\'Carbon tested\' Budget: Treasury mulls incentives for green home upgrades and electric cars

'Carbon tested' Budget: Treasury mulls incentives for green home upgrades and electric cars

Energy efficiency and green buildings could secure policy support in the Chancellor's Budget next month
Energy efficiency and green buildings could secure policy support in the Chancellor's Budget next month

The Times reports Treasury is considering new energy efficiency funding programme, including potential incentives for households that undertake green upgrades

The government is expected to unveil a raft of major new green programmes as part of next month's Budget, as Ministers move to "carbon test" new policy measures against the UK's net zero emissions target.

The Times reported today that the Budget is being positioned as a step forward in the UK's net zero transition, acknowledging that the country is off track to meet its current emissions goals.

Citing unnamed government sources, the paper said the Treasury is looking at a number of options to "share the cost" of upgrading buildings so as to significantly reduce their emissions, alongside proposals to increase and extend current electric vehicle (EV) grant schemes.

"At the moment, we're not where we need to be with just nine months to go before we're going to be the centre of world attention," the source said, referencing this autumn's COP26 Climate Summit, which the UK will host in Glasgow. "The sacking of Claire Perry O'Neill [as president of the conference] was disastrously handled and there is a lot of pressure to show that we 'get' this."

A government source also indicated that in future all policies would be to be tested to ensure they are compatible with the UK's net zero emissions goal.

The Treasury is yet to make any decisions on its green plans and is under intense pressure to manage any Brexit-related headwinds and keep the deficit under tight rein.

However, a number of significant green policy interventions are said to be under consideration. Specifically, The Times reported that the government is expected to commit about £9bn to a domestic energy efficiency scheme to support the existing goal to ensure all homes meet energy performance band C or above by 2035.

The scheme could see direct funding to enhance the energy efficiency of social housing, schools, and hospitals, alongside a package of incentives to encourage other households to enhance their efficiency.

Campaigners have in the past lobbied for stamp duty tax breaks for greener hones, but the paper reported that the government may look to revive the 'Green Deal Improvement Fund', which offered eligible households grants worth up to £5,000 to help with the cost of green upgrades before it was scrapped in 2014.

A further £500m is reportedly likely to be earmarked to help energy intensive industries fund emission reduction projects.

Meanwhile, the Treasury is said to be considering extending and potentially increasing the current £3,500 grant for people and businesses purchasing EVs, which is currently due to end at the end of March.

The government is introducing new tax breaks from April to encourage company car drivers to switch to plug in models, but experts have warned that axing the grant scheme would dampen demand across the burgeoning market. Norway, where EVs have seen their market share soar, has been credited with driving demand through a generous grant scheme, while Germany recently moved to increase its EV grant payments.

The speculation comes as the government is also thought to be putting the finishing touches to a wide-ranging Energy Whitepaper designed to mobilise increased investment in nuclear, offshore wind, carbon capture and storage, and energy efficiency programmes.

However, the prospect of a raft of new green policies has been overshadowed somewhat by the government's imminent Cabinet reshuffle and on-going uncertainty over the identity of the new COP26 President.

Reports over the weekend reiterated that Cabinet Secretary Michael Gove is hotly tipped to be named the new COP26 chair, after former Prime Minister David Cameron and former Foreign Secretary William Hague turned down the job, but it remains unclear how he would marry such a role with his current duties.

Richard Black, director of the Energy and Climate Intelligence Unit think tank, warned that the government needed to recognise the scale of the COP President role.

"All the runes are now pointing to Michael Gove being appointed president of the Glasgow summit, largely because of his importance within the group of people currently running the Conservative Party and because other candidates have ruled themselves out," he said. "While he has a decent reputation among environment groups he has no experience in diplomacy or international affairs, which is going to make his learning curve all the steeper because a climate summit is basically a diplomatic process.

"The other issue is that presumably he'll want to be, and Boris Johnson will want him to be, at the centre of trade deal negotiations. Running a big amorphous government department with many difficult issues on the horizon, brokering trade deals, and running what's going to be a really difficult climate summit, that's an absolutely massive load for anyone."

Meanwhile, reports suggested that both Business Secretary Andrea Leadsom and Environment Secretary Theresa Villiers are at risk of being moved, sparking speculation that the departments most closely associated with driving the net zero transition could have new leaders by the end of the week.

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