455. The Review heard from a variety of businesses, SMEs and representative organisations who stressed that to fully seize the opportunities of a sustainable future, the UK needs to accelerate the development of new and emerging green markets and low carbon technologies.
456. The Government has a range of fiscal levers to drive this change and it needs to consider the merits of utilising various options to achieve its Net Zero ambition. This includes business model development, financial incentives such as grant funding, taxation, co-investment, and loans to support businesses and mobilise the investment required to achieve our net zero targets.
457. Ideas for best use of these policy levers have been received through our call for evidence. These cut across direct tax relief via tax credits or capital allowances, rebalancing energy levies, and business rates.
458. Businesses asked for this range of levers to be used to incentivise tech adoption and innovation as well as reward those who have already adopted or are decarbonising:
"[We] operate in a range of sectors... and would highlight the following broader priorities: i) Incentivise investment in decarbonisation technologies through capital allowances and tax reliefs and ii) shifting the tax burden away from (green) electricity to natural gas". - Large manufacturer327
459. The Review also heard that tax relief may not be the one-size-fits all solution for all businesses:
"Capital equipment costs to replace or upgrade existing equipment to more energy efficient ones are a barrier and fiscal reliefs can work. While tax reliefs are appreciated, the current situation is that companies are very tight on cash (and keeping it to pay their energy bills rather than investing), so loans, grants and funds are preferred at this moment." - The Lighting Industry Association328