By Lauren Hurley / No 10 Downing Street – Number 10 Flickr page, OGL 3, https://commons.wikimedia.org/w/index.php?curid=150044082

Today, UK Chancellor of the Exchequer Rachel Reeves stood up in the House of Commons and delivered her first ever budget. Much has been made of the new Labour Government’s green growth strategy, so did the budget deliver on the narrative? Here is my immediate reaction based on the Chancellor’s speech and some skimming of the official budget documentation:

Transport: new investment in rail, a modest rise in ‘normal’ air passenger duty and a whopping hike for private jets are all moves in the polluter pays direction. Plus there were some tweaks in vehicle excise duty (what many call ‘road tax’) and company car rules to favour EVs. However the 50% rise in the cap for bus fares and the continued freeze in road fuel duty counter some of these carbon benefits – old Mrs Miggins getting a bus to her local supermarket is effectively subsidising a commuter sat alone in an idling SUV stuck in a queue of traffic. There was nothing on little for active travel which has substantial environmental and health benefits [corrected 31/10/24].

Building Emissions: £3.4bn for the warm homes plan is welcome (although delivery has previously been difficult in practice). In the budget papers there is an extra £1bn for decarbonisation of public buildings. This is all good stuff.

Oil and Gas: the rise and extension of the Energy Profits Levy (EPL) with exemptions for decarbonisation is a good move and a contrast with the previous Government wasting public money trying to prop up the fading North Sea hydrocarbon extraction.

Industrial Strategy/Green Growth: the headline announcements were on carbon capture and storage and green hydrogen. This is where I have reservations as both technologies have been the next big thing for at least 25 years, with very little to show for it. As I explained before, CCS is intrinsically inefficient as you are creating pollution before trying to capture and store it. Using electricity to break water molecules into hydrogen, compressing it for storage and then converting it back into electricity gives you just 15-45% of the energy you put in. By comparison, an EV battery gives you back 80+% of the energy you put in. The Climate Change Committee believes there is a role for hydrogen, but notes its expense.

These technological ‘investments’ bother me as both industries have a long history of failing to deliver on the promises of their supporters. If my scepticism is unfounded, then I will be delighted, but the Government is running the risk of throwing good money after bad with the attendant reputational damage it could cause the transition to a low carbon economy. The investments in EV and electric arc technologies are a much better use of public money in my view and I would like to have seen more investment in the electricity grid to unlock renewables and the use of heat pumps – this only gets a brief mention in the budget and no investment.

My conclusion: this budget is much better for the low carbon transition than those from the last lot, but I do question whether the CCS and hydrogen money could be much better spent on technologies with a future

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