Autumn budget 2024 - headlines for net zero sector

Labours first autumn budget in 14 years has landed; presented with hopes to “fix the foundations” of the UK, focusing on the stagnant living standards and crumbling public services.

In terms of sustainability, Chancellor Rachel Reeves looks to be seeking to drive innovation and catalyse investment in the net zero space, with hopes to deliver the government mission to make Britian a clean energy superpower and meet out net zero target by 2050. Measures in the budget are being taken to support clean energy and net-zero; including funding for investment in carbon capture and storage (CCS), and green hydrogen.

Bill Esterson MP Chair of the Energy Security and Net Zero Committee commented on the autumn budget: “The Chancellor has described new direction and investment in the UK drive for clean energy, including the development of world-first hydrogen energy facilities. The commitment to Sizewell C brings much needed certainty. This new focus on the longer term is most welcome as we look to meet increasingly challenging goals securing our energy and climate”.    

These are some key takeaways from the autumn budget announcement:  

• A commitment to ringfence £125m for the proposed establishment and early operations of Great British Energy (GBE).

• A wider budgetary increase for the Department of Energy Security and Net Zero (DESNZ) from £6.4bn in 2023-24 to £14.1bn in 2025-26.

• £3.9bn set to benefit both Track-1 Carbon Capture, Usage and Storage projects, as well as established contracts with 11 green hydrogen producers.

• Over £200 million to accelerate the rollout of electric vehicle (EV) chargepoints across Britain.

• £3.4bn to be invested into increasing the energy efficiency and decarbonisation of household energy, as well as supporting the growing heat pump manufacturing supply chain.

• £2.7bn of funding to further support Sizewell C's continued development.

• The expansion of UK Export Finance (UKEF) to enable financing support to UK companies supplying critical minerals to exporters in high-growth sectors such as EV battery production and clean growth.

Other highlights:

Clean energy investment 

Prior to the budget announcement, the Government earmarked desire to implement measures to catalyse private investment into the UK economy, with the National Wealth Fund set to mobilise billions of pounds of investment into clean energy and growth industries. 

The autumn budget provides confirmation of these plans. The National Health Fund is to invest in industries of the future, including in the hydrogen & sustainable transport space. £3.9bn is earmarked to benefit both Track-1 Carbon Capture, Usage and Storage projects, as well as established contracts with 11 green hydrogen producers. It will be the vehicle that initially delivers funding to Great British Energy.

Reeves also compounds this with a new way of measureing investment - "rather than just looking at the cost (which allows governments to sell counterproductive cuts as “savings”) we will measure investment as a proportion of GDP."

Green hydrogen funding

The Energy Advice Hub writes – Truly green, carbon-free hydrogen is made through electrolysis powered by renewable energy, but this represents less than 1% of global production. Today Reeves announced 11 new green hydrogen projects in the UK. This is “amongst the first commercial-scale [green hydrogen] projects anywhere in the world,” according to the Chancellor.

These seem to be the same 11 projects that were shortlisted under the previous government’s first Hydrogen Allocation Round (HAR1). The published version of the Budget seems to confirm this by giving the location of four of them: two in Scotland, two in Wales.

Blueprint for Britan’s energy infrastructure

Department for Energy Security and Net Zero write that the location for new energy infrastructure will be set out in a strategic plan to speed up the transition away from fossil fuels and accelerate the government’s clean energy superpower mission.

·       This new plan is to provide a blueprint for Great Britain’s energy infrastructure out to 2050, providing stability for investors

• The more strategic approach will help cut grid connection waiting times, reducing overall system costs and accelerating the government’s clean energy superpower mission
• UK, Scottish and Welsh energy ministers commission National Energy System Operator (NESO) to produce first ever spatial plan for energy in 2026

Minister for Energy Michael Shanks said:

“To help drive growth and investment in our clean energy future, we need to provide investors with the long-term certainty and stability that they have been crying out for. “

Taking this more strategic approach will provide much-needed long-term certainty and stability for investors and accelerate the growth of the UK’s clean energy industries, creating more jobs and improving lives in communities across the UK.

Clean Heat Innovation

Government announces England's first-ever heat network zones, supporting businesses and building owners to benefit from low-cost, low-carbon heating.

Ground-breaking: Schemes in Leeds, Plymouth, Bristol, Stockport, Sheffield, and two in London will receive a share of £5.8m of government funding to develop the zones, with construction expected to start from 2026. 

Electric Vehicle Insentives

Carbon Brief, in their budgets article, write -

The budget confirmed that the new Labour government has committed to ending the sale of cars that “rely solely on internal combustion engines” by 2030, leaving room for hybrid sales beyond that date.

The budget also contains a number of commitments to support the rollout of electric vehicles, including tax incentives to encourage people to purchase them.

The budget confirms that benefit-in-kind (BIK) tax rates for company cars will continue to favour electric cars, increasing by 2% per year out to 2029-20. 

Other measures in the budget include investing over £200m in 2025-26 to accelerate the rollout of electric vehicles charging points. There is also £120m to support people in purchasing electric vans through the plug-in vehicle grant scheme, and to support the manufacture of wheelchair accessible electric vans.

Looking more broadly at electric vehicle manufacture, the government has also committed £2bn in support for the automotive sector, “including the zero-emissions vehicle manufacturing sector and supply chain”.