uk budget 2021 cleantech

What’s relevant for cleantech companies in the UK’s Budget 2021?

While the UK’s vaccination programme’s success has given us a roadmap out of lockdown, the damage caused to the economy resulting from the global pandemic will require long-term, extensive repair measures. Therefore, the Budget 2021 delivered by Chancellor Rishi Sunak on March 3rd is one of the most important in recent memory as the UK looks to develop its regulatory system in a way that supports innovation. We’ve summarised the announcements that cleantech businesses should take note of, from sector-specific plans to the latest cross-industry financial incentives.


There are a number of standout energy pledges from the UK’s Budget 2021, including:

  • £68 million to fund a UK-wide competition to deliver first-of-a-kind long-duration energy storage prototypes that will reduce the cost of net-zero by storing excess low carbon energy over longer periods.
  • £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators and help support the government’s aim of generating enough electricity from offshore wind to power every home by 2030.
  • £27 million of investment in the Aberdeen Energy Transition Zone and a further £5 million to the Global Underwater Hub in Scotland. These projects form part of the North Sea Transition Deal that will support a low carbon future in Scotland.
  • £4.8 million to support the development of a demonstration hydrogen hub in Holyhead, Anglesey.

The budget also reiterates the government’s previously announced goal of achieving net-zero aviation by 2050. Furthermore, in partnership with industry players, the government will invest £84.6 million in developing hydrogen and electricity technologies for the aviation sector.

Additionally, £1 billion of UK-wide funding has been pledged to support the establishment of carbon capture and storage in four industrial clusters. It is expected that two of these clusters will be operational by the mid-2020s, with the other two following by 2030.


The main e-mobility takeaway from the budget was the announcement that the fuel duty currently levied on combustion vehicles will be frozen for the eleventh year running, potentially disincentivising drivers from moving to EVs.

The budget did not include any new electrification pledges. The sector was, however, covered in the Prime Minister’s Ten Point Plan for a Green Industrial Revolution in November 2020.


The bioeconomy also didn’t receive much attention in the budget, though £4 million was pledged towards a biomass feedstocks programme. This will be used to identify ways to increase the production of green energy crops and forest products that can be used for energy.

General financial support

Several financial incentives were announced in the Budget 2021 as the UK looks to an investment-led recovery from COVID-19.

The £375 million, UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies – including those in cleantech – that are looking to raise at least £20 million of funding.

A review of Research & Development tax reliefs will also take place to ensure that the UK remains a competitive location for cutting-edge research and development.

Plans for at least £15 billion of green gilt issuance in the coming financial year were announced to help finance critical projects which tackle climate change and other environmental challenges. This capital will also be used to fund essential infrastructure investment and create green jobs across the UK.

Build Back Better – Plan for Growth

Published the same day that the budget was released, the UK’s Build Back Better – Plan for Growth also included cleantech-related policies.

The plan confirmed that the government will aim to generate 5GW of low carbon hydrogen production capacity and capture 10Mt CO2/year using carbon capture, utilisation and storage by 2030.

It also provides further details about the UK’s energy transition, including targets for new cleantech-related jobs:

  • Up to 60,000 jobs in the offshore wind sector
  • Up to 50,000 jobs in carbon capture, utilisation and storage
  • Up to 8,000 in hydrogen in industrial clusters

Build Back Better – Plan for Growth also foresees an end to the sale of new petrol and diesel cars and vans in 2030. It pledges £1.3 billion to accelerate the rollout of EV charging infrastructure and promises to support EV manufacturing with nearly £500 million of financial backing over the next four years.

Finally, the strategy plans to help achieve net-zero by committing £12 billion of funding for projects through the Ten Point Plan for a Green Industrial Revolution. This will be used to support projects relating to hydrogen, carbon capture and storage, offshore wind, nuclear, electric vehicles, heat and buildings.

What impact will the UK’s Budget 2021 and Build Back Better – Plan for Growth have on your business? We’d love to hear your thoughts and discuss any shift in your needs, so don’t hesitate to get in touch.

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