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 / Five key energy and fuel-related headlines from the Autumn Budget

Five key energy and fuel-related headlines from the Autumn Budget

28 Oct 2021

|10 minutes

Rishi Sunak, the UK’s Chancellor, delivered his third budget – the Autumn Budget and Spending Review - just days before the COP26 climate summit.

What did the Chancellor reveal in the Autumn Budget and Spending Review?

There was keen interest in announcements relating to global warming, the energy industry and the government’s net-zero plans. In contrast to the government’s net-zero strategy where ‘climate change’ featured heavily, the Chancellor chose to instead focus his budget speech on describing, simply, the commitments to energy efficiency, low-carbon power generation, and decarbonisation.

1. Achieving net-zero with nuclear power

The budget confirmed £1.7 billion of government funding to enable a nuclear project developer to take the final investment decision on the development of the large-scale nuclear power plant: Sizewell C in Suffolk. Nuclear power is a key low-carbon technology and plays a central role in the UK government’s net-zero strategy. Along with low emissions, nuclear power can provide a resilient, low-carbon electricity supply to millions of homes.

As well as playing a part in the decarbonisation agenda, the investment in nuclear is also planned to protect households and businesses from price spikes in energy driven by changeable international fossil fuel market. The importance of this industry was further underpinned by the £385 million for Advanced Nuclear Fund research and development and £120 million for a new Future Nuclear Enabling Fund.

2. A further freeze on fuel duty

Sunak confirmed that for the twelfth consecutive year fuel duty will be frozen at 57.95 pence per litre for the year 2022-23. The announcement was made in light of the government’s recognition that fuel - comprising in this instance petrol and diesel - is a major cost for both businesses and households and the freeze, which is worth £7.85 billion over the next five-year period, will have a positive impact on UK car drivers. The average car driver will have saved around £1,900 over the 12 years of the frozen rate. With the price of petrol now at a record high, the chancellor stated that the freeze would relieve pressure for families and small businesses.

3. Funding energy efficient homes

The UK currently has some of Europe’s least energy efficient building stock, which accounts for 17% of all domestic emissions. In a drive to make homes and buildings more energy efficient, the Chancellor confirmed the £3.9 billion in funding that had been previously announced in the Heat and Buildings strategy. In relation to the government’s commitment to decarbonising buildings, there was the reiteration of the pledge to invest £450 million to grow England and Wales’s heat pump market to help meet the target of 600,000 heat pumps installed annually by 2028.

4. Reduced cost of Air Passenger Duty

The Chancellor announced a cut in Air Passenger Duty on domestic flights from April next year. The timing of the statement surprised some parties ahead of COP26 and the drive to reduce carbon emissions; however, Sunak defended the decision saying it was part of the levelling up agenda – increasing connectivity within the UK - and would also support regional airports, which require a much-needed boost.

5. Decarbonising the UK’s transport sector

The Budget and Spending Review announced an increase of capital support to £817 million to aid in the transition towards the use of electric vehicles, which includes support for the development of infrastructure – including charging points – and their supply chains. The transport sector produces the highest emissions of all sectors, contributing 32% of domestic emissions in 2019. With this in mind, the Chancellor also confirmed funding for:

  • Research and development programmes to help commercialise low emission transport technologies
  • Zero emissions buses
  • Initiatives to promote cycling and walking, including segregated bike lanes
  • The end of the sale of new petrol and diesel vans in 2030 and all new diesel vehicles by 2040.

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