The lack of detail in the Budget speech on investment in renewable energy (nothing on hydrogen for example) was disappointing, and surprising to many given the timing of the Autumn Budget with COP26. However, the Comprehensive Spending Review did give a bit more detail. Whether it goes far enough or fast enough to meet ambitious targets is still up for debate.
It is true that, since the Spring Budget of 2021, the government has made progress with its green financing programme, both sovereign green bonds (green gilts) and retail Green Savings Bonds via NS&I. The UK successfully launched its inaugural green gilt, maturing in 2033, on 21 September 2021, raising £10bn. A second green gilt, maturing in 2053, followed on 21 October 2021, bringing total proceeds raised by both issues to £16.1 billion.
The new £1.4 billion Global Britain Investment Fund will help in supporting investment in the UK’s life sciences, offshore wind and automotive manufacturing sectors. Indeed, the Chancellor did mention the UK Investment Bank’s first major investment of £107m in offshore wind in Teesside – one of the three Freeport locations that will be able to start operations in November alongside Humber and Thames.
Previous announcements and plans suggest that the government is committed to its levelling up targets, but clearly also expects the private sector to do much of the heavy lifting to achieve those goals. Freeports could provide the muscle to do just that.
In terms of the decarbonisation agenda, the Comprehensive Spending Review described the £240m Net Zero Hydrogen Fund, which it is claimed will unlock £4 billion worth of investment by 2030, as well as continued support for the Holyhead Hydrogen Hub in Wales. £380m was earmarked for the offshore wind sector, given the target of generating 40 gigawatts by 2030, while the £1bn Carbon Capture Usage and Storage (CCUS) Infrastructure Fund is intended to support the goal of CCUS in four industrial clusters by 2030.
£140m was set aside to establish the Industrial Decarbonisation and Hydrogen Revenue Support scheme (IDHRS) and funding for the Aberdeen Energy Transition Zone. £3.9bn for energy efficiency improvements and clean heat installations making the transition to net zero cheaper and easier for households seems generous, but this money must also support the decarbonisation of the public estate, which will likely take a fair chunk of that. As with levelling up, the private sector will be expected to do much of the work to turn these net zero ambitions and ‘pump-priming’ funding opportunities into delivered reality.