Green highlights from the 2020 Budget

The 2020 Budget may have been dominated by the response to the Coronavirus outbreak, but there were new green announcements on heating, electric vehicles, packaging and clean tech innovation.

Posted on 25 March 2020

Chancellor of the Exchequer Rishi Sunak with the Budget briefcase.


The 2020 Budget may have been dominated by the responses to the Coronavirus outbreak, but there were new green announcements on heating, electric vehicles, packaging and clean tech innovation.

Heating and power

To encourage businesses to switch from gas to electric heating methods, the government will raise the Climate Change Levy (CCL) - paid by companies on their energy bills - on gas in 2022-23 and 2023-24, while freezing the rate for electricity. The Climate Change Agreement (CCA) scheme, which allows energy-intensive organisations to receive a discount on the levy in return for taking voluntary actions to improve their energy efficiency, has been extended for a further two years.

The government also announced plans to launch a new ‘Green Gas Levy’, which will raise funds to support the use of biomethane instead of natural gas. In addition, the Renewable Heat Incentive (RHI), which subsidises investment in greener heating technologies such as biomass boilers and heat pumps, has been extended until 2022.

A new £100 million Low Carbon Heat Support Scheme will also be launched to support the installation of heat pumps and biomass boilers, with more details to follow later in the year.

Electric vehicles and fuel

The government has set aside £533 million to extend grants for electric cars, vans, taxis and motorcycles to 2022-23. The Plug-in Grant takes up to £3,000 off the price of an electric car and up to £8,000 off the price of an electric van. A further £500 million will be invested in electric vehicle charging infrastructure across the country over the next 5 years.

Electric cars will also be exempt from vehicle tax and the First Year Allowance allowing companies to write off the cost of zero emission vehicles against taxable profits has been extended by four years from April 2021.

From April 2022, the entitlement to use lower-taxed ‘red diesel’ will be removed from all sectors except agriculture, fish farming, rail and non-commercial heating, ensuring more businesses pay the standard rate for diesel.

In a less positive move for the green economy, the freeze on fuel duty has been extended again for the tenth successive year.

Packaging and waste

The government’s long-awaited Plastic Packaging Tax will be launched in April 2022. The tax will add a penalty of £200 per tonne on all packaging that has less than 30 per cent recycled content. It is hoped that the tax will increase the use of recycled plastic in packaging by 40 per cent.

An additional £700,000 has been earmarked for developing a new Extended Producer Responsibility (EPR) scheme to encourage producers to make their packaging more recyclable and reduce the amount of unnecessary packaging in their products.

A £9.2 million funding package was also announced for developing a nationwide ‘smart waste tracking’ system and supporting innovative approaches to tackling fly-tipping.

R&D and innovation

Plans were announced to increase public investment in research and development to £22 billion per year by 2024-25 - the largest and fastest ever expansion of support for R&D and innovation. The funding will be focused on meeting the greatest challenges facing society, including climate change.

As part of the plans, the government will at least double the size of its Energy Innovation Programme, which aims to commercialise new clean energy technologies and processes.

R&D tax credits will also be increased to 13 per cent to encourage private investment in R&D.

Carbon capture and storage (CCS)

The Budget also announced new support for developing technologies that can capture carbon emissions and prevent them from entering the atmosphere. A CCS Infrastructure Fund of at least £800 million will be launched to establish the technology in at least two UK sites with more details expected later this year.

Natural environment

A total of £640 million will be used to increase the rate of tree planting in England by over 600 per cent. Two new environment schemes were also launched: a £25 million Nature Recovery Network Fund to help businesses partner with local communities to protect, retire and support natural habitats; and a Natural Environment Impact Fund to develop green projects that could be suitable for private sector investment.



Posted under General Interest, Carbon Reduction, Energy Efficiency, Fuel Efficiency, Material and Packaging Efficiency, Waste Management, Environmental Regulations and Legislation and Environmental Technologies and Renewable Energy on 25 March 2020