Post-Autumn Statement 2023 thoughts from Mark Lumsdon Taylor, partner at MHA
The US and the EU have shaped their fiscal program and associated policy around the green transition (both regulatory and investment in the case of the EU, and from an investment perspective in the USA) that fossil fuels are the energy source of the 20th century, and that those who first create a fully decarbonised economy are more likely to benefit from the long-term financial rewards. They have each committed billions – in fact, the USA investment is a milestone in the hundreds of billions.
In the Autumn Statement, the green sector/net zero was raised over 20 times, albeit not necessarily joined up. £4 billion was promised, of which £2 billion will go into the automotive sector for decarbonisation.
A further £960m investment by 2030 for a new “green industries growth accelerator” programme was announced. Whilst no doubt that the support will be welcomed, it’s not until 2025 that this will be seen.
Immediate fixes looked a little scarcer. Whilst investment is important, it is the joined-up approach to sustainability and both monetary and fiscal economy levers that need to be pulled.
The key element is a joined-up sustainability, regulatory and environmental framework that aligns infrastructure; manufacture; all GHG reduction strategies; regulatory reporting & self-sufficiency – not dissimilar to the United States program of priorities below:
The USA approach:
- Designing and deploying a capital-efficient and affordable system
- Strengthening supply chains to provide stable access to raw materials, components, and skilled labour
- Securing access to adequate land with high load factors for the deployment of renewables while considering the needs of local communities
- Reforming transmission development to include proactive planning, fast-track permitting, and systematic consideration of transmission alternatives
- Creating market mechanisms for expanding firm capacity to ensure reliable and adequate clean energy supply
- Accelerating technological innovation to ensure timely deployment of new clean technologies
The Autumn Statement 2023 did re-emphasise the Conservative’s commitment to net zero, after an uncertain period earlier in the year. There were 26 mentions of net zero in the text of the statement.
The level of detail as explained was ‘short’ – no gigafactories (from Tesla or any other battery manufacturer), which were rumoured and a new investment exemption within the Electricity Generator Levy (EGL), announced last year.
The government has also stated that it will legislate 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, and it will end as planned for all projects on 31 March 2028.
The EGL will still be retired in 2028 as planned. What is on the horizon is the Carbon Border Adjustment Mechanism (CBAM). Given the EU’s CBAM is now in force, this is something businesses are questioning in terms of the UK Approach – similarly in the cascade of CSRD Regulations in Europe and the relentless march of standards for ESG reporting in business.
There was reference to CCA agreements again being rebooted which will be good news for manufacturing alongside reductions in red tape for those trying to connect to the electricity transmission network, including the proposal for up to £10,000 off electricity bills for local communities. The CCS Technology which is again rumoured in the background continues to ‘germinate’.
Following the Autumn Statement, the Office of Gas and Electricity Markets (Ofgem) published a statement noting that a Connections Action Plan (CAP) will accelerate the onboarding of wind, solar and battery power generation to the electricity grid, tackling delays in the current connection queue by “releasing over 100 gigawatts (GW) of capacity for new projects”. This is around a quarter of the electricity needed to power the economy in 2050.
Suffice it to say, there was a welcome acknowledgement of green technologies, however, with the other references to ‘social’ support in terms of tax reductions, ESG feels like something the statement referenced, but didn’t necessarily follow through on the detail.
