, environmental organisations were quick to point the finger at government mishandling.

In a piece for BusinessGreen, Green MP Caroline Lucas wrote:

“In its inimitable style, this government has managed to make a complete mess of delivering the scheme. First it awarded the contract to an American company that seems to be thoroughly incompetent; then it strangled it in paperwork with conflicting and confusing information, and so many delays that householders simply give up.”

In guidance issued ahead of the budget, Environmental Audit Committee (EAC) chairman Philip Dunne said the grant scheme “must be overhauled and given a multi-year extension if it is to meet the government’s target of issuing 600,000 vouchers”.

As it stands, fewer than 23,000 vouchers have been issued despite more than 70,000 households applying for the scheme.

The EAC also advised that there should be VAT reductions on energy efficiency upgrades in homes, as well as on repair services and items that have been recycled.

Following the intense debate around the green home grants, there was speculation ahead of the budget about what it would say about their fate.

As it turned out, neither the chancellor himself nor the entire 107-page budget document made any mention of the grants. However, when contacted by the Financial Times, the Treasury confirmed that much of the original funding had indeed been withdrawn. 

Carbon pricing

Sun article in the run up to the budget quoted prime minister Boris Johnson saying he had no intention of introducing new “meat or carbon taxes” that would impact consumers.

Nevertheless, there has been a lot of conversation in the UK in recent months about different options for carbon pricing, particularly following the UK’s withdrawal from the EU.

While the Treasury reportedly would have preferred to implement a carbon tax to replace the EU emissions trading scheme (ETS), the government’s energy white paper eventually confirmed that the UK would have its own UK ETS instead.

Like the EU ETS, this system is meant to cover high-emitting actors, such as power plants, heavy industry and domestic airlines, which will be allocated credits to emit greenhouse gases that they can also purchase if they emit beyond set limits.

Although some details of the UK ETS have already been published, a lot of uncertainty still remains and the first auctions are not set to be held until 19 May.

There have been concerns that, without EU membership, there will not be enough participants in the UK system for it to function effectively and help cut emissions.

However, the government has so far been vague about any plans to link its system with those operating in other nations, stating in the white paper that the UK is “open to linking the UK ETS internationally…but no decision on our preferred linking partners has yet been made”. According to the budget text:

“The government is committed to carbon pricing as a tool to drive decarbonisation and intends to set out additional proposals for expanding the UK ETS over the course of 2021.”

However, it remains to be seen what “expanding” the scheme will entail.

The UK also has its own domestic carbon tax in the power sector which goes back to when it was part of the EU ETS, known as the carbon price support. This was originally brought in due to the low carbon price signal at the time under the EU’s system.

Road building

Billed as the “largest ever investment in England’s motorways and major A roads”, a commitment to spending £27bn on roadbuilding over the next five years was a key component of last year’s budget.

It was also one that attracted criticism from environmental groups, who compared this significant sum to the relatively small amounts spent on green measures and questioned how it fits in with the government’s commitment to net-zero emissions.

The new budget does not mention the government’s road-building plans at all, although a document released to accompany it, titled “Build back better – our plan for growth”, references it several times.

It also emphasises the government’s focus on promoting “the importance of low-carbon infrastructure” and achieving its net-zero target, one of the “people’s priorities”.

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Environmental consultancy Transport for Quality of Life found last year that emissions from the scheme would wipe out 80% of the emissions saving from electric cars up to 2032, although the Department for Transport dismissed this analysis as “wholly incorrect”.

However, a recent National Audit Office report concluded that, “while there has been an increase in the number of ultra-low emission cars and the required charging infrastructure, carbon emissions from cars have not reduced in line with government’s initial expectations.”

It attributed this, in part, to a rise in the sale of sports utility vehicles (SUVs) and also “increased road traffic and travel by car”. There is evidence that building new roads leads to a greater overall volume of traffic.

Meanwhile, the Guardian reported in February that the £27bn scheme had been “thrown into doubt after documents showed the transport secretary, Grant Shapps, overrode official advice to review the policy on environmental grounds”.

Media reaction

Much of the media coverage of the budget echoed the concerns of environmental organisations who described it as a “missed opportunity” to take decisive action on climate change.

An editorial in the Guardian said “the climate emergency was noticeable by its absence”, while an editorial in the Financial Times noted “there were few concrete measures to ensure that post-Brexit Britain will…achieve its target of net-zero carbon emissions”.

The budget “did little to bring down emissions or address the hard parts of climate policy,” according to Politico

It also noted that the chancellor “took more than half an hour to get to the green section” of his budget speech “despite the tub thumping his government has done over net-zero, green recovery and hosting this year’s COP26 UN talks”.

