The UK government’s Autumn Budget 2024 has placed a strong emphasis on sustainability, with significant funds directed towards green investment initiatives and energy efficiency.
For businesses, especially those in energy-intensive sectors, real estate, and manufacturing, these provisions present both opportunities for tax incentives and a need for heightened compliance. As top accounting firms advise clients on navigating this green-focused budget, here’s a breakdown of what companies need to be aware of to capitalise on these changes.
Responding to the budget, Ed Matthew, campaigns director for thinktank E3G, said in a statement:
“After years of flatlining investment, the government must now seize the opportunity of the ‘investment rule’ to make the UK a clean-energy superpower and boost green homes investment further. It is clean technology where our future prosperity lies, boosting productivity, making us competitive and weaning us off expensive and volatile fossil fuels. It’s the economic opportunity of the century.”
1. Carbon Capture and Hydrogen Production Incentives
A headline provision of the budget is the £3.9 billion allocated for Carbon Capture, Usage, and Storage (CCUS) Track-1 projects, aimed at decarbonising industry and generating flexible power. Additionally, the government’s support for electrolytic hydrogen production aligns with the UK’s broader decarbonisation goals, promising substantial backing for businesses investing in clean energy.
Accounting firms have a pivotal role in helping clients assess eligibility for these incentives and structuring investments to take full advantage of any tax benefits.
A significant boost of £120m (US$155m) has been allocated to the Green Industries Growth Accelerator (GIGA) fund, which aims to support the development of supply chains for new technologies, including offshore wind and carbon capture and storage.
“The Chancellor’s announcement to unlock the National Wealth Fund to invest in the industries of the future, provide funding for 11 new green hydrogen projects across the UK, and reinforce the Government’s commitment to Great British Energy, marks an exciting step in Labour’s mission to drive the UK’s transformation into a green energy powerhouse,” said Nicola Riley, Senior Director of Net Zero Infrastructure at Turley.
The budget also reinforces the government’s commitment to Great British Energy, with Labour’s plan for GB Energy receiving a substantial £8.3bn (US$10.7bn) market intervention.
2. Compliance and Reporting Requirements
As government funding and tax breaks increase, so does the scrutiny on businesses benefiting from green incentives. Firms receiving government support for carbon reduction and sustainability projects should be prepared for heightened compliance expectations and reporting requirements. This presents a significant opportunity for accounting firms to advise clients on robust reporting structures and ESG (Environmental, Social, and Governance) compliance, which will be increasingly necessary as green initiatives gain momentum.
These compliance and reporting requirements could become key factors in evaluating funding eligibility. For businesses with existing carbon management plans, this may mean revisiting audit and reporting processes to align with evolving standards – a critical advisory service area for accounting firms.
3. Energy Efficiency in Real Estate and Property Management
The government’s £3.4 billion Warm Homes Plan is another flagship element of the budget, aimed at improving household energy efficiency and decarbonising heating systems. This funding, expected to benefit over 225,000 households, creates a unique opening for property-focused businesses, construction firms, and landlords interested in pursuing green projects.
“We don’t just need more homes; we need more low carbon homes. And today’s budget was a missed opportunity to combine ambitious house building targets with policies that increase the uptake of low carbon technologies and invite households to move towards cleaner, more secure electricity,” said Dr Jon Hiscock, CEO at Fundamentals.
Accounting firms advising clients in real estate can offer guidance on structuring investments in line with these energy efficiency goals. For companies seeking to manage rising energy costs while pursuing sustainability objectives, these initiatives are an important avenue to explore, with potential long-term financial and reputational benefits.
4. Aligning with ESG Standards and Long-Term Sustainability Goals
As the government intensifies its focus on green initiatives, companies have an opportunity to strengthen their ESG credentials and align with global sustainability standards. For companies with long-term ESG commitments, investing in green technologies is not only a strategic choice but also a way to increase appeal to investors and consumers alike.
Accounting firms play a crucial advisory role here, helping businesses integrate sustainability into their growth plans while navigating regulatory changes. For those pursuing sustainability goals, preparing for possible mandatory disclosures and carbon reduction targets will ensure they stay ahead of compliance requirements and can maintain their market positioning in an evolving landscape.
The price to pay?
The Autumn Budget 2024’s focus on green investment, from carbon capture and hydrogen production to energy efficiency in housing, highlights a national drive towards sustainability. By proactively preparing clients to leverage these provisions and meet compliance demands, accounting firms are positioned to serve as essential partners in this transition.
This is a time for businesses to embrace green opportunities with the support of expert advisory services, ensuring their strategies are aligned with both regulatory demands and long-term growth ambitions in a greener, more sustainable UK economy.