- Energy efficiency made a national energy priority in the UK, with major new funding from 2025. ECO extension scheme expected to go ahead in 2023.
- UK Government remains committed to a 68% reduction in emissions and climate finance commitments made at COP26, but Overseas Development Assistance frozen at 0.5% of GNI.
- No announcements on green finance, raising concern that the Government is not prioritising a plan to leverage the investment needed to reach our climate targets and aid economic recovery.
- Windfall tax increased for oil and gas sector but windfall tax introduced for electricity generators at a higher rate sparking controversy.
The UK Government has moved energy efficiency to the centre of its energy security approach by announcing a new target to reduce energy demand from buildings and industry by 15% by 2030, a new Taskforce to oversee it and a commitment to £6 billion of additional funding from 2025. An ECO extension scheme, with new funding, is also expected to go ahead in 2023.
Juliet Phillips, Senior Policy Advisor at E3G said:
“Making energy efficiency a national priority is a triple-win for lower bills, energy security and economic recovery. Today’s announcement of a new taskforce and demand reduction target shows the government recognises the importance of energy efficiency in tackling inflation and exposure to gas price volatility. A commitment to long term public funding for energy efficiency is also welcome. With households facing eye watering energy bills now it is essential that the new ECO insulation extension scheme is put into place as soon as possible.”
Recommitting the UK to a 68% reduction in emissions was important, but as Alok Sharma, UK COP President, clearly stated at COP27: ‘Without finance, none of what needs to happen will happen’. Concerningly, the Chancellor made no mention of UK plans to deliver the world-leading UK Net Zero Aligned Financial Centre that the new Prime Minister Rishi Sunak announced last year at COP26 in Glasgow or mention key financial reforms such as the UK Green Taxonomy and Sustainability Disclosure Requirements.
Heather McKay, Policy Advisor at E3G said:
“The Government’s commitment to stick with a 68% emissions reduction target by 2030 is a relief. But omitting plans as to how this will be financed risks undermining the Big Bang economic recovery the Chancellor wants. A Net Zero Investment Plan and a credible green taxonomy must be delivered urgently to leverage private investment and plug the net zero investment gap. An ‘innovative and competitive’ financial centre simply cannot exist without net zero.”
Windfall tax on generators
The UK Government announced that the windfall tax on oil and gas companies will be increased from 25% to 35% and remain in place until 2028. The investment allowance is reduced from 80% to 29%. A windfall tax on major electricity generators is being introduced at 45%.
Ed Matthew, Campaigns Director at E3G said:
“As energy bills rocket, it’s only right to tax the windfall profits of all energy companies, but it is completely wrong that the oil and gas industry should be paying a smaller windfall tax than clean energy companies, especially when clean energy investment can bring down our energy bills long term.”
Overseas Development Assistance staying at 0.5% of GNI
The UK Government has announced that ODA will stay at 0.5% of GNI (Gross National Income) and will not return to 0.7% until government is not borrowing for day-to-day spending and underlying debt is falling.
Shane Tomlinson, E3G Co-CEO said:
“Locking in Overseas Development Assistance at 0.5% of GNI is a false economy. As these turbulent times show, security for UK citizens depends on what happens overseas. The UK should return to 0.7% of GNI before the end of this Parliament and radically reform its investments to provide stability and net-zero growth in developing countries.”
Available for comment
Juliet Philips, Senior Policy Advisor, E3G (Energy efficiency)
+44 7548 097 061, email@example.com
Heather McKay, Policy Advisor, E3G (UK sustainable finance)
+44 7707 275 359, firstname.lastname@example.org
Ed Matthew, Campaigns Director, E3G (Windfall tax)
+44 7827 157 906, email@example.com
Shane Tomlinson, Co-CEO, E3G (Overseas Development Assistance)
+44 7557 108 510, firstname.lastname@example.org
Notes to Editors
- E3G is an independent climate change think tank with a global outlook. We work on the frontier of the climate landscape, tackling the barriers and advancing the solutions to a safe climate. Our goal is to translate climate politics, economics and policies into action. About – E3G
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