The financial instability of the past few weeks has naturally brought into focus some of the bigger policy commitments that have been made in recent years. One target being put under the microscope is the commitment to Net Zero.
Part of the problem is that Net Zero has, so far, almost exclusively been talked about in terms of costs to the government. The public’s role in this agenda has been relatively ignored, except as a taxpayer.
However, the data shows that a growing part of the public has been mobilised towards delivering Net Zero. There are now over 120 community-driven re-use networks across the UK, saving 50,000 tonnes of waste from landfill. Spending on greening our homes has increased by £13bn over the past three years. Spending on environmentally friendly travel and transport has increased by £11bn over the same period. There are a growing number of local energy efficiency schemes and retrofitting social enterprises that are making our housing stock and buildings fit for the future.
The Government should be building on this popular support and giving people more ways that they can invest and support the path to Net Zero. An obvious area, particularly given recent events, is community energy.
According to Community Energy England, community energy is now generating 506GWh of electricity in England, powering nearly 200,000 households. This has come through local people putting their own money into these schemes both because they recognise the importance of generating green energy and thanks to the the financial benefit it offers.
Unfortunately, the growth of community energy has slowed in recent years, just when we need it most. If we had kept on track with initial growth rates of community energy, the sector could be double the size it is today – giving tens of thousands of homes access to cheaper, greener power. At a time when the Prime Minister, Chancellor and Business Secretary have made a commitment to expanding the supply of energy, community energy must be part of the mix.
There is also a big political opportunity for the new Government. The Prime Minister and Chancellor are keen to make the case for capitalism. Community energy embodies the spirit of popular capitalism, whereby households invest and take a stake in local schemes and share the rewards. The Government should combine its own philosophy of championing the market economy with the path to Net Zero to turbocharge the growth of community energy.
One of the ways that to do this is through Social Investment Tax Relief (SITR). SITR used to provide tax relief for people who invested in community energy, but it was removed to avoid a double subsidy for schemes that already had access to Feed-in tariffs. That made sense at the time, but now Feed-in Tariffs have been removed. This means there is now in a bizarre situation where we desperately need to increase the supply of renewable energy, but there is no tax relief offered for people investing in local energy schemes.
Getting access to finance is a big challenge for community energy. Expanding SITR to community energy schemes could unlock tens of millions of pounds for investment in renewables in the coming years and ensure that the benefits go straight into people’s pockets. Community energy is also a way of working with communities to get buy-in to energy generation schemes. It would be popular and relatively low-cost, leveraging in private capital to deliver on one of the Government’s big agenda items.
The Chancellor announced his commitment to EIS and SEIS in the mini-Budget. He should use his next to expand SITR and turn it into the tax relief for popular green capitalism.
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