Hunt to announce £20 billion in green energy investment

Jeremy Hunt in next week’s budget will announce investment in carbon capture technology to store 20-30 million tonnes of CO2 a year by 2030, with companies in Yorkshire set to benefit.

Industry sources told The Yorkshire Post earlier this week that they expected the Chancellor’s budget will include a pot of money which will be made available to companies such as those clustered around Humberside and the east coast in the next step to removing pollution from the atmosphere.

It is thought that carbon capture and storage (CCS) technology for heavy industry and gas plants will be among those set to benefit, as well as bioenergy with carbon capture and storage (BECCS), which has been developed by Drax, which runs the biomass power station in North Yorkshire.

However, it is expected that the results of the consultation on business models for the technology, which provides a roadmap to projects getting green-lit if they show they can make a profit, will not be unveiled until after the budget.

Sources suggested that the upcoming Energy Security Bill, which is expected in the next few weeks, is more likely to give clarity on business models for the sector.

“We don’t want to see high bills like this again, it’s time for a clean energy reset,” said Mr Hunt.

“That is why we are fully committing to nuclear power in the UK, backing a new generation of small modular reactors, and investing tens of billions in clean energy through carbon capture.”

It comes as the Government was warned that further delays to funding to carbon capture technology could see the UK be left behind following moves by the US and the EU to give businesses incentives to invest domestically.

Joe Biden’s Inflation Reduction Act (IRA) has prompted concern in the UK and EU with many firms indicating that they are tempted to move their operations to America in order to make use of the IRA’s generous tax incentives for green energy projects.

In reaction the EU is now working on how it can best compete with Mr Biden’s multi-billion dollar package of tax breaks by bringing in its own reforms to keep energy investment attractive in the bloc.

UK businesses have repeatedly warned the Chancellor over the UK becoming less attractive for investment with the upcoming rise in corporation tax, from 19 to 25 per cent, combined with the end of the “super deduction” package of tax relief for investment set to hamper firms’ willingness to invest in Britain.

The Yorkshire Post last year reported that Drax’s plans to create thousands of jobs in Yorkshire were set to be green-lit as the Government looked to tackle the fuel crisis in the Autumn, with Rishi Sunak backing the plans while he was running for the Tory leadership against Liz Truss.

The consultation on business models for the process that removes carbon emissions from the burning of biofuel closed in October, but no response has been published on its future after Whitehall sources at the time said that it was key to combating future gas crises.

A delegation of US senators is due to visit Drax’s North Yorkshire powerstation next week amid fears that Drax’s investment could be lured to the US.

A Drax spokesperson said: “The Budget is a golden opportunity for the Government to demonstrate its commitment to the rolling out of renewable power and carbon removal technologies in the UK.

“Drax stands ready to invest £2bn in North Yorkshire to create the world’s largest carbon removals project at Drax Power Station but in order to make the final investment decision on our plans for bioenergy with carbon capture and storage (BECCS), we need the Government to announce it will shortlist this project.

“BECCS at Drax will ensure we can continue to generate power at the site for another 50 years to support the UK’s long-term energy security, help meet the country’s net zero targets and demonstrating that the UK is leading the global race to deliver solutions to our climate crisis.

“If the Government does not continue at pace in investing in and supporting renewable power and carbon removal technologies, it risks getting left behind and investment moving to other countries.”