The 2025 Autumn Budget, delivered by Rachel Reeves on 26 November, includes several important energy and climate-policy moves. Some of these have the potential to reshape the future of clean energy in the UK, so let’s dive into what’s set to change and how this could impact the renewable energy landscape in the UK.
Energy bill levy reduction
The government is scrapping the Energy Company Obligation (ECO), a long-standing levy on energy bills that previously funded home-insulation and retrofit schemes, aimed at improving energy efficiency in homes (especially for those on low incomes).
They also announced plans to shift a large proportion of the cost of the legacy Renewables Obligation (RO) away from household energy bills and onto general taxation (covering roughly 75% of the domestic RO burden until at least 2029).
As a result of these changes, it’s good news for consumers, because average households are projected to save around £150 per year on their energy bills (from April 2026 onwards).
By removing these green levies from energy bills, electricity will become more competitively priced for consumers, compared to gas and other heating fuels. This will help accelerate the adoption of clean-energy technologies like electric heating, heat pumps, and electric vehicles.
For households using electricity heavily (e.g. electric heating, heat pumps, EV charging), the lower bills may improve the cost-effectiveness of switching to low-carbon technologies, potentially speeding up the decarbonisation of heat and transport sectors.
This change to reduce the burden on households may enhance public and political support for sustained investment in clean energy, giving the government a greater incentive to back new renewables generation, grid upgrades, storage, and infrastructure.
Electric Vehicle (EV) taxation changes
The 2025 Budget introduces a new “pay-per-mile” tax for electric vehicles and plug-in hybrids (PHEVs), which is set to take effect from April 2028 under the new electric vehicle excise duty (eVED). Under the proposals, battery-electric cars will be charged roughly 3p per mile, while PHEVs will pay around 1.5p per mile.
For a driver covering the UK average yearly mileage (around 8,500–10,000 miles), that would translate into a cost of roughly £240–£255 per year. This is intended to replace some of the lost revenue from declining fuel duty as the switch from petrol/diesel vehicles gathers pace.
Introducing a per-mile levy on EVs sends a signal that while the government still supports the transition to electric mobility, it also wants to ensure EVs contribute to road upkeep and recoup lost fuel-duty revenues. That said, the added cost could dampen some of the financial attractiveness of EV ownership, potentially slowing the pace of EV uptake compared with a scenario of continuing near-zero road tax for EVs. This could ripple out to slower growth in demand for electricity-based transport infrastructure, charging networks, battery storage, and related renewable-energy services.
On the other hand, by making this tax more usage-based rather than fuel-based, the policy maintains a degree of fairness and sustainability as the transport sector decarbonises. It may encourage more efficient usage patterns and support long-term fiscal sustainability for road maintenance, giving the government greater flexibility to invest in clean energy infrastructure, grid upgrades, and low-carbon transport.
Helping to bridge the green-skills gap with free SME apprenticeships
In another positive move, the government announced that training for apprentices aged under 25 will now be completely free for small and medium-sized enterprises (SMEs). As part of a £725 million fund under the new Growth and Skills Levy, the usual co-investment payment SMEs were required to make when hiring apprentices under 25 will be scrapped, essentially removing training cost barriers for younger hires. Alongside this, the government says it will reform and simplify the apprenticeship system.
This could significantly help build the skilled workforce the UK needs to meet its net-zero and clean-energy ambitions by lowering barriers for SMEs, so they’re encouraged to hire and train more young people. This will boost the supply of clean-energy technicians, installers, and engineers, and offer a valuable opportunity to close critical skills gaps in sectors like renewables, heat pumps, energy-efficiency upgrades, EV infrastructure, and more. At scale, this could accelerate the deployment of low-carbon technologies across the UK.