Post: Government to “deliver energy security and the net zero transition”

Government to “deliver energy security and the net zero transition”

On 22 November the Chancellor Jeremy Hunt presented the Autumn Statement 2023 to Parliament noting that the government supports levelling up and want to enable the UK to seize growth opportunities through the transition to net zero.

Among the measures plans were announced to “get Great Britain building and to deliver energy security and the net zero transition”. It was confirmed that the government will

• reform the grid connection process to cut waiting times, including freeing up over 100GW of capacity so that projects can connect sooner. This will help to enable the significant majority of projects to get their requested connection date with no wait and, for viable projects, reduce overall connection delays from five years to no more than six months
• extend the critical national priority designation for nationally significant low-carbon energy projects. Alongside this, the government will look to remove unnecessary planning constraints by accelerating the expansion of electric vehicle (EV) charging infrastructure and will consult on amending the National Planning Policy Framework to ensure the planning system prioritises the rollout of EV chargepoints, including EV charging hubs
• set out an Action Plan to halve the time to build new grid infrastructure to seven years. Key elements of this action plan include new proposals for community benefits with up to £10,000 off electricity bills. The Electricity System Operator will also be required to work with government to produce a new Strategic Spatial Energy Plan; and introducing competition into onshore electricity networks in 2024 to benefit consumers
• consult on stronger guidance on the regulators’ Growth Duty; extending the Growth Duty to Ofgem, Ofwat and Ofcom; and providing a new strategic steer for the Competition and Markets Authority
• kickstart a Smart Data Big Bang, giving industry and investor certainty by setting out the UK’s ambition for using new powers in the Data Protection and Digital Information Bill, exploring innovative opportunities across seven sectors: energy, banking, finance, retail, transport, homebuying and telecoms
• legislate in an upcoming Finance Bill for a new investment exemption for the Electricity Generator Levy (EGL). New projects for which the substantive decision to proceed is made on or after 22 November 2023 will be exempt from the EGL. The EGL will end as planned on 31 March 2028
• make £4.5B available in strategic manufacturing sectors – auto, aerospace, life sciences and clean energy – from 2025 for five years
• launch a £960M Green Industries Growth Accelerator (GIGA). This will support investments in manufacturing capabilities in: Carbon Capture Utilisation and Storage (CCUS), hydrogen, offshore wind, electricity networks, and nuclear

The Statement also noted that the parameters for the next renewables Contracts for Difference auction round have been set out, increasing the maximum price that can be received, and will shortly publish further details on growing hydrogen and Carbon Capture, Usage and Storage (CCUS) deployment. To further accelerate the UK’s world-leading offshore wind deployment, the government will bring forward legislation to provide the Crown Estate with borrowing and wider investment powers to unlock a further 20GW-30GW of new offshore wind seabed rights by 2030. Government is also working with The Crown Estate to bring forward additional floating wind in the Celtic Sea through the 2030s.

It also noted that reforms to the Emissions Trading Scheme (ETS), as set out by the UK ETS Authority in July 2023, will reduce the number of ETS permits available for purchase from government by 45% between 2023 and 2025. The scheme will be extended to cover emissions from domestic maritime and energy from waste in 2026 and 2028 respectively. Alongside this, the government has undertaken extensive consultation on possible measures to mitigate carbon leakage risk including introducing a carbon border adjustment mechanism and will publish its response shortly.

The government also reconfirmed that it is providing around £300M a year in tax relief in exchange for meeting energy efficiency targets under the new six-year Climate Change Agreement scheme which starts from 2025, and expanding VAT relief available on the installation of energy-saving materials in residential buildings or those used solely for a relevant charitable purpose.