Sheena McGuinness, partner at RSM, comments on the latest announcements from the government on clean energy and carbon tax:
The £100bn ‘clean energy and infrastructure growth’ package announced by the prime minister is extremely welcome, with Sunak examining a UK-wide carbon tax that could raise billions of pounds while encouraging the drive towards net-zero emissions. The priorities are that construction costs will benefit the UK economy and the details are published as to how we will achieve this ambition plan.
Benefit to the UK economy
The focus is very much on offshore wind and the UK has created an effective and stable regulatory regime for this form of renewable energy. However, it will be important to take a holistic approach to the development and running of these massive floating platforms anticipated over the next decade and it is hoped that as much of the supply chain as possible will be located in the UK. Manufacturing in the UK not only ensures employment of our own workforce and taxes when the unemployment rates are rising and the economy is slowing down, it also reduces the carbon footprint in the supply chain. So, a double positive.
Balancing private and public sector finance
It will take public and private investment to meet the UK’s net zero targets. It is challenging this capital investment is coming at a time when the budgetary deficit is so high. Nonetheless, it took us over 100 years to get to this rate of pollution and the stimulus package will likely take equally as long to repay. This long-term funding approach is not new as it took us over 100 years to pay back the war debt. The important thing will be to ensure the holistic approach with UK manufacturing, as far as possible, and there is no knee jerk reaction in the form of tax hikes to pay for the clean energy package. Rishi Sunak is examining proposals for a UK-wide carbon tax seeking to replace existing EU carbon-reduction schemes when the transition period finishes at the end of the year. Similarly, investing in ‘guilt free’ (to quote the PM) heat and power must be for the long term good of the country and the planet. A sensible approach must be applied throughout the supply chain and the real environmental benefit of these projects be must properly and candidly understood and reported.
Government must publish detailed plans
Delivering 40 GW of offshore wind by 2030 is a challenging target, but achievable if government and the industry work together to accelerate deployment and sustainably build out the UK project pipeline as quickly as possible. It will build a skilled labour in the UK long-term, support the regeneration of coastal communities, and ultimately help to mitigate climate change. RSM will be analysing and commenting on the details when published.