Funding for green projects in the UK disproportionately benefits technologies connected to fossil fuels
The UK government has set aside approximately £9.8 billion for carbon capture, utilisation, and storage (CCUS) and hydrogen between 2025 and 2030, according to a new data investigation by our website. However, this allocation raises concerns about transparency and the effective use of public funds in driving a decarbonisation programme.
The investigation suggests a potential imbalance in the UK's green spending, with more funds allocated to CCUS and hydrogen compared to other emerging decarbonisation solutions. The funding for nature projects during the same period is £5.1 billion, which is less than the allocation for CCUS and hydrogen.
Cleantech startups, which typically promote fossil-fuel-free decarbonisation pathways, receive around £4 billion in the same timeframe. This allocation is significantly less than the funds allocated to CCUS and hydrogen, making the latter more than twice the amount for cleantech startups.
The imbalance arises primarily from the government's strategic priorities and the nature of required investments to achieve net-zero targets. The UK government's Clean Power 2030 plan emphasizes expanding flexible, low-carbon power capacity to meet rising electricity demand from electrification of transport, heat, and industry. Technologies like CCUS and hydrogen offer dispatchable low-carbon power critical to replacing unabated fossil fuels that cannot be fully substituted by intermittent renewables alone, necessitating significant investment between 2025 and 2030.
The oil and gas industry's support for CCUS and hydrogen may indicate an influence on the UK's net zero agenda. CCUS and hydrogen technologies, while supported by the oil and gas industry, may not necessarily be the most effective or efficient solutions for achieving the UK's net zero goals. Investors have expressed concerns about the government's reliance on "techno-fixes" for emissions reductions and the potential for the UK government to be funding technologies that may not be the most effective in achieving its net zero goals.
The investigation's findings raise questions about the effectiveness of the UK's green finance agenda and the potential for improved transparency in its spending plans. Clear policy signals have been sent for CCUS and hydrogen, but not for other emerging solutions. The government's reporting practices are opaque, making it difficult for investors to access clear spending projections for other early-stage clean technologies.
In contrast, cleantech startups and nature projects, although important for innovation and biodiversity/climate resilience, generally require comparatively smaller, dispersed funding and pace their growth differently. The government’s focus during 2025-2030 is to build a backbone of critical large-scale low-carbon infrastructure that can deliver near-term emissions reductions and system stability at scale.
As the UK strives to meet its net-zero targets, it is crucial to ensure a balanced approach in allocating funds across various decarbonisation solutions. The investigation aims to provide a comprehensive comparison of spending plans across different parts of the UK's net zero value chain, offering insights into potential areas for improvement in the UK's green finance agenda.
- Despite the significant allocation of funds for carbon capture, utilisation, and storage (CCUS) and hydrogen technologies, the investment for cleantech startups and nature projects appears to be less, highlighting a possible imbalance in the UK's green spending.
- The UK government's devotion to CCUS and hydrogen technologies, while critical for achieving dispatchable low-carbon power, might overshadow other emerging solutions in the environmental-science sector, prompting concerns about the effectiveness of the UK's green finance agenda and potential areas for improvement.
