This was a budget without a vision. Instead of taking the big steps that the country is crying out for, the Chancellor presented a Budget which reads more like she was playing energy policy whack-a-mole – reacting to problems as they popped up without following a coherent strategy. Some hits landed well, others missed entirely, but what’s missing is a vision for permanently lowering bills and accelerating the clean energy transition.
Let’s take a look at a few key areas.
Energy bills
Households across the UK are still struggling with the ongoing cost of living crisis. In this context, any reduction in household energy bills is welcome, and credit where it’s due – the Chancellor has managed to remove £150 a year from bills.
Energy Company Obligation
The Energy Company Obligation (ECO), funds home insulation and energy efficiency programmes. These funds are vital for people in fuel poverty that the programme was targeted towards because, done well, they are the best way of reducing energy bills. But the Chancellor made the decision to scrap the scheme.
This decision will result in 10,000 jobs lost almost overnight, and cause 1 million families to lose the opportunity of insulating their homes in the next four years – which would keep their bills permanently low.
ECO had some problems in delivery, including a very poor record on solid wall insulation, but it needed reforming not scrapping, by beefing up certification to kick out the cowboy builders and getting proper inspection and redress in place. The government will need these systems for ALL its energy efficiency work, so the funding could have gone into those programmes.
Although the end of ECO loses over £3bn for home upgrades this Parliament, the government has boosted other efficiency programmes, namely the Warm Homes Plan, by £1.5bn. We need to see that rolled out quickly for the benefit of both the fuel poor and those who work in the industry.
Renewables Obligation
The Renewables Obligation is a charge that was designed to ensure energy suppliers developed more new renewable energy to supply customers with. Energy suppliers levied that charge on customer electricity bills. In this Budget, the Chancellor made the decision to remove this levy off bills and into general taxation.
This decision means that households with electric heating – who are twice as likely to be fuel poor – will save the most. It will also make it cheaper for people to make the switch to electric vehicles and heat pumps, so this is a good move by the Chancellor, and one we were campaigning for, that will help lower bills and support people to make greener choices.
Paying for nuclear energy
The changes for bills don’t end there, in less optimistic news, the Chancellor has decided to add £28 on to household bills per year by 2030 to pay for nuclear energy. When we can create clean, green energy from renewables, there’s no need to fund astronomically expensive nuclear power and the waste it produces, which still, no one can find a safe way to deal with.
This Budget has endorsed a flawed review that lays the blame for nuclear power delays and cost overruns at the door of planning rules and safety standards. Yet nuclear power is delayed and over-budget in France, Finland, China, USA, and other places that obviously do not have the same regulatory standards as the UK.
In a world of limited money for climate action, nuclear becomes an obstacle to emissions cuts as money that is spent on nuclear power could be better spent on genuinely clean energy, efficiency and storage
Missed opportunity: a strategic reserve for gas power plants
However, the biggest driver of rising energy prices since 2022 has been the international gas price crisis caused by Russia’s invasion of Ukraine. So the Government has missed an opportunity to reduce energy bills by taking gas plants out of the wholesale market and putting them into a strategic reserve.
Gas plants set electricity prices 85% of the time despite providing only 30% of generation over the last year. A strategic reserve with regulated returns would stop them extracting excessive profits during peak demand and prevent gas from dictating prices for all consumers.
They could have also taken this chance to lower leasing costs for offshore wind, helping to bring more affordable clean energy onto the grid and push down bills.
Polluter pays measures
Given the urgency of the crisis, the lack of a single mention of the climate in the chancellor’s speech was striking. The climate and cost of living crises are here on our doorstep and ordinary families are the ones paying the cost.
This budget was a missed opportunity to transfer those costs to the polluters through new taxes and fines on a fossil fuel industry that has consistently been rewarded for trashing the planet and fuelling destructive extreme weather. Nor did the chancellor take the opportunity to fix the gaping hole in the UK’s international climate finance contributions.
Windfall tax
Crucially however, the chancellor resisted a storm of oil and gas industry lobbying, and chose not to ditch or reduce the windfall tax, or Energy Profits Levy (EPL), earlier than the 2030 date forecast. She should be commended for that.
46,000 of you asked the chancellor to keep the levy and we wrote to the chancellor alongside 16 other organisations including fuel poverty groups, tax justice groups and the Fire Brigades Union. Ultimately, our voices overpowered those of the oil and gas industry.
New tax regime
In a separate document also published on budget day, the government introduced a new permanent tax regime for fossil fuel companies operating in the North Sea which will apply to revenues, rather than just profits. This is a good move – or it would be, if the rate set by the government for when the tax starts to kick in were set at a lower rate.
The tax will apply when oil prices rise to $90 per barrel and gas prices rise to 90p per therm (compared to EPL thresholds that are $71.40 per barrel and £0.54 per therm for gas). The government had an opportunity here to introduce a more progressive polluter pays tax on the world’s most polluting industry, instead their future tax regime will only apply during instances of quite substantial price shocks.
Electric vehicles
And it’s not just bills and windfall taxes that are impacted in this budget. The government has decided to introduce a new pay-per-mile tax on electric vehicles from 2028, called the Electric Vehicle Excise Duty. We don’t oppose this tax in principle – it will be necessary once electric vehicles dominate our roads. But 2028 is too early. The transition is still building momentum, and introducing the tax too soon risks slowing the switch to electric. The government should wait until after 2030 when the market is more mature.
The Office for Budget Responsibility states that there will be 440,000 fewer electric vehicle sales between now and 2031 because of this change. This would equate to emissions from the road transport sector being about 670,000 tonnes higher. When road transportation is the sector responsible for the highest emissions in the UK, this is a big climate failure.
However, the OBR also suggested that there would be around 320,000 extra sales from the £1.3bn that the government has put aside to boost takeup, partially offsetting the impact of the pay-per-mile tax.
But we should be cautious about that estimate, because it is well known that a lot of grant money ends up only lowering the purchase cost of cars that would have been bought anyway.
Budget 2025: Greenpeace’s verdict
This Budget offered flickers of progress – but no real plan for the fairer, cleaner future the UK urgently needs. At a moment when families are grappling with high bills and communities are feeling the impacts of extreme weather, the Chancellor chose tactical tweaks over strategic leadership.
Removing regressive levies from bills and keeping the windfall tax in place are meaningful wins – especially thanks to the tens of thousands of people who spoke out. But these steps sit alongside decisions that push the UK in the wrong direction: cutting insulation programmes just when they’re needed most, ploughing money into costly nuclear power, and weakening the incentives to choose electric cars. The missed chance to take gas out of the wholesale market or introduce new polluter-pays measures shows a government still unwilling to challenge the fossil fuel industry that helped create this mess.
The good news is that the solutions are already on the table. With proper investment in home insulation, renewable energy, flexible storage and cleaner transport, the UK could permanently lower bills, strengthen energy security, and accelerate the transition away from fossil fuels. The Chancellor’s Budget may not have delivered that vision – but it’s the direction the country is demanding, and it’s the direction Greenpeace will keep fighting for.