UK government's Autumn Statement fails to consider green energy
Despite giving extra funding to the development of electric vehicles, renewable fuels and energy efficient transport, the UK government’s Autumn Statement has not provided confidence in a low-carbon growth plan to battle climate change. The statement did confirm developments for the electric vehicle industry, and the carbon price floor was maintained to levy tax on industry emissions, though the latter’s trajectory has not been confirmed. The future of the Levy Control Framework (LCF), a cap on subsidies for low-carbon energy to ensure low bills for consumers, was not mentioned. The government’s support for shale remains, as does oil and gas subsidies paid for by the taxpayer.

First the good news. The U.K.’s Chancellor Philip Hammond presented yesterday his autumn statement to the U.K. Parliament, pledging £390 million ($485 million) investment in future transport technology, including driverless cars, renewable fuels and energy efficient transport.

Specifically, £80 million ($99 million) will be invested towards installing charging points for ultra-low emission vehicles; £150 million ($186 million) will aim to provide at least 550 new electric and hydrogen buses and reduce the emissions of 1,500 existing buses and support taxis to become zero emission, and another £100 million ($124 million) will be spent towards testing infrastructure for driverless cars.

There will also be "a two-year 100% first year allowance for companies who install electric charge-points, coming in from today?," said the government. "This allows companies to deduct the cost of the charge-point from their pre-tax profits in that year?."

However, in a rather contradictory announcement, the Chancellor confirmed that fuel duty in 2017 will remain frozen for the seventh successive year.

The funding announced yesterday for EVs and charge point infrastructure is not the first time that the U.K. government has dedicated support to the sector. In January, some £40 million was steered to four British cities to aid the growth of electric and low-emission vehicles.

The U.K.’s energy minister Lucy Neville-Rolfe has also publicly talked of a U.K. energy future that includes EVs. For instance, she referred to EVs in her speech at the Clean Energy Live exhibition in Birmingham and at the Bloomberg New Energy Finance Summit in London in October.

The move could also be construed as additional reason for EV manufacturer Nissan to remain focused on the U.K. The Japanese car giant recently stepped up investment in its factory in Northern England, following reassurances from the British government that Brexit will not impact the company’s U.K. operations. The actual content of the negotiations held between Nissan and the U.K. government was not, controversially, made public.

What low-carbon growth plan?

Where Hammond’s autumn statement echoed recent speeches from the U.K. energy minister was the failure to provide any hint that the government has a holistic low-carbon growth plan with solar and other smart technologies at its center.

Commenting on Hammond’s autumn statement, the U.K.’s Renewable Energy Association (REA) said that it welcomes the new funding for EVs. However, "we urge him to remember that the development of these transport technologies are not emerging on their own but are part-and-parcel of a wider shift to a higher-tech, lower-carbon world. Decarbonizing transport through electrification requires the decarbonization of the electricity system as well."

On a similar tone, Leonie Greene, head of external affairs at the Solar Trade Association (STA), commented that only a "week after the U.K. ratified the Paris Agreement, the Chancellor made no mention of climate change. It is deeply frustrating at this point in time that we have to battle against a tax regime that is rewarding investors in fossil fuels over solar energy. Very modest intervention is needed to unlock a billion of investment in solar over this Parliament. The U.K. economy, as well as the climate, urgently needs this investment."

Greene’s frustration refers to the Chancellor failing to scrap the proposed changes to the business rates for companies that self-supply themselves with solar power. The STA has argued that this solar tax "risks devastating the commercial rooftop sector."

The STA welcomed the news that the Chancellor had retained the carbon price floor at current levels. More interestingly, the Chancellor did not say a word about a new CfD tender for low-cost renewable energy technologies (which include solar and onshore wind) and did not give any clues on the future of the Levy Control Framework (the U.K.’s budget for renewable energies) beyond 2021.

Earlier this month, the U.K. government and the energy regulator called for energy market stakeholders to contribute to a dialogue for a more flexible energy system for the country. This might open a new window of opportunities. Meanwhile, it is becomjng apparent that the U.K. government is increasingly of the opinion that low-carbon energy is to be chiefly drawn from nuclear and large offshore wind plants.

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