The UK Labour Government’s 2024 budget announcements, presented by Chancellor Rachel Reeves, focus on economic stability, climate action, and reducing energy costs. This budget seeks to overhaul the energy sector to make the UK a global leader in green energy while also addressing rising energy prices.

Here’s a breakdown of the key measures and their anticipated impact on the energy market.

Renewable Energy Investments

A major component of the Labour Government’s budget is dedicated to its continued commitment to renewable energy.

Labour has allocated £12 billion to increase green energy capacity, particularly through offshore wind and hydrogen projects. Eleven hydrogen projects across the UK will receive funding, aiming to establish the nation as a leader in hydrogen technology. Additionally, £134 million has been set aside to upgrade port infrastructure, which will support offshore wind projects and floating wind technology.

Impact on the Energy Market

These investments in green energy are expected to create jobs and drive down costs for renewable technology, making green energy more accessible and affordable. In the long term, these efforts will help reduce the UK’s reliance on imported fossil fuels, enhancing energy security and stabilising prices as renewable capacity grows.

Creation of Great British Energy (GB Energy)

The budget introduces GB Energy, a new publicly-owned energy company. Headquartered in Aberdeen, GB Energy will receive £8.3 billion over the next five years to focus on renewable energy development. Its establishment aligns with Labour’s goal to ensure the UK leads in clean energy production and maintains energy security.

GB Energy is intended to operate alongside private firms, fostering competition and focusing on projects that might not typically attract private investment.

Impact on the Energy Market

With GB Energy entering the market, the UK will have greater control over energy prices and resources. By directly investing in renewable energy production, this public entity could make energy more affordable while stimulating private sector involvement in green projects. GB Energy’s focus on long-term, sustainable energy projects might also encourage more stable, low-carbon energy production across the nation.

Support for Energy Efficiency and Green Homes

Labour’s budget allocates £2 billion for energy efficiency improvements under the Green Homes Grant, targeting home upgrades for insulation and energy-saving technology. These upgrades are intended to help households reduce their energy consumption and lower bills, addressing one of the primary drivers of energy poverty in the UK.

Impact on the Energy Market

By improving household energy efficiency, the demand for energy is expected to decrease, which could reduce pressure on the grid during peak times. This investment aligns with Labour’s goal of reducing the UK’s overall energy consumption while mitigating the effects of high energy costs on households. For energy companies, there may be increased demand for energy-efficient technologies, spurring innovation in the sector.

Carbon Capture and Storage (CCS) Initiatives

Labour has allocated £3.9 billion for carbon capture and storage (CCS) projects in 2025/26, with a focus on reducing industrial emissions. These CCS clusters will support the UK’s heavy industry sectors in reducing carbon output, an essential component of the country’s net-zero ambitions.

Impact on the Energy Market

The CCS projects signify Labour’s commitment to balancing industrial needs with climate goals. By helping energy-intensive sectors