As part of the Chancellor’s budget on Wednesday, Rishi Sunak announced a range of green initiatives to be a key part of the UK’s recovery from the pandemic. In the year the UK holds the presidency of the UN climate change talks (COP 26), the Chancellor’s announcements aim to show the UK’s commitment to tackling climate change and reaching it’s net zero targets.
The Chancellor has also updated the Bank of England’s mandate to now explicitly say that environmental and climate goals should be a part of monetary policy. The Bank of England should support the government’s efforts to make the UK economy greener and achieve zero greenhouse gas emissions by 2050.
How the government will lead a green recovery:
• The government will issue its first sovereign green bond – or green gilt – this summer, with a further issuance to follow later in 2021 as the UK looks to build out a ‘green curve’.
• Green gilt issuance for the financial year will total a minimum of £15 billion
• The green gilt framework, to be published in June, will detail the types of expenditures that will be financed to help meet the government’s green objectives
• The government also commits to reporting the contributions of green gilt spending towards social benefits such as job creation and levelling up.
Green retail National Savings and Investment (NS&I) product
• The government will offer a green retail savings product through NS&I in the summer of 2021
• This product will be closely linked to the UK’s sovereign green bond framework and will give all UK savers the opportunity to take part in the collective effort to tackle climate change, benefiting from the innovative reporting standards planned for the green gilt programme
• In line with the commitment to double spending on energy innovation, the government is announcing support for the development of new solutions to cut carbon emissions and accelerate near-to-market low-carbon energy innovations:
- the launch of a £20 million programme to support the development of floating offshore wind technology across the UK
- the launch of a new £68 million UK-wide competition to implement several first-of-a-kind energy storage prototypes or technology demonstrators
- a £4 million UK-wide competition for the first phase of a biomass feedstocks programme, to support the rural economy in making improvements to the production of green energy crops and forestry products.
UK Infrastructure Bank
• The new UK Infrastructure Bank will provide financing support to private sector and local authority infrastructure projects across the UK, to help meet government objectives on climate change and regional economic growth.
• The Bank will:
- be able to deploy £12 billion of equity and debt capital and be able to issue up to £10 billion of guarantees
- offer a range of financing tools including debt, hybrid products, equity and guarantees to support private infrastructure projects
• The Bank will partner with the private sector and local government to increase infrastructure investment to help tackle climate change and promote economic growth across the UK
Future Fund: Breakthrough
• A new direct co-investment product to support the scale-up of the most innovative, R&D-intensive businesses green energy innovation schemes from the government’s £1 billion Net Zero Innovation
• Portfolio to support the development of new solutions to cut carbon emissions and accelerate near-to-market low-carbon energy innovation
For more information about the green initiatives announced by the Chancellor visit - https://www.gov.uk/government/news/budget-2021-what-you-need-to-know