Source · Select Committees · Business and Trade Committee
Recommendation 7
7
Accepted
Paragraph: 43
Introduce tailored capital allowance regime responses to attract investment in low-carbon energy projects.
Recommendation
The UK has become less attractive to energy investors. The UK is in a global race against larger markets to attract capital to decarbonise the economy. The US and EU have introduced a series of long-term tax incentives for clean energy infrastructure. The UK Government has yet to respond. We recommend that when reviewing the competitiveness of fiscal incentives offered by the UK to encourage investment in low- carbon energy projects, the Government should consider providing a more tailored response in the capital allowance regime for the sector.
Government response summary AI-generated
The government launched the Floating Offshore Wind Manufacturing Investment Scheme (FLOWMIS), worth up to £160 million, on March 30, 2023, to provide grant funding and leverage private investment in port infrastructure.
Summary of the government's response below — read the verbatim text to verify.
Paragraph Reference:
43
Government Response
Accepted
HM Government · verbatim extract
Accepted
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
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