2020 Budget: Getting stuff done, except net zero

By Dr Jonathan Marshall, Head of Analysis

Published:11 March 2020

Trailed by the new Chancellor as a ‘net zero’ budget, it would be reasonable to expect that the 2020 Budget would put us back on track to meet national climate targets. And while green news would be overshadowed by Coronavirus, outlining a £175 billion spending spree showed that cash was still available for the Government’s priorities.

However, overshadowed by the Coronavirus outbreak, and with a delayed National Infrastructure Strategy pushed back, there were potential justifications for rowing back on green spending plans.

Undoubtedly though, all focus is now on the impending infrastructure plan. Arguably one of the most important Government documents in decades, it should detail the upgrades needed to modernise Britain and, crucially, jump-start action to bring net zero within sight.

A to B

Proclaiming that this Government will ‘deliver green growth and protect our environment’, initial signs were good. Much of the pre-Budget to-and-fro was over cleaning up transport, with the continuation of the fuel duty freeze the largest announcement here.

Expected to cut annual Treasury receipts by more than half a billion pounds by the end of this Government, changing the cost of motoring is big politics. Add onto this a £27 billion spending spree on roads (42 times the outlay on nature policies) and it is easy to see why green NGOs are unimpressed.

Also found wanting will be the UK motor industry, who recently changed tune to call for electric vehicles to be zero-rated for VAT. While the extension of the plug in car grant (£403m that will cut £3,500 from the purchase price of 115,000 vehicles) will be welcome, a tax cut would have been harder to reverse and therefore a stronger signal to the industry.

Widely trailed but not forthcoming was a formal consultation on the phase-out of non-electric vehicles, which would have not only put an end to uncertainty on timing but provided a major litmus test on how serious the Government is about sending strong green messages ahead of COP26.

Home Front

The new Chancellor's budget was strong on messaging but light on green policy. Image: HM Treasury
The new Chancellor's budget was strong on messaging but light on green policy

The Conservative manifesto pledged to deliver £9.2 billion for building efficiency, of which £6.3 billion was for domestic property. With this expenditure expected to begin in the financial year that starts in a couple of weeks, the Treasury should be looking to provide imminent clarity on this funding.

Expected in the infrastructure plan, which itself should be along sooner rather than later, we have to hope this not a more serious indication of the Government’s appetite to curb energy waste.

Boosting ambition on the able to pay sector, within which lie most of the potential sectoral emissions reduction, was not expected in the budget but it would have been welcome. Instead, we again look ahead, again, to a suite of documents expected during 2020.

Powering up

Against thin competition, the main energy announcements related to a doubling of the Energy Innovation Programme, expected to top £1bn over the coming Parliament. Announcements on nuclear fusion also tied in with a technofix theme, potentially overshadowing delivering the manifesto pledge for £800m support for carbon capture and storage. Unexpected was support for a gas-fired CCS plant, while a boost for ‘gas to hydrogen’ was also absent.

Extending the RHI will avoid decimating the UK’s low carbon heat industry (think solar and the end of FiT), but it remains an underutilised and underwhelming policy, and fundamentally doesn’t deliver low carbon heat on the scale needed to wean the nation off gas.

Other measures such as changes to the climate change levy for domestic consumers and support show signs of a green tinge but lack ambition needed to ultimately convince onlookers that the Government is facing up to some of the trickier aspects of the net zero journey.

Can, kicked?

If the budget does indeed represent a missed opportunity, 2020 brings with it a slew of opportunities to put the UK back on track. The delayed infrastructure plan should be here within ‘days or weeks’, followed by a framework on low carbon heat over the summer, a spending review, low carbon transport strategy, Treasury net zero review, detail on onshore wind auctions, to get the list going.

With public appetite for climate action at all-time highs and time running out before the UK embarrasses itself by hosting a climate conference while not on track to meet its targets, the Government should be looking to make the most of these opportunities.

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