(Bloomberg) -- The UK unveiled its strategy to speed up the deployment of renewable power and capture carbon, but the plan to boost energy investment in Britain lacks the financial might of efforts in the US.
Billed as a response to the limitless green subsidies in US President Joe Biden’s Inflation Reduction Act, the measures were low on fresh funding, with any meaningful expenditure expected in the autumn. Briefing reporters, Energy Secretary Grant Shapps appeared to concede there was little in the way of new spending.
“This is money that’s been talked about,” but it doesn’t take effect “until you actually set out the program,” Shapps said. “Projects can’t actually go ahead and the private capital can’t crowd in” until projects are delivered, a process Thursday’s measures aim to accelerate.
It comes at a critical juncture for the UK government as it seeks to return the economy to growth. Following an investment chill worsened by its exit from the European Union, the US green package and the EU response to it threaten to lure cash away from Britain’s clean energy industry.
Key measures for Shapps’ green plan include the expansion of a home energy efficiency program, steps to speed up the planning process for renewable power developments and an announcement of the first projects to go forward in the country’s carbon capture and storage support mechanism. The UK is also looking at how to tax carbon at the border to prevent unfair competition from countries with weaker environmental rules.
Britain has been slow to react to Biden’s $369 billion subsidies and tax credits, with the EU unveiling its proposal to counter-act the risk of losing investment earlier this month. Chancellor of the Exchequer Jeremy Hunt on Wednesday warned that the UK needed to “mitigate against those risks,” but on Thursday, he defended the decision not to throw more cash at net-zero ambitions.
“We are not going toe-to-toe with our friends and allies in some distortive global subsidy race,” Hunt wrote in the Times. “We will target public funding in a strategic way in the areas where the UK has a clear competitive advantage.”
Read: Competition From the US Is Forcing Europe to Up Its Green Game
Labour’s shadow climate secretary, Ed Miliband, had said it’s a “decisive moment” in the global race for green jobs, adding that the UK should “match the ambition” of the US.
“This is not protectionism, it is patriotism,” Miliband said in a speech on Tuesday, “This is our chance but it can easily slip from our grasp. And we are at a moment of jeopardy.”
Energy companies are already moving green investment out of the UK to spend money in more favorable subsidy and regulatory environments abroad, according to the head of trade group EnergyUK, which represents the country’s largest power generators. “We are already seeing money moving and we will see more,” Emma Pinchbeck said.
The government appointed interim executives of a body called Great British Nuclear that is meant to help deliver future investments in new nuclear power plants. However, it’s unclear how that will solve the most vexing problem for nuclear power in the UK, finding the billions of pounds needed up-front to build new plants.
The UK also revealed funding for hydrogen production projects and the £30 million Heat Pump Investment Accelerator, which is meant to multiply with private investment alongside it. It will also extend the Boiler Upgrade Scheme until 2028, a program provides grants to subsidize home heat pump installations.
The government is also opening another consultation on how it can work with communities to deliver onshore wind infrastructure to give them benefits like cheaper power. The move effectively delays a similar consultation launched last year, after the government came under pressure to lift a ban on onshore wind.
“We want a rational solution that works for communities,” Shapps said.
The details may disappoint both the renewable power industry and the fossil-fuel one — and environmental groups said it falls well short of what’s needed to achieve the UK’s ambition of eliminating carbon emissions by 2050.
While permitting reform is a key ask for green energy developers, there’s little by way of fresh funding and no sign that the government will budge on the terms or budget for an upcoming auction round to support new wind farms. Developers have warned that the price may be too low to make investments viable after soaring costs in recent years.
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