Ministers will unveil a host of measures on Thursday aimed at repulsing US and EU attempts to attract renewable technology companies.
“Green Day” follows calls from the electricity, electric vehicle (EV) and even the oil sector to react to mountains of cash being thrown at UK companies to shift to the US in particular.
US President Joe Biden's Inflation Reduction Act (IRA) unlocked nearly US$400bn worth of public support for clean tech from last August, while sweeping legislation from the European Union last month effectively matched it by making it easier for member states to grant subsidies for clean tech firms.
A response from the UK is yet to emerge despite the pleadings, with energy security minister Grant Shapps expected to unveil a list of packages on Thursday, alongside a revised net-zero strategy.
Chancellor Jeremy Hunt, meanwhile, is also set to launch a review of Britain’s foreign direct investment framework, in a bid to shore up the UK's attractiveness to overseas companies.
Several firms will be keenly awaiting what the government has to say, with those set to be directly affected including Centrica, SSE, Drax, car makers and renewable-focused investment funds such as Greencoat UK Wind and Gore Street.
Carbon Capture - Drax
Drax Group (LSE:DRX) has very publicly called on the government to clarify whether it will continue to provide support for its biomass plant in North Yorkshire.
Under the contracts for difference scheme, the government ensures renewable generators can sell electricity at a fixed price, with Drax set to receive £11bn as part of this by 2027, according to think tank Ember.
Its threat of rerouting a £2bn investment in bioenergy with carbon capture and storage (BECCS) could be quelled then if the government confirms it will continue to provide these subsidies.
Chancellor Jeremy Hunt already said £20bn would be allocated to carbon capture in his spring budget, with Citi analysts adding an announcement specific to Drax could be expected on Thursday.
Decoupling Electricity and Gas
Energy security minister Grant Shapps confirmed plans would also be laid out to decouple the price of electricity from gas, which currently acts as a benchmark for other fuels.
The implication was that this would come through a lowering of policy costs on electricity bills, paid by households, to fund companies' environmental and social schemes.
Industry trade body Energy UK called on the government to decouple the pair by scrapping existing renewable obligation certificates (ROCs) in September.
The ROC scheme was closed to new applicants in 2017 since it ensures low carbon generators are paid subsidies by suppliers on top of wholesale costs, which soared last year but has become outdated as production costs fall.
How the government will actually split gas and electricity remains to be seen, though the pre-laid out plan by Energy UK could have turned some heads.
Wind farm operators and investors, like Greencoat and Denmarks Oersted, alongside nuclear power firms, such as EDF, will have the most to lose from any changes, having previously been accused of profiteering by linking electricity to soaring gas prices while production costs remained little changed.
Energy storage - SSE
SSE boss Alistair Philips-Davies also placed pressure on the government this month to clarify how it will deliver net zero targets in the coming years.
“Now we are into delivery mode,” he said in mid-March, pushing the government to lay out how it will allocate additional funding for carbon capture and other green technologies.
SSE is indeed exploring the use of carbon capture, but also said it would invest £100mln in a new pumped-hydro storage plant in Scotland earlier in March.
However, the FTSE 100-listed energy generator said it was “critically important” that the government specify how it will facilitate such projects – paving the way nicely for more information on Thursday.
EV manufacturers subsidies
Car producers may have mixed reactions over reports that the government has u-turned on plans to introduce an electric vehicle mandate on manufacturers.
The mandate, which had been due to be a key part of the 'Green Day' proceedings, would require a certain proportion of cars produced to be electric, with the figure rising each year.
Originally floated by Boris Johnson’s government, the plan would aim to wean manufacturers off producing fossil-fuel cars by 2030, when the ban kicks in.
Battery manufacturing
Prospective battery-producer Britishvolt and Ford Motor Company (NYSE:F) called on the government in November to introduce the mandate by 2024, suggesting the new law could boost the UK’s flailing EV sector.
Tata Motors-owned Jaguar Land Rover has made headlines more recently, as it threatened last month to build a new EV factory in Spain rather than the UK without £500mln in government support.
Dwindling public support has led to serious doubts over the UK’s EV industry, leaving Jaguar and the UK’s three other mass manufacturers - Nissan, BMW and Toyota - in a lurch as to where to place future funding.
An announcement on EV subsidies, to combat those in the US and EU, will be expected by these manufacturers.
Mini nuke rollout – Rolls-Royce
Hunt already confirmed the government would co-fund the rollout of mini nuclear reactors in the UK, after the maiden competitions round takes place this year.
Rolls-Royce Holdings PLC (LSE:RR.) is currently waiting for approval for its small modular reactor (SMR), with the tech being assessed by the UK – though the list of those waiting is growing.
Citi sees the government clarifying its nuclear energy policy on Thursday, after promises made during the recent Spring budget.
And finally - Oil and gas – windfall tax shift?
Any changes to the 35% windfall tax on North Sea oil and gas firms would be welcomed by firms like Shell PLC, BP PLC and Harbour Energy PLC (LSE:HBR), which all operate in UK waters.
According to a survey by industry body Offshore Energies UK, 95% of respondents said they were looking to invest elsewhere as a result of the levy, which lifts total tax on profits to 75%.
Harbour, the North Sea’s largest independent producer, and Shell have already suggested investment could be taken elsewhere, while TotalEnergies said it would cut UK spending by 25% in response to the tax.
According to CitiGroup analysts, the government could well introduce a level where the current tax “ceases to apply,” with a floor level on gas likely benefiting Centrica PLC (LSE:CNA) (Centrica PLC (LSE:CNA) in particular.