What did the Autumn Budget 2026 say about business energy?

A pause on new policy costs, the scrapping of the planned Gas Shipper Obligation and changes to the Climate Change Levy were among the measures in Chancellor John Healey’s Autumn Budget on 28 October 2026.

Here’s a roundup of the key announcements for businesses, from energy and carbon to transport and public procurement.

Business energy bills

• Cost Control Framework: The government will introduce a Cost Control Framework at the 2027 Spending Review to drive bills down over the next 10 years, setting budgets for components of energy costs, including policy costs. Until the framework is in place, no further policy costs will be added to bills, except where those costs are considered to reduce bills or be essential for security of supply.

• Gas Shipper Obligation: The planned levy on gas bills in Great Britain, intended to fund initial hydrogen production projects under the Hydrogen Production Business Model, will no longer be introduced. Instead, Hydrogen Allocation Round 1 contracts will be publicly funded through a £27 million increase to the Department for Energy Security and Net Zero budget in 2027-28. Any future hydrogen contracts, such as Hydrogen Production Plant 1, will also be publicly funded if the government commits to those contracts, subject to value for money.

• British Industrial Competitiveness Scheme (BICS): Applications have opened for BICS, which will provide eligible businesses in Great Britain with relief from the indirect costs of the Renewables Obligation and Feed-in Tariffs from April 2027, and the Capacity Market from October 2027. Businesses confirmed as eligible in the first application window will also receive an additional payment in 2027, reflecting the support available had the scheme been in place sooner. The Northern Ireland Executive is being funded to deliver a comparable scheme.

• Climate Change Levy (CCL): The main CCL rates for electricity and liquefied petroleum gas (LPG) will be frozen at 2027-28 levels from 1 April 2028. The main rates for gas and solid fuels will rise in line with RPI for 2028-29.

• Carbon Price Support (CPS): The tax on fossil fuels used in electricity generation will end from April 2028 as previously announced. According to the government, removing £18/tCO2e on fossil-fuel electricity generation will simplify carbon pricing and help reduce energy bills.

• Ceramics Industry Support Scheme: A £120 million scheme will support energy efficiency and decarbonisation in the ceramics sector, launching by the end of 2026.

Electricity market and grid

• Wholesale Contracts for Difference (CfDs): A consultation on wholesale CfDs has been published as part of the government’s plans to delink electricity prices from volatile international gas prices. The consultation explores enabling eligible low-carbon generators, whose revenues are currently exposed to wholesale electricity prices, to move onto a fixed-price arrangement. Further reforms to the CfD scheme will be delivered before Allocation Round 9 opens.

• New generation: New generation will only be procured where the capacity “lowers bills, benefits the system, and can be accommodated by the grid”.

• Electricity market reform: The government will set out further detail on reforming and improving the efficiency of the electricity market in the 10 Year Plan. The detail will cover how generators make siting and investment decisions, constraint management, system pricing, and balancing and settlement arrangements, building on the reformed national pricing programme set out earlier this year.

• Great British Grid: Announced last month, Great British Grid is a new publicly owned body within Great British Energy that will invest in the electricity grid. The new body will work alongside existing network operators to increase competition and support delivery of grid upgrades and reforms.

• Data Centre Covenant: A Data Centre Covenant has been published, setting out tests that all data centres are encouraged to meet, and that strategic data centres seeking enhanced government support must meet. The tests include paying for energy costs created, supporting grid resilience and flexibility, minimising water use, reporting annual energy and water consumption, and capturing waste heat for nearby homes, schools, hospitals or businesses where practical. In return, a new Ministerial Control Centre will help strategic data centres access power sooner. Further detail on how strategic data centres will be defined is expected to follow.

Energy industry

• Nuclear regulation: The government has committed to fully delivering the findings of the Fingleton Nuclear Regulatory Review. A “significant” number of the recommendations have already been implemented or will be completed through the Nuclear Regulation Bill in early 2027. All reforms should be delivered by the end of 2027.

• Oil and Gas Revenue Levy: The government is legislating for the Oil and Gas Revenue Levy in Finance Bill 2026-27, so the levy can take effect immediately after the Energy Profits Levy ends on 1 April 2030, or earlier if the price floor is triggered.

• Energy Wealth Fund: Established within the National Wealth Fund, the Energy Wealth Fund will invest in renewable and low-carbon energy infrastructure across the UK. The fund will receive £2 billion and will be linked to the government’s future revenues from the North Sea.

Elsewhere in the Budget

The Budget also brings updates for businesses in areas such as carbon, transport and public procurement.

Decarbonisation and sustainability

• Carbon Border Adjustment Mechanism (CBAM): Country-specific default values will be introduced for the UK CBAM from 2029, replacing the initial global default values used in 2027 and 2028. According to the government, country-specific values will more accurately reflect emissions associated with imports from different countries. The government also intends to expand CBAM to include refined products, subject to consultation on feasibility and impacts.

• VAT on energy saving materials: From 1 April 2027, heat batteries will be added to the energy saving materials that qualify for the 5% reduced VAT rate when installed in residential accommodation and charitable buildings.

Vehicles and transportation

• Fuel duty: The temporary 5p-per-litre fuel duty cut will be extended for a further six months to 1 July 2027, and the planned RPI increase will be deferred to the same date.

• VAT and CCL on EV charging: Legislation in Finance Bill 2026-27 will clarify that electricity supplied through public and workplace EV charging points is subject to 20% VAT and is not considered domestic use for the Climate Change Levy, taking effect from 1 November 2026.

Public procurement

A new National Procurement Policy Statement will be laid in Parliament in March 2027.

A new definition of a “UK supplier” in public procurement will be published by January 2027, to give the government a better understanding of UK suppliers and sub-contractors across public supply chains.

The government has also published new guidance on applying social value in central government procurement.

What does this mean for your business?

With many measures subject to further legislation, consultation and guidance, the practical implications of the Budget will take time to emerge.

We’ll be keeping a close eye on developments as further information is released.

As an expert energy and sustainability partner, Inspired can help you navigate the changing policy landscape and reduce your exposure to rising energy costs, from a tailored procurement strategy to pinpointing efficiencies in your day-to-day energy use.

Our team can also help eligible businesses make the most of BICS and claim a CCL discount with a fully managed service.

Bidding for central government contracts? Our support with decarbonisation plans and wider sustainability requirements can help your submission measure up.