Spring Budget 2017

The UK de-carbonises its energy supplies

Yesterday afternoon, the Chancellor presented the Spring 2017 Budget to Parliament.  As with last year’s Autumn Statement, there was little in the way of energy-related announcements, but key points to note are;

Levy Control Framework

The government recognises the need to limit costs to businesses and households as the UK decarbonises its energy supplies. The existing Levy Control Framework has helped to control the costs of low carbon subsidies in recent years and will be replaced by a new set of controls. These will be set out later in the year.

Carbon Pricing

The government remains committed to carbon pricing to help decarbonise the power sector. Currently, UK prices are determined by the EU Emissions Trading System and Carbon Price Support. Starting in 2021-22, the government will target a total carbon price and set the specific tax rate at a later date, giving businesses greater clarity on the total price they will pay. Further details on carbon prices for the 2020s will be set out at Autumn Budget 2017.

Industrial Strategy Challenge Fund (ISCF)

The new ISCF will support collaborations between business and the UK’s science base. An initial investment of £270 million in 2017-18 will kick-start the development of disruptive technologies that have the potential to transform the UK economy. Following engagement with experts in academia and industry, the Budget announces that the first wave of challenges funded from the ISCF will include the following:

• leading the world in the development, design and manufacture of batteries that will power the next generation of electric vehicles, helping to tackle air pollution.
• developing cutting-edge artificial intelligence and robotics systems that will operate in extreme and hazardous environments, including off-shore energy, nuclear energy, space and deep mining.

Consumers and Markets Green Paper

The government will shortly bring forward a green paper to examine markets that are not working efficiently or fairly, although it does not confirm whether this will include the energy market.