The Budget 2020 and its Environmental Goals

Today brought the first Budget of the decade from the UK government. It included work planned and budgeting for addressing areas of environmental concern in the heating and energy sector.

The Budget includes a range of policies designed to ensure the UK continues its commitment to reduce carbon emissions. The UK has already cut carbon emissions more than any other G7 country and in 2019 was the first major economy to legislate for a target of net-zero greenhouse gas emissions by 2050.

As the UK prepares to host this year’s COP26 UN climate summit, the Budget announces several policies to reduce emissions, ensure our environment is resilient to climate change, and generate green economic opportunities across the UK.

The heating of our homes will need to be virtually zero emissions by 2050, replacing natural gas and other fossil fuels with low carbon alternatives – likely to be a mix of green gas, heat pumps and heat networks. To meet this challenge, the Budget accelerates the greening of the gas grid by announcing a new support scheme for biomethane, funded by a Green Gas Levy. The government will also support the installation of heat pumps and biomass boilers by introducing a Low Carbon Heat Support Scheme.

Recognising the energy efficiency benefits of heat networks, the Budget confirms funding for the Heat Networks Investment Project for a further year to 2022 and provides £270 million of new funding to enable new and existing heat networks to adopt low carbon heat sources. To encourage businesses to operate in a more environmentally friendly way, the government is raising the Climate Change Levy on gas in 2022-23 and 2023-24 (whilst freezing the rate on electricity) and reopening and extending the Climate Change Agreement scheme by two years.

However, there are some environmental negatives. The Budget has plans to expand the UK’s road network. This would result in more traffic on the roads and more pollution. Fuel duty will also continue to be frozen, allowing motorists to purchase cheaper petrol and diesel. There is also concern that there is not an appropriate policy on insulating Britain’s 40 million homes so that they are not wasting energy regardless of how they are heated.

Mixed reactions have been observed for the Budget’s addressing of environmental issues but progress has undoubtedly been made. The reduction of tax on electricity (which comes increasingly from green sources) while increasing tax on polluting gas will hopefully have a profound effect on the decarbonisation of the UK. As decarbonisation efforts increase, it is hoped that next year’s Budget will reflect this.

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