The Chancellor will attempt to “reset” the UK’s energy supply by announcing £20bn of spending over 20 years on carbon capture and clean energy in next week’s Budget.
Jeremy Hunt said the investment would help ensure households never see spikes in energy bills on the scale seen over the winter after Russia’s invasion of Ukraine.
The cash, spread over two decades, will go towards projects aiming to store 20-30 million tonnes of carbon dioxide (CO2) a year by 2030 – equal to the emissions from 10-15 million cars.
During Wednesday’s Spring Budget, Mr Hunt will commit to projects having spades in the ground from 2024, as he also announces plans to boost nuclear power generation by launching a competition for the country’s first small modular reactor.
He will also reclassify nuclear power as “environmentally sustainable”, subject to consultation, in a bid to drive more private sector investment into the sector.
The measures form part of the Government’s plan to boost the UK’s homegrown energy supply as the country transitions to net zero carbon emissions by 2050.
Ahead the Budget, the Chancellor said: “Without Government support, the average household energy bill would have hit almost £4,300 this year, which is why we stepped in to save a typical household £1,300 on their energy bills this winter. We don’t want to see high bills like this again, it’s time for a clean energy reset.
“That is why we are fully committing to nuclear power in the UK, backing a new generation of small modular reactors, and investing tens of billions in clean energy through carbon capture. This plan will help drive energy bills down for households across the country and improve our energy security whilst delivering on one of our five promises to grow the economy.”
The small modular reactor competition will be run through the Great British Nuclear project to co-ordinate the delivery of new plants to meet the Government’s ambition of 24 Gigawatts of nuclear power by 2050.
The Government body will select sites for potential nuclear projects, removing costs, uncertainty, and bureaucratic barriers for manufacturers as they develop their proposals.
It comes after a £210m investment into the Rolls-Royce small modular reactor project, matched by private sector funding, with the proposals currently being assessed by the Office for Nuclear Regulation safety watchdog.
To support future sites for nuclear development, the Government will also be consulting on a new approach to nuclear site selection later this year.
The Energy Security Secretary, Grant Shapps, said: “Putin’s illegal invasion of Ukraine has demonstrated to the world the vital importance of increasing our energy security and independence – powering more of Britain from Britain and shielding ourselves from the volatile fossil fuels market.
“Already a global leader in offshore wind power, we now want to do the same for the UK’s nuclear and carbon capture industries, which in turn will help cut the wholesale electricity prices to amongst the lowest in Europe.
“Today’s funding will play an integral role in delivering that, helping us further towards our net zero targets and creating green jobs across the country.”