Looking ahead to the budget: green tech
On March 11, 2020, the Chancellor of the Exchequer will unveil the first budget of the new Government as well as making his debut, having been recently appointed.
techUK welcomes the pro-tech outlook from Government. This budget will be the first signs of what this means in practice and it should prioritise tech and the climate.
In the run-up to the March 2020 Budget, techUK is taking a deep dive into the issues that will power the future UK economy. Here, we explore the challenges and opportunities for the new Chancellor around green tech and the environment.
Tackling the Climate Emergency Through Technology:
Global climate change is the single biggest threat currently facing humanity, and technology has a huge role to play in securing the future of our planet. Existing technology could already cut emissions by 15%, nearly one-third of the 50% reduction in emissions required by 2030. techUK believes that UK Government could show real climate leadership by developing the right policy framework to enable the acceleration and adoption of green tech solutions.
There are several concrete steps the Government can take to increase investment and innovation in green tech, which will go a long way towards helping meet its pledge of a net-zero economy by 2050. Additionally, investment in climate tech can further the UK’s comparative advantage globally and allow it to take advantage of growing worldwide demand for climate tech.
Boosting Electric Vehicle Uptake:
Currently, electric vehicles (EVs) comprise around 2% of the market and increasing their uptake would do much to lessen carbon emissions. techUK believes that providing tax reliefs on EVs purchased for commercial purposes (e.g. fleets or private hire vehicles) would help by doing a number of things: form the basis for a second-hand market that could facilitate mass adoption; stimulate domestic demand for EVs; support the continued growth of manufacturing supply chains in the West Midlands and elsewhere, helping maximise opportunities for economic growth and levelling up the UK.
Further, fleet operators should be incentivised to switch to low carbon emissions vehicles. One way to do this would be to use data-driven investment to target infrastructure investment in the areas where it will do the most good. This would cover both hydrogen and electric vehicle charging. Some potential incentives include:
- Extending benefit-in-kind tax rules for charging electric company cars to all commercial vehicles.
- Phasing in value-added tax reductions or scrappage schemes, aimed at helping businesses transition to low emissions vehicles, especially in Large Goods Vehicles and Heavy Goods Vehicles, which have significant price differentials.
- Providing a first year ‘no-tax’ benefit for companies transitioning to low emissions vehicles, reducing running costs for fleet operators.
Upping Energy Efficiency in Small and Medium-Sized Businesses:
Small and medium-sized businesses (SMEs) use over half of all energy used by businesses in the UK and motivating them to invest in energy efficiency has been challenging. For a typical SME, energy costs are a small percentage of their operating costs and there are limited resources to commit to reducing energy usage. The April 2020 cessation of the Energy Technology List leaves a gap in policy designed to make energy-efficient products attractive to SMEs throughout the UK.
A new business efficiency scheme should be introduced, working in partnership with energy service organisations, aimed at SMEs. This would help ensure the expert delivery of projects at scale, and payments to the Energy Savings Opportunity Scheme could be modulated based on the innovations and improvements to energy efficiency employed. Smart sensors and analytics should be a core offering of any such scheme.
Green Rewards Schemes for Local Authorities:
Local authorities and councils will play a key role in helping central government meet the net-zero challenge. Local authorities play a key role in supporting sustainable mobility choices and in the development of smart grids, which can unleash innovation at the local level. However, local authorities have faced both major funding challenges and popular support for action to tackle climate emergencies.
Her Majesty’s Treasury should use the upcoming budget to set up a rewards scheme for local authorities. Those that set measurable and achievable decarbonisation targets should be duly rewarded by the central government upon completion. It will be key to incentivise local decarbonisation efforts, and this can only be done with clear and coherent targets that are easy to judge. Thus, councils will be able to reap rewards based on their performance.
techUK has also called for greater support for the greening of data centres, which have been a great economic success story but use significant amounts of energy, as well as supporting an international centre for artificial intelligence, energy, and climate, which would focus on updating outdated data science applications for climate change.
Taken together, these proposals would enable the Government to make significant progress towards achieving its pledge to a net-zero economy by 2050.
To see some of the other deep dives techUK has taken in the run-up to the March 2020 Budget, follow the links below: