Budget 2020: What does it mean for energy?

With the government pushing the UK towards becoming a NetZero carbon nation by 2050 it was natural that reducing emissions and changing the way the country produces and provides energy was the main driver and focus of the budget when it comes to the energy sector.

Judging by the public’s reaction to the recently announced plans to hit NetZero the government is going to have a bit of a fight on its hands to convince them that drastic lifestyle choices will need to be made.

In the Budget, a new ‘boiler tax’ was announced which will make gas heating more expensive in an attempt to reduce carbon emissions.

Adam Scorer, Chief Executive of National Energy Agency said: "The only energy efficiency measure is a new gas tax, which may drive aspects of the decarbonisation agenda, but has the potential to hit the poorest, hardest," he said.

From April 2022, the levy on electricity will be frozen but on gas, it will be raised.

It’s a move that is likely to be deeply unpopular as a recently released study showed that at the current pace it will take at least 1000 years to replace all gas heating in the country.

“Electricity is now a cleaner energy form than gas, but our climate change levy – paid by companies – taxes electricity at a higher rate. I will support the most energy-intensive industries to net zero. As another step towards equalising the rates and encouraging energy efficiency, from April 2022 I’m freezing the levy on electricity and raising it on gas,” said the Chancellor.

“The gas and heat networks policies being brought forward are game-changers for our climate emergency. By providing significant seed investment for heat networks we have an opportunity to grapple with our gas addiction – a real deliverable, pragmatic solution to fossil-based ‘natural’ gas which will allow us to decarbonise the heating in homes and businesses around the UK.

We operate three of the largest schemes in the UK and can use that technology and deployment experience to spread and scale the green heating option across the country, supplying communities in fuel poverty with reliable, affordable, low carbon heating. This will ensure Britain stays great and green,” said Richard Kirkman, Chief Technology and Innovation Officer, Veolia UK and Ireland.

When it comes to Electric Vehicles the Chancellor announced that it was extending the Plug-in Car Grant to 2022-23 and was providing over £400 million of subsidies to encourage the public to buy EVs.

One of those new incentives was the exclusion of EVs from Vehicle Excise Duty.

Electricity supply companies should this increased focus on encouraging EV buying as an opportunity. By offering specialist tariffs aimed at EV owners they can attract a new customer base.

Read more: Ban on Petrol and Diesel cars brought forward to 2035 announced at COP26 Launch

With the government’s push to hit net zero emissions by 2050 and the rapid pace of the change of public opinion, all energy suppliers will likely have to demonstrate that they’re providing power from genuine renewable sources. Those that don’t could fall behind.

“The gas and heat networks policies being brought forward are game changers for our climate emergency. By providing significant seed investment for heat networks we have an opportunity to grapple with our gas addiction – a real deliverable, pragmatic solution to fossil-based ‘natural’ gas which will allow us to decarbonise the heating in homes and businesses around the UK.

We operate three of the largest schemes in the UK and are able to use that technology and deployment experience to spread and scale the green heating option across the country, supplying communities in fuel poverty with reliable, affordable, low carbon heating. This will ensure Britain stays great and green.” Said Richard Kirkman, Chief Technology and Innovation Officer, Veolia UK and Ireland.

Read more: Ofgem sets out plans to hit net-zero carbon emissions by 2050

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