Last month, Peers argued for amendments to the Subsidy Control Bill which would embed climate and environmental considerations within subsidy decisions. The Bill, which replaces the EU State Aid rules, will apply to hundreds of governmental and public authorities and relate to billions of pounds awarded annually to businesses. Whilst the government had recognised that subsidies can be a valuable way of supporting the UK’s strategic priorities, including net-zero, the Bill provided very limited direction on how decision-makers should approach these priorities.
The government ultimately did not accept amendments proposed by Peers, despite making it clear that “net zero is of critical importance”. They did, however, confirm that decision-makers should take into account the effect of a subsidy on their climate and environmental obligations, and provided assurances that the Secretary of State will provide guidance on how to take into account the impacts a subsidy may have on the targets in the Climate Change Act or the Environment Act.