The UK Government will invest up to £1bn in the Green Investment Bank from the sale of infrastructure-related assets, and seeks to match this with at least £1bn of private sector investment.
A consultation on the establishment of the Green Investment Bank will be published this summer by Infrastructure UK.
Other measures affecting renewable energy and energy in general in the Budget include:
- Launching UK Finance for Growth to streamline £4bn of existing financial support for small and medium-sized businesses, which will include support encouraging businesses to commercialise low-carbon and renewable energy technologies;
- £60 million for the development of UK port sites to support offshore wind turbine manufacturers looking to locate new facilities in the UK;
- Halving the rate of company car tax for ultra-low carbon cars;
- A commitment to reduce Government departments’ carbon emissions by at least 30% by 2020; and
- A commitment to reform the energy market to provide clean, secure and affordable energy in the long-term.
The Government also announced a £8/tonne increase in the standard rate of landfill tax from 1 April 2014.
The competition of up to £60m of funds to develop sites will support manufacturing for the offshore wind industry. Bids are expected to include contributions from local supply chain partners.
The Department of Energy and Climate Change (DECC) says the competition will help the UK secure major operations in offshore wind manufacture and assembly – something that could create hundreds of direct jobs with potentially thousands more in the supply chain.
Energy market reform
The UK Government says the current energy market will be fine up to 2020, but beyond that, pressures could be felt.
“The UK’s binding 80% greenhouse gas reduction target by 2050 will only be achieved by huge increases in low-carbon electricity generation, requiring unprecedented levels of investment, including the upfront costs of many low-carbon technologies,” DECC comments.
DECC adds that providing greater certainty on the current carbon price alone will not be enough to drive the needed long-term change.
The UK Government says it intends to “consult shortly” on how to change the way electricity from biomass is supported to improve certainty for investors and to ensure sustainability.
This follows a review of how biomass is currently supported under the £1bn Renewables Obligation (RO).
The proposed changes for biomass support include:
- Providing a set level of support for dedicated biomass for their lifetime under the RO. This would split non-fuel costs for new plants from fuel costs;
- Grandfathering ROCs for anaerobic digesters and energy from waste with CHP facilities at current levels from point of accreditation;
- Excluding bioliquids from receiving grandfathered support under the RO; and
- Consulting in the summer on the introduction of sustainability criteria for biomass and considering whether biomass generation must meet these criteria as a condition for qualifying for financial support.
DECC says support for generators in all low-carbon and renewable energy technologies other than biomass is currently grandfathered, meaning that the level of ROCs they receive is set at the point of accreditation for 20 years, irrespective of future changes to support levels.
The renewable energy industry and investors are broadly welcoming the Budget’s provisions for low-carbon and renewable energy, but there are warnings about the speed of which measures can be implemented. You can read a selection of comments here.