Budget introduces more funding for decarbonised gas

Today’s Budget contained a number of positive measures to support decarbonised gas including:

Heating: Renewable Heat Incentive extended until March 2022, and a new support scheme for biomethane, funded by a Green Gas Levy.

CCS: At least £800m to establish CCS infrastructure in at least two clusters by 2030 – one in the mid-2020s and a second one by 2030. The first CCS power plant will also be supported through consumer subsidies.

R&D: The BEIS Energy Innovation Programme will be doubled to £1bn.

The Budget also makes clear its support for various decarbonised gases, alongside electrification:

“1.239 The government has already made significant progress in reducing carbon emissions from electricity generation, driven by the switch from coal to gas and the growth in renewable energy. Costs have fallen so quickly that offshore wind, onshore wind and solar are likely to be the UK’s primary source of electricity in the future. However, the power generated by these renewable sources is dependent on the weather, so the UK also needs reliable low carbon power from technologies such as nuclear, gas with carbon capture and storage (CCS), and hydrogen.

“1.240 To meet the net zero target, the UK must also decarbonise industry. There are a number of possible routes – from using low carbon energy sources like hydrogen or electricity, to capturing industrial emissions and storing them safely under the ground. This challenge provides opportunities not only to reduce emissions, but also to enable our manufacturing heartlands to become leaders in the green markets of the future.

“1.241 Carbon capture and storage will be important to decarbonising both power and industry. It can provide flexible low carbon power and decarbonise many industrial processes, whilst also offering the option for negative emissions at scale. The Budget announces a CCS Infrastructure Fund to establish CCS in at least two UK sites, one by the mid-2020s, a second by 2030. Using consumer subsidies, the government will also support the construction of the UK’s first CCS power plant.

“1.242 The heating of our homes will need to be virtually zero carbon by 2050, replacing natural gas and other fossil fuels with low carbon alternatives – likely to be primarily a mix of green gas, heat pumps and heat networks. To meet this challenge, the Budget accelerates the greening of the gas grid by announcing a new support scheme for biomethane, funded by a Green Gas Levy. The government will also support the installation of heat pumps and biomass boilers by introducing a Low Carbon Heat Support Scheme. Recognising the energy efficiency benefits of heat networks, the Budget confirms funding for the Heat Networks Investment Project for a further year to 2022 and provides £270 million of new funding to enable new and existing heat networks to adopt low carbon heat sources.”

The full Budget documents can be found here.