The King’s Speech – five bills for energy and climate

The King’s Speech set out the new government’s legislative agenda for the coming months. In the words of the King, the government “recognises the urgency of the global climate challenge and the new job opportunities that can come from leading the development of the technologies of the future.” This article outlines five key upcoming Bills for energy and climate.

1. Great British Energy Bill

Great British Energy (GBE) is at the heart of the government’s clean energy mission. The new publicly owned company will “own, manage and operate” clean power projects through partnerships with the private sector. GBE will have a capitalisation of £8.3 billion over the course of Parliament, funded by the Energy Profits Levy on oil and gas profits, the rate of which the government intends to increase from 35% to 38%.

The GBE Bill will enable the Department of Energy Security and Net Zero (DESNZ) to provide the requisite financial backing to GBE. The Bill will also require DESNZ to prepare a GBE strategic priorities statement.

Whilst most investment into clean energy in the UK to date has been from the private sector, and this is likely to continue, the industry will welcome the strong investment signals provided by a state-owned vehicle as well as the further de-risking of newer technologies such as floating offshore wind. Next steps will be DESNZ’s strategic priorities statement that should help clarify the scope and remit of GBE.

2. National Wealth Fund

The National Wealth Fund (NWF) is key to the government’s strategy to rebuild the UK’s industrial capabilities and will be another mechanism by which to drive more private investment towards ports, gigafactories, clean steel and hydrogen. Investment in these areas will be critical to decarbonise hard to abate industrial sectors and also meet the UK’s offshore wind ambitions that require supporting onshore infrastructure.

The NWF Bill will establish the NWF on a permanent statutory basis and enable it to align existing investment vehicles such as the UK Infrastructure Bank and the British Business Bank under the NWF. Next steps will be deploying £7.3 billion from the NWF to the UK Infrastructure Bank.

3. Planning and Infrastructure Bill

The current planning system and the grid connection process are two key areas where rapid reform is needed to boost investment in clean energy projects. One of the aims of the Planning and Infrastructure Bill will be to streamline the delivery process for critical infrastructure including renewable energy projects and grid upgrades. The Bill aims to “simplify the consenting process for major infrastructure projects and enable relevant, new and improved National Policy Statements to come forward, establishing a review process that provides the opportunity for them to be updated every five years, giving increased certainty to developers and communities.”

This follows the Chancellor’s recent announcement to remove planning restrictions on onshore wind. Developers will welcome the Bill’s focus on wider reforms to streamline the planning process, alongside the steps outlined by the Chancellor including prioritising energy projects, employing new planning officers and reforming the National Planning Policy Framework.

4. The Crown Estate Bill

The Crown Estate Bill aims to modernise The Crown Estate. As owner of virtually all of the UK’s seabed to territorial sea limits, The Crown Estate is responsible for leasing seabed plots to offshore wind farms.

The Bill aims to widen The Crown Estate’s investment powers, primarily by granting The Crown Estate the power to borrow. This should enable borrowing from the Exchequer to free up The Crown Estate’s cash reserves to be invested in new projects, an ability which the government has stated is “particularly critical for accelerating the pace of our offshore wind deployment”. The Bill will also widen The Crown Estate’s existing investment remit, to enable investment in complementing activities such as digital technologies to support offshore energy deployment and port infrastructure.

The offshore wind industry will welcome a more responsive Crown Estate, but in terms of quadrupling capacity by 2030, will be more focussed on whether DESNZ will decide to increase the budget for Allocation Round 6 of the Contracts for Difference scheme. The deadline for this decision (1 August 2024) is fast approaching.

5. Sustainable Aviation Fuel (Revenue Support Mechanism) Bill

The sustainable aviation fuel (SAF) mandate, published on 25 April 2024, sets targets for fuel suppliers to blend a proportion of SAF into their supply. The aim is to ensure that 10% of all jet fuel in flights taking off from the UK comes from sustainable sources by 2030.

The Sustainable Aviation Fuel (Revenue Support Mechanism) Bill will introduce a revenue certainty mechanism for SAF producers who are looking to invest in new plants in the UK. The government acknowledges that revenue certainty remains a key barrier for SAF production facilities given the lack of UK or global market price for SAF. Although the SAF mandate can be met by imported SAF, the Bill aims to increase investment into UK SAF plants to better secure supply for the UK aviation industry.