The second Budget from Rachel Reeves was upstaged by a surprise leak. Here are the energy and carbon measures that you may have missed.
Help with business energy costs
There were no new headlines here, but the Budget reaffirmed a commitment to supporting energy-hungry businesses.
The government is already compensating energy-intensive businesses for network charging costs to the tune of 60%. In April 2026, this compensation will increase to 90% (announced in October 2025). This will benefit around 550 businesses.
The British Industrial Competitiveness Scheme (BICS) will be in force from April 2027. This will exempt eligible businesses from non-commodity charges like the Renewables Obligation. On 24 November, Chris McDonald MP confirmed:
• There are over 7,000 businesses eligible for the BICS
• They will save up to £40 per MwH
Help with domestic energy costs
The Budget included a series of measures aimed at easing pressure on household energy bills and accelerating support for vulnerable customers:
• On average, around £150 of costs will be removed from household energy bills – through government funding 75% of the domestic cost of the legacy Renewables Obligation and ending the Energy Company Obligation.
• The Warm Home Discount will be expanded, giving six million households £150 off their energy bills this winter.
• The Warm Homes Plan receives an additional £1.5 billion capital investment to tackle fuel poverty (in addition to the £13.2 billion of funding already allocated).
Better grid connections
A year ago we were reporting a plan to speed up grid connections and get more renewables online. Grid connections continue to be a serious blocker to growth, so the government will be changing the way it prioritises projects. Capacity will be reserved in advance for “strategically important demand projects” and released capacity will be reallocated more efficiently. This can only happen if government gets the powers it needs from the Planning and Infrastructure Bill, now in its final stages.
Accelerating nuclear
The government had already set up a nuclear taskforce to drive growth in this area. Taskforce head John Fingleton recently published a report on regulatory challenges and Reeves announced in her Budget speech that the government will be endorsing its recommendations. We can expect “a full implementation plan within three months”.
The Green Financing Framework has been updated to include nuclear power on the list of policies that can be funded by green gilts and Green Savings Bonds.
Keeping windfall tax on oil
The Energy Profits Levy (EPL), a windfall tax on oil and gas producers in the North Sea, will stay in place until 2030, as announced in the 2024 Budget. The autumn 2025 Budget sets out what will be eventually replacing it: an Oil and Gas Price Mechanism (OGPM) which will kick in above a certain price threshold. The idea is to strike a balance between supporting the oil and gas industry while ensuring that the public coffers get a share when profits are high. The industry has reacted with dismay to the news that the EPL won’t be scrapped yet and is warning of job losses.
Meanwhile, the government is looking into how we include refined fuels in the UK’s Carbon Border Adjustment Mechanism (CBAM).
New tax on electric vehicles
To make up for falling revenues from fuel duty, this Budget introduces an Electric Vehicle Excise Duty (eVED). It will basically be a mileage charge for electric cars, coming in from April 2028. The average EV driver will pay around £20 a month. But the government remains “firmly committed to supporting the transition to EVs”, so there are other measures to make them more accessible, including the extension of the Electric Car Grant to 2029-30. The following measures may be of interest to business:
• 100% business rates relief for eligible EV chargepoints
• Extending the first year allowance for zero emission cars
• Employee Car Ownership Schemes to see no change to Benefit-in-Kind rules until 2030
As these measures come in, the Energy Advice Hub will keep you updated on how they affect UK business.
