UK government Green Financing Framework excludes nuclear

6 July 2021

The UK's Green Financing Framework, released on 1 July by the Treasury, describes government plans to finance expenditures by issuing green gilts and the retail Green Savings Bonds that it believes “will be critical in tackling climate change and other environmental challenges”. 

The 31-page framework sets out the basis for identification, selection, verification and reporting of the green projects eligible for finance from the green gilt programme and savings bonds. The Framework “aligns with the 2021 International Capital Market Association (ICMA) Green Bond Principles.”

The government will “actively support the research and development of innovative technologies required to meet the Net Zero target, whilst crowding-in private investment through regulatory levers”. The many innovative technologies that already exist “may require further investment to become cost competitive and to be proven at scale”.

The government says the UK’s ambition “is to be the global leader in green finance by designing and delivering financial services that are better, more innovative, and more efficient”. Green financial services represent “an opportunity for the UK and the City of London which will help catalyse the transition to a green economy”. The UK has established the Green Finance Institute, “which is playing an integral role in supporting delivery of our Green Finance Strategy and driving the mainstreaming of green finance in the UK and abroad”.

In addition, the UK “will implement a green taxonomy defining which economic activities are environmentally sustainable, in order to improve understanding of the environmental impact of firms’ activities and investments”. The 18-member Green Technical Advisory Group (GTAG), announced in June is expected to run for at least two years and will provide initial recommendations in September.

The framework lists renewable energy as one of its “green categories” with the following “subcategories”:

  • Support development of renewable energy generation capacity such as wind, solar and hydrogen;
  • Schemes for renewable heat use, including heat networks, heat pumps and hydrogen heating;
  • Support for energy storage systems, such as batteries, compressed air/liquid air, and gravitational storage; and
  • Research and development for the commercial viability of renewable energy technologies.

It also details a number of “exclusions”. It says, “Eligible Green Expenditures will exclude any expenditures financed and/or refinanced by green financing instruments issued by other government agencies and public sector entities to ensure suitable oversight and avoid double-counting.”

Also excluded is nuclear energy. The document notes: “Recognising that many sustainable investors have exclusionary criteria in place around nuclear energy, the UK Government will not finance any nuclear energy-related expenditures under the Framework.” It adds, however that the government recognises that reaching net zero emissions will require all energy to be delivered to consumers in zero-carbon forms and be derived from low carbon sources.

“Nuclear power is, and will continue to be, a key part of the UK’s low-carbon energy mix alongside solar and wind generation and carbon capture and storage. All these technologies are important in tackling climate change and diversifying the UK’s supply, contributing to the UK’s energy security and sustainable growth.”

Photo: Nuclear power accounts for almost 15% of UK electricity generation

Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.