Autumn Statement 2016

Chancellor Phillip Hammond delivered his autumn statement yesterday, providing the UK with an update on Government economic forecasts and key policies that they wish to implement.

In previous years there has been a significant focus on the energy industry with changes to energy regulation and energy costs. This year there was little shift in Government energy policy compared to the Spring Budget.

The key energy updates are highlighted below;

 1.       Carbon Price Support

Previous commitment to maintain the cap on the CPS at £18t/Co2 has been upheld, however the future of the CPS beyond 2020 and whether the cap will be lifted is uncertain.

2.       Levy Control Framework

Contrary to earlier expectations, the Government has not made a decision on the future of the Levy Control Framework beyond 2020. However this will be detailed in the 2017 Autumn Statement.

3.       Electric Vehicles

As part of a wider investment in national infrastructure, additional funding has been granted in order to support ultra-low emission vehicles (ULEVs). £390 million will be available by 2020/21 for ULEVs and renewable fuels including £80 million for charging infrastructure and a 100{f28ba8b7cd80e2a72e2e4b0140ea6524aee5e72b0af8287d84bbf0c79910665b} capital allowance for companies investing in charge-points for electric vehicles.

Furthermore, lower company car tax bands have been introduced for ULEVs in order to incentivise company tax and salary schemes.

4.       Energy Investment

The Government is focused on attracting £100bn in private investment to the UK energy sector over the next 15 years. However, details of future investment plans for interconnection, battery storage, carbon  capture and demand response are all still unclear at this time.

Nick Campbell, Risk Manager at Inspired Energy had the following thoughts on the budget: “Further along the pricing curve, the Autumn Statement proved to be something of a “damp squib” for power markets as speculation beforehand suggested that the Chancellor may reduce or even remove completely the current Carbon Price Support mechanism which is particularly punitive for coal power stations.

As it was, the Chancellor extended the current freeze until 2020 at the current rate and this has supported the seasonal products as Traders reassessed seasonal product positions.”