Source · Select Committees · Business and Trade Committee
Recommendation 3
3
Deferred
Paragraph: 28
Lack of overarching delivery plan for power decarbonisation causes siloed decisions and systemic issues.
Conclusion
An overarching delivery plan for the decarbonisation of power, with clear milestones and contingencies, will help the Government bring a complex set of interrelated tasks together. At the moment, decisions are taken on specific technologies or issues in silos without a roadmap for the whole system. This has led to sequencing problems and a failure to take ownership of whole system costs. This was illustrated by National Grid ESO confirming significant constraint payments, largely stemming from a failure to upgrade the transmission grid between Scotland and England. A comprehensive plan will give investors more confidence to deploy new, low-carbon infrastructure in the UK because they will have a clearer understanding of how their projects, and the reforms these depend on, will fit into a decarbonised energy system.
Government Response Summary
The government, through HM Treasury, focuses on monitoring the impact of international subsidies and leveraging capital allowances to support green industries, committing to engage with industry on tax incentives. It does not commit to developing an overarching delivery plan with clear milestones and contingencies for power decarbonisation as recommended.
Paragraph Reference:
28
Government Response
Deferred
HM Government
Deferred
8. [Response provided by HMT] The UK will take a different approach and not engage in a distortive subsidy race. HM Treasury will continue to monitor the impact on the UK, and its response will be on an ongoing basis, as is appropriate, concluding later this year. 9. However, the Government expects that the capital allowances changes announced at Spring Budget—full expensing and the 50% First Year Allowance for special rate expenditure—will support green industries including low carbon energy generation. 10. The Skidmore Review recommended that HMT should review how policy incentivises decarbonisation, including via the tax system and capital allowances. In response to this recommendation, the Government set out that it will engage with industry to carefully consider how best to incentivise businesses to invest in green technology. This will help the Government to consider whether there is a case for doing more through the tax system or whether other levers are more appropriate. 11. Future decisions on tax are for the Chancellor, and any changes would be communicated at a future fiscal event. Decarbonisation of the power sector: Government Response 3