Budget 2023: Chancellor backs nuclear and carbon capture in ‘energy reset’ – but leaves ‘glaring gaps’ in onshore wind, creaking grid, home insulation

The chancellor today skirted round contentious topics like onshore wind and home insulation in his budget, but did promise cash for nuclear power, carbon capture and energy bills.

The underlying commitment to net zero and clean energy were generally welcomed.

But campaigners have accused Jeremy Hunt of prioritising risky, “fanciful” technologies – such as machines that suck up carbon dioxide and bury it underground – over proven, but politically difficult, climate policies like boosting onshore renewables.

There is also widespread concern the budget does little to compete with the hundreds of billions unveiled by the US and EU to stimulate green growth investment, risking the UK falling behind in the “green industrial revolution”.

Nuclear reaction

A key announcement was that nuclear is to be classed as “environmentally sustainable”, subject to consultation, in a bid to pull in investment in the same way enjoyed by renewable energy.

Nuclear is costly and lengthy to build but provides reliable power without the pollution.

Government climate advisers say some nuclear power is vital to the UK’s clean energy future.

But the chancellor was criticised for rehashing old pledges.

He gleefully announced Great British Nuclear, an agency designed to revive the nuclear industry – but this has been promised before.

“The chancellor’s words on nuclear give a positive message, but it’s more like a ‘greatest hits’ compilation from the past, rather than anything new,” said Professor Adrian Bull, BNFL chair in Nuclear Energy and Society at the Dalton Nuclear Institute at Manchester University.

The government also announced a competition for mini reactors known as “small modular reactors (SMRs)”, which are not yet widely available.

If this young technology is “demonstrated to be viable” the government will “co-fund this exciting new technology”, the chancellor said.

This too resembles a previous announcement. In 2015 then-chancellor George Osborne launched a competition to identify the best design and get one built in the 2020s – a target yet to be hit.

Chris Stark, chief executive of the government’s climate advisors the Climate Change Committee (CCC), said nuclear seems to “have been announced and re-announced so many times”.

“SMRs [sic] would be useful if they are delivered as quickly as promised. Whether they will be though…” he wrote on Twitter.

Carbon capture, utilisation and storage

Another leap of faith, on top of the push for SMRs, is the push on carbon capture, utilisation and storage (CCUS).

It is an expensive technology, still in its infancy.

But the UK cannot afford to bypass CCUS, climate advisers said last week, because it is not cutting emissions enough.

Today the government pledged £20bn towards the technology in order to “increase resilience to future energy price shocks” – suggesting it would primarily be used to allow the UK to burn more gas, rather than to capture emissions from factories, for example.

Dr Steve Smith from Oxford University’s Smith School of Enterprise and the Environment said the funding was “good news” but needs extra policy decisions from government to become viable.

Some campaigners warn the UK is using it as an excuse not to cut emissions.

“Locking in reliance on gas power will increase our vulnerability to future energy price shocks, while adding in the additional costs, risks and uncertainty of trying to capture emissions from gas power plants,” said Alethea Warrington, senior campaigner at climate charity Possible.

“Including carbon capture will add even more costs, while being unproven to actually work and putting our climate, as well as our finances, at risk.”

Meanwhile Greenpeace called the £20bn over 20 years “frankly pathetic compared to the green growth investments being made in the US, EU and China”.

Capital expensing – and can the UK rival the US and EU’s mega green growth packages?

Sam Hall, director of the Conservative Environment Network, said today’s measures do bring the country closer to net zero.

He welcomed the announcement of full capital expensing for the next three years, saying it would help attract more investment in renewables and the supply chain. This should please the offshore wind sector.

“But with the USA and EU offering enormous green subsidies, the UK needs to up its game” to remain an attractive place to invest in wind and solar, as well as the next generation of clean industries like sustainable aviation fuel and green hydrogen, added Mr Hall.

But the government will be talking more about net zero before the end of the month – the deadline by which it has to respond to a legal ruling on its net zero strategy.

The courts found the government’s net zero strategy was unlawful because it failed to outline how climate policies would meet legally binding carbon budgets – forcing ministers to rework their plans.

‘Zero mention of renewables’

Many were disappointed that the chancellor steered clear of lifting a de facto ban on onshore wind.

Antony Froggatt, of thinktank Chatham House’s Environment and Society Programme, said: “In the UK Budget there is zero mention of renewables and only £105m set aside for community supported energy efficiency compared to £235m funding for potholes.”

Onshore wind is politically contentious, with recent governments changing their minds on it.

Meanwhile, the EU and US are “rolling up their sleeves and supporting the domestic production of electric vehicles, solar panels and wind turbines, that will bring jobs now and make a difference in the 2020s”, said Mr Froggatt.

He warned the chancellor to “be careful the UK isn’t left at the starting line of this new and more competitive low carbon race.”

Friends of the Earth criticised the “glaring gap” in the budget on onshore wind and home insulation.

Energy bill help a ‘sticking plaster’ compared with home insulation

Good news amid the cost of living crisis came in the form of a decision to extend the energy price guarantee, which caps average household bills at £2,500, for a further three months to June.

It had been due to rise to £3,000 in April and the cost of scrapping the planned 20% increase will amount to around £3bn.

However, the chancellor stopped short of new commitments on home insulation, which advocates say would bring down household bills permanently.

In his autumn statement Hunt did pledge £6.6bn during this parliament for energy efficiency, and a further £6bn from 2025. But energy groups say £6bn a year is needed to upgrade leaky homes and promote heat pumps.

Insulation rates were over 90% higher in the 2000 and 2010s to 2013, at which point the Cameron administration “cut the green crap”, according to thinktank ECIU.

Jo-Jo Hubbard, CEO of network optimisation specialist Electron, called the energy bill support a “sticking plaster” that is “about to wash off.”

Upgrade the grid!

Instead the government should upgrade Britain’s outdated electricity network, added Ms Hubbard, one of many in the industry warning of the problems it is creating.

At the moment consumers are paying for wind to be switched off when the grid can’t handle the capacity. New power capacity is also waiting to be connected, said Ms Hubbard.

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