How an approach based on strategy and policy can help you secure sustainability grants and incentives
Partner Content: Maciej Van Der Steen and Alwyn Hopkins from EY’s Tax and Law Sustainability team outline ways of putting your company in the best position to obtain Government funding for your net zero transition.
For many companies, a net zero transition will prove a complex and expensive pathway, despite the importance of this change.
Governments worldwide have made ambitious net zero commitments. They are using fiscal policies to encourage this business transformation in their jurisdictions and beyond.
Some of these policies are incentives – both discretionary (e.g. grants) or statutory (e.g. tax credits) – that are made available to support a business journey towards net zero.
However, these incentives are many and varied, and getting lost in the complicated and crowded landscape is easy. Additionally, many discretionary programmes are competitive, with limited funding. Therefore, only the ‘best’ projects receive funding.
How, then, can a business effectively approach access to discretionary incentives?
1) Understand Government priorities
Rather than tackling individual funding competitions in isolation, your business should look to understand how its long-term strategy aligns with Government priorities.
Alignment of your plans to Government policy benefits the development of grant applications. This is because grants and other incentives are designed to enforce policies that drive the economy in a particular direction.
For instance, the UK Ten Point Plan for a Green Industrial Revolution lays out actions in key areas such as hydrogen, carbon capture and storage, and offshore wind to transition the UK to a net zero future.
Government funding is therefore to prioritise and facilitate this transition. This can be by stimulating innovation to close knowledge gaps and by improving the return on investment on technologies that are not currently economically attractive.
Being able to effectively express alignment with Government sustainability plans is key to a successful application.
2) Think “outside in” to express your value
Most companies think “inside out” when they apply for funding – presenting their challenges and funding needs as the central driver for the grant request.
However, focusing on public priorities, rather than just the need for funding, enables an “outside-in” approach. This looks at the challenges the country needs to overcome to reach its objectives. It then allows the application to show how the proposed project contributes to the solution.
For instance, if the high cost of storage limits the amount of renewable energy that can be used on the grid, developing a new low-cost, efficient and rapidly deployable storage solution can positively impact renewable energy uptake, and would therefore be aligned with Government priorities.
3) Engage with funding consultations and policymakers
Governments often design incentive programmes in consultation with industrial players who are likely to bring priority-aligned solutions.
To take the earlier example around the amount of renewable energy that can used on the grid, energy companies may highlight that to be able to offer more of this resource, they need storage solutions more urgently than better solar panels. This could then lead to funding availability for these solutions in priority to other areas.
For a business engaging with policymakers, it is vital to connect with the right stakeholders and make pro-active contributions to funding consultations as this is likely to lead to better opportunities in the future.
There is an ever-evolving and competitive landscape for discretionary sustainability incentives and it is critical that businesses take a coordinated approach to incentives. Demonstrating how your strategy aligns with Government sustainability priorities can provide access to more funding opportunities, expedite application preparation, and improve your chance of application success.
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