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3Ci’s reflections on the Autumn Budget – and what it could mean for the UK’s Net Zero future.
By the 3Ci Team
On Wednesday 30th October, the Chancellor of the Exchequer Rachel Reeves MP announced the new Budget.
We delved into some of the Budget announcements that are relevant to supporting our mission here at 3Ci: to enable private investment into local Net Zero across the UK, creating jobs and growth to support a Just Transition to a low carbon future.
Broadly, these fit into these “three Cs”:
- Clean Energy – from the Warm Homes Plan to Great British Energy (GB Energy), the latest updates are crucial in underpinning the UK’s drive towards greater energy security.
- Connectivity – increasing connectivity is paramount to achieving national, but also local, growth. The Budget lays out several transport commitments to accelerate this in the UK.
- Carbon Capture – in addition to last year’s carbon capture plans from the UK government, Reeves announced further funding for 11 new green hydrogen projects.
Below, we examine how each of these subjects have featured in the Budget Announcement, as well as our perspective on their significance to the UK’s broader vision for Net Zero.
Clean Energy
The budget provided £1billion toward the Warm Homes Plan next financial year and a further £3.4billion across the following two years. 3Ci’s already stated position is that the UK could retrofit three times the number of homes per £ of public investment by spending a small amount up-front on demonstrating innovative financing models like Net Zero Neighbourhoods (NZNs), potentially leveraging £billions of private investment.
NZNs are a ‘no-cost to owner or tenant’ model that turn energy savings into an annuity, meaning private – and other – investment can be attracted to pay for the retrofit works. They are also neighbourhood-wide and focused on local renewal and job creation, not just building works. You can find out more in The Case for a National Net Zero Neighbourhoods Programme.
In reality, several NZNs are about to get off the starting blocks, and the same principle has been used in Local Net Zero Accelerators, so a demonstrator programme is not only cost effective, it is highly achievable.
Separately, 3Ci has welcomed the inauguration of Great British Energy (GB Energy), anticipating further investment into creating more energy security in the UK, including the establishment of the Local Power Plan focused on co-investment in “shovel ready” local authority led projects that provide community benefit. 3Ci also recognises the investment that will be undertaken with the National Wealth Fund. Working with its predecessor, UKIB, 3Ci’s National Net Zero Project Pipeline with over 1,200 projects of £40-60bn of investment provides significant opportunities for collaboration alongside both GBE and the NWF.
GB Energy’s remit will include accelerating existing projects delivering green energy such as wind farms, as well as developing and co-investing in new energy sources that provide community benefit, driven through the new Local Power Plans. The Chancellor has announced funding in the latest Budget to help achieve this, as well as a commitment to establishing its headquarters in Aberdeen.
The above measures rely on having the right levels of capacity in local authorities – and elsewhere in the system – to bring projects up to investment grade, and whilst there is not a separate commitment to this within the Budget, 3Ci will be working with partners to understand how this can best be achieved, as a key to realising private investment and Net Zero ambitions. Underlying these points is the overall resource available to local authorities, which remains under significant pressure.
Connectivity
Increasing connectivity, particularly in the UK, is paramount to achieving national, but also local growth. Public transport infrastructure needs to be able to support our growing population as well as meeting net zero targets, and many infrastructure projects also rely on private investment. They can be highly attractive to patient investors like pension and insurance companies, if developed in the right way.
The Autumn Budget included:
- The delivery of the Trans-Pennine upgrade to connect York, Leeds, Huddersfield and Manchester, “delivering fully electric local and regional services between Manchester and Stalybridge by the end of this year”.
- The Budget commits to an east-west rail to drive growth between Oxford, Milton Keynes and Cambridge.
- There will be more railway schemes to improve journeys across the country.
- There will be funding for HS2 to extend the line to London Euston.
- £1.3bn funding has been announced to improve connectivity within city regions.
Several projects within 3Ci’s Net Zero Pipeline also include transport and connectivity, and we will be seeking ways to bring them forward in a manner that attracts private investment.
Carbon Capture
At the end of last year, the UK Government set out plans for a new competitive UK carbon capture, usage and storage market by 2035 – delivering new jobs and supporting net zero. These plans were supported by a £20m investment fund.
In an exciting update in the latest Budget, further funding was announced for a new, multi-year investment into carbon capture and storage.
Funding will be provided to 11 new green hydrogen projects across England, Scotland and Wales. These will be among the first commercial-scale projects anywhere in the world. 3Ci sees this as a significant opportunity to attract investment into localities across the UK that could target multiple assets alongside these storage and capture facilities, increasing growth and boosting jobs.