UK Government confirms rise in oil and gas headline tax and investment in clean energy

Rachel Reeves, the UK’s Chancellor of the Exchequer, delivered Labour’s first budget in over a decade, confirming a rise in the headline tax rate for the oil and gas industry to 78%, one of the highest globally. 

This tax will also extend until 31 March 2030. The UK Offshore Energies Association (OEUK) warned in September that the tax would threaten jobs and disrupt progress toward net-zero targets, stressing the need for industry-government collaboration.

The Labour government also earmarked £2bn for 11 green hydrogen projects, projected to deliver 125 MW of capacity and promised as some of the first commercial-scale initiatives globally. These projects, previously stalled, now move forward with this funding. 

Additionally, the budget includes a multi-year carbon capture and storage investment and a £3.4bn allocation to boost home energy efficiency.

Labour’s plans for Great British Energy, a public body to oversee energy distribution, include a projected £100bn in capital over five years, though further investment details remain pending. Labour aims for the body to collaborate with industry and unions to deliver clean energy, targeting over £8bn in co-investment by the next parliament.