BusinessGreen published a piece summarising the response from the “green economy”. Among those quoted is Philip Dunne, chair of the Environmental Audit Committee, who welcomed the National Infrastructure Bank and the expansion of the Bank of England’s remit, but added:

“The chancellor has today missed an opportunity to go further: reducing VAT for green sectors including energy efficiency upgrades, and investing more significantly in renewable and low-carbon energy.”

Financial Times columnist Martin Wolf wrote: 

“A UK Infrastructure Bank with capital of £12bn will not amount to much. Where is the ambition for investment? Where is the plan for environmental policy? Where, for that matter, is the discussion of carbon pricing? After the massive response to the pandemic, the needed long-term vision for a country facing an uncertain future is absent.”

According to the Daily Telegraph, the new bank “will offer loans and investments worth two-thirds less than EU predecessor”. 

The newspaper said the European Investment Bank lent an average of £5bn a year to projects in the UK, according to the Treasury’s independent Office for Budget Responsibility, which compared that figure to the expected £1.5bn a year from the new UK infrastructure bank.

Several publications, including the Daily Mail and the Daily Telegraph, also reported on the fuel duty freeze, with the former noting it “is likely to increase [in the future] to help the government meet climate change targets”.

Energy-related emissions up in December despite pandemic

Scientists have previously calculated that CO2 emissions fell by 7 percent during the full year 2020 as people stayed at home because of the pandemic.

Global energy-related carbon dioxide emissions rose slightly in December compared with the same month of 2019, indicating the sharp drop seen due to the pandemic was short-lived.

Figures released Tuesday by the International Energy Agency show emissions from the production and use of oil, gas and coal were 2 percent higher in December 2020 than a year earlier. The Paris-based intergovernmental agency said a resurgence in economic activity coupled with a lack of clean energy policies mean many countries are now seeing higher emissions than before the coronavirus outbreak.

“The rebound in global carbon emissions toward the end of last year is a stark warning that not enough is being done to accelerate clean energy transitions worldwide,” said the agency’s executive director, Fatih Birol. “If governments don’t move quickly with the right energy policies, this could put at risk the world’s historic opportunity to make 2019 the definitive peak in global emissions.”

Scientists have previously calculated that CO2 emissions fell by 7 percent during the full year 2020 as people stayed at home because of the pandemic.

“Our numbers show we are returning to carbon-intensive business-as-usual,” said Birol. “These latest numbers are a sharp reminder of the immense challenge we face in rapidly transforming the global energy system.”

Carbon dioxide is the main greenhouse gas responsible for global warming.

Scientists say that in order to meet the Paris climate accord’s goal of keeping average temperatures from rising by 2 degrees Celsius — ideally no more than 1.5C — compared to pre-industrial times, man-made emissions of CO2 and other planet-heating gases need to reduced to near zero by mid-century.

IEA figures show that China was the only major economy whose emissions grew in 2020, while those in the United States fell by 10 percent compared to 2019. By December, U.S. energy emissions were close to the levels seen in the same month of 2019, the agency said, attributing this to economic recovery and greater coal use due to higher gas prices and colder weather.

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Energy firms overcharged one million switching customers

More than one million people were overcharged by energy firms during the process of switching suppliers, the regulator Ofgem has said.

When a customer decides to switch, the rules state they should be protected from price rises while moving – which could take up to three weeks.

Eighteen suppliers made errors leading to overcharging of £7.2m.

They are refunding the money and making extra payments in some cases, taking the compensation total to £10.4m.

The biggest names in the sector – including British Gas, E.On, EDF, Npower, Scottish Power, SSE and Octopus – made the mistakes, with Ovo Energy and Shell the worst offenders.

They failed to protect customers who switched tariffs or suppliers after price rises were set between 2013 and 2020.

Although the average amount overcharged was only £6.27, the sums would be higher for those with the biggest bills, and Ofgem said companies did not have the “adequate arrangements” in place to prevent overcharging.

Several companies had self-reported the issue to Ofgem, which then required all suppliers to check their records.

Anna Rossington, interim director of retail at Ofgem said: “Customers should have confidence in switching and not be overcharged when doing so.

“This case sends a strong message to all suppliers that Ofgem will intervene where customers are overcharged and ensure that no supplier benefits from non-compliance.”

In changes made last year by Ofgem, customers receive automatic compensation of £30 if their switch to a new provider goes wrong.

Payments are made if the switch is not completed within 15 working days. A mistaken switch or a failure by the old supplier to provide a final bill within six weeks also qualify for compensation.