Budget 2021: Rishi Sunak 'set to unveil green savings bonds and net-zero innovation programmes'
Chancellor Rishi Sunak has confirmed that he will launch green savings bonds at the Budget on Wednesday. There are also media reports of a £1bn portfolio to support innovations that will accelerate the UK's net-zero transition.
Finance for the green savings bonds will be made available to retail investors, the Treasury has confirmed. They will be required to invest them in sectors that are directly driving the UK’s low-carbon transition, including renewable electricity generation, electric vehicles (EVs) and active transport.
“The UK is a global leader on tackling climate change, with a clear target to reach net zero by 2050 and a Ten Point Plan to create green jobs as we transition to a greener future,” Sunak said.
“In a world-first, we’re launching a new green savings bond which will give people across the UK the opportunity to contribute to the collective effort to tackle climate change.”
The Treasury has not yet revealed how much will be available for the bond scheme, which it claims is the first of its kind in the world.
However, it has stipulated that Sunak will use his platform this Wednesday (3 March) to provide an update on the UK’s first sovereign green bonds, so-called green gilts. Sunak first confirmed the decision to launch the bonds last November, following recommendations to make this move by bodies including the Green Finance Institute. Other nations to have launched government green bonds as part of their Covid-19 recovery efforts include Sweden and Germany.
Some local authorities and businesses have already launched green bonds in a drive for better engagement with the green recovery and the net-zero transition, including West Berkshire Council and Warrington Borough Council.
There are also media reports that Sunak will use the Budget to launch a new Net Zero Innovation Portfolio of finance totalling £1bn. Funding will be allocated on a competitive basis to sectors including long-duration energy storage; floating offshore wind; biomass and regenerative agriculture, outlets including The Times are reporting.
Media reports have varied, however, about Sunak’s plans for changing tax systems – and the impacts this could have on the UK’s net-zero transition.
Sunak has been told by businesses, trade bodies, local authorities and citizens’ groups that the worst recession since World War Two is not the appropriate time for taxes that will hit individuals – particularly those in low-income households – or small businesses harder than corporations. The Government has reportedly thrown out a carbon tax on meat over this argument and is now being urged to consider a broader scheme that places the onus on corporate emitters.
The Treasury has also remained silent on whether Wednesday’s speech will provide clarity on the Green Homes Grant. Green groups have said that clarity is urgently needed after the majority of the scheme’s £2bn funding pot was pulled due to challenges with delivery.
Other questions from the green economy have centred around the forthcoming National Investment Bank (NIB), the prospect of a National Nature Service and other key policy packages first confirmed last year. You can read edie’s summary of calls to action here.