The UK government has announced plans to explore a new funding model to promote UK low carbon innovation and development.
The Regulated Asset Base (RAB) approach, which has already been successfully deployed in UK infrastructure projects, is a mechanism which facilitates private investment in public sector programmes by guaranteeing investments by passing on excess costs to the end user under the oversight of the relevant regulatory body. The government has drawn up new proposals to implement an RAB funding mechanism to attract increased private investment in UK low carbon innovation projects, in order to drive research and incentivise programmes aimed at decarbonising the UK energy sector; with particular focus on nuclear power and carbon capture and storage.
Business and Energy Secretary Greg Clark said: “Reaching net zero emissions will require action across all areas of society – from innovators, government, regulators and civil society. We will all need to act together to ensure we cut emissions and build a vibrant and innovative economy that can continue to capture the economic benefits of clean growth. A critically important step in reaching net zero emissions will be transforming the energy system so the economy can be powered by affordable, secure and clean energy. We will need to change not just the way we use energy in our homes and businesses, but also how it is produced and delivered. We need to do this in a way that keeps the cost of energy as low as possible and ensures our energy security is never compromised.”
Clark added: “Through our modern Industrial Strategy we are building on our international leadership in clean growth to invest and develop the technologies and funding models we will need to reach net zero emissions. This new funding model has the potential to help UK industry seize the global challenge of the low carbon transition by building the infrastructure we need, while offering value for money for consumers and taxpayers.”
