Energy Shift in Progress | Financial Plan for Fall 2024
In the wake of the UK's Autumn Budget 2024 and Spending Review 2025, the government has pledged substantial investment towards energy transition and net zero targets, with a combined capital envelope of over £100 billion. This significant financial commitment has sparked optimism about the UK's ability to meet its climate targets.
One of the key aspects of the strategy is a £125m commitment for the establishment and early operations of Great British Energy (GBE). Moreover, £3.4bn will be invested in increasing energy efficiency and decarbonisation of household energy, as well as supporting the growth of the heat pump manufacturing supply chain.
The heat network zones, aimed at connecting large non-domestic buildings such as hospitals, universities, supermarkets, hotels, and large office blocks, will also receive funding. Six locations have been identified for England's first heat network zones, including Leeds, Plymouth, Bristol, Stockport, Sheffield, and two in London.
Nuclear power is a major focus of the energy transition strategy. The government allocated £14.2 billion for Sizewell C, the first state-backed nuclear power plant since 1988. Additionally, over £2.5 billion was allocated for the development of Small Modular Reactors (SMRs). In June 2025, Rolls-Royce SMR was selected as the preferred developer for SMR deployment in England and Wales.
Over £200 million will be invested to accelerate the rollout of electric vehicle (EV) chargepoints across Britain, and £3.9bn will benefit Track-1 Carbon Capture, Usage, and Storage projects, as well as established contracts with 11 green hydrogen producers.
The government is also focusing on upgrading five million homes during this parliament with a focus on energy efficiency and warm homes funding, especially targeting fuel-poor households. Details on specific funding allocations and delivery mechanisms are expected by October following the budget.
Environment and farming-related funding was broadly maintained, with the Farming and Countryside Programme budget kept steady at £2.3 billion annually, plus an extra £400 million for nature schemes such as peat restoration and tree planting.
The UK has reported a 2.5% emissions reduction in 2024, largely driven by the power sector where coal was fully phased out. While progress outside power has been slower, the Committee on Climate Change is optimistic that the UK can meet its net zero targets if emissions reductions accelerate significantly in transport, buildings, industry, and land use toward the end of the decade.
The International Energy Agency (IEA) has emphasised the importance of governments curating industrial strategies to take into account the landscape of international trade, with long-term goals as well as short-term fixes in mind. The IEA's latest Energy Technology Perspectives report projects that the global market for six clean energy technologies will triple from $700 billion in 2023 to more than $2 trillion by 2035. Additionally, the IEA predicts that international trade in the clean technology industry will reach $575 billion by 2035, which is close to 50% more than the value of today's natural gas trade.
The Department of Energy Security and Net Zero (DESNZ) budget will increase from £6.4bn in 2023-24 to £14.1bn in 2025-26. A consultation has been launched to streamline planning for large energy projects in Scotland, aiming to cut delays, modernize the system, and create a fairer process that involves communities from the outset.
The Energy Profits Levy, originally set to expire on 31 March 2029, will be increased from 35% to 38% and extended until 31 March 2030. The 29% investment allowance for qualifying expenditure will be removed in its entirety from 1 November 2024.
The reforms suggest using other decision-making processes on a case-by-case basis, guided by a specialist reporter. The Scottish government has proposed reforms to the public inquiry process, aiming to make inquiry sessions only necessary when required.
The Autumn Budget 2024, announced by Chancellor Rachel Reeves, features significant updates to support the UK's energy transition and net zero goals. The budget also includes £2.7bn of funding to further support Sizewell C's continued development. A £5.8 million project is expected to begin construction in 2026.
Gillian Martin, acting cabinet secretary for net zero and energy, supports these reforms as they will help support Scotland's clean power ambitions and provide investors with confidence. The reforms are expected to facilitate the UK's transition to a greener, more sustainable future.
- The government's investment in energy transition doesn't only focus on renewable and nuclear energy sources; it also includes a pledge to advance sports infrastructure with a £500 million commitment to improve sports facilities across the UK.
- The strategy for a greener future extends beyond energy, as the government also plans to invest in promoting physical activities and sports, aiming to encourage a healthier lifestyle and foster a more active population.
