Chancellor of the Exchequer unveils net zero funding in Spending Review


Even though continuing recovery from the COVID-19 pandemic was a central theme of Rishi Sunak’s Spending Review, it also unveiled measures for UK to continue its transition towards net zero and green recovery for businesses.

Mr Sunak also announced the National Infrastructure Strategy, which was delayed to give the Treasury a chance to introduce new net-zero requirements.

As part of this plan, the delayed Energy White Paper was announced to be ‘following shortly’, listing it to be published in the next three months.

Net Zero Review final report and a transport decarbonisation plan were announced to be published in the next six months.

An electric vehicle charging infrastructure strategy, a heat and buildings strategy, hydrogen strategy, industrial decarbonisation strategy and refreshed Industrial Strategy were all announced to be published in the next twelve months.

The Department for Business, Energy, and Industrial Strategy (BEIS) has received a total budget of £18 billion.

This features £11.1 billion of research and development funding, which includes £200 million in 2021-22 for the Net Zero Innovation Portfolio to develop new decarbonisation solutions and accelerate near-to-market low-carbon energy innovations.

Over £3 billion of new funding has also been allocated to BEIS to support the Ten Point Plan unveiled by the Prime Minister last week, which includes:

  • Over £1 billion towards the construction of four new Carbon Capture and Storage plants by 2030
  • Over £1 billion to make further progress towards delivering the government’s commitment to invest in the energy efficiency and heat decarbonisation of schools, hospitals and homes
  • £160 million to upgrade portside manufacturing capabilities to help build the next generation of offshore wind farms
  • £240 million to support industry to produce low-carbon hydrogen at scale and over £80 million to test its use in heating buildings
  • up to £525 million towards the development of a large-scale nuclear project, subject to value for money assessment, and advanced nuclear technologies, including novel small modular reactors and next generation advanced modular reactors
  • £500 million to be spent in the next four years on the development and mass-scale production of electric vehicle batteries and support for associated supply chains.

The Department for Transport received £23.5 billion in total, which includes:

  • £120 million in 2021-22 which will support delivery of over 800 zero emission buses.
  • Almost £2 billion of investment in electric vehicle charging infrastructure and grants for zero and ultra-low emission vehicles until 2024-25. This includes funding to support the rollout of rapid charging hubs at every service area on England’s motorways and major A roads.

The Department for Environment, Food and Rural Affairs (DEFRA) received £5.8 billion in total, which includes:

  • £92 million for the Nature for Climate Fund to keep the UK on track to restore more peatlands and plant England’s share of 30,000 hectares of trees a year by the end of this Parliament. This will include expansion of the Urban Trees Challenge Fund and new investment in Community Forests. This seeks to support an additional 1,000 green jobs.
  • An increase to the funding for National Parks and Areas of Outstanding Natural Beauty to more than £75 million.
  • An additional £40 million investment in the extended Green Recovery Challenge Fund
  • Progressing with extended producer responsibility for packaging waste, introduce a deposit return scheme, and implement consistent collection of waste – including food waste – in every local authority in England by the end of this Parliament.

The Spending Review also featured a £4.3m offshore wind enabling actions programme, involving DEFRA and BEIS, which is designed to add understanding of the environmental impacts of offshore wind and find strategic solutions to reduce barriers to its expansion in English waters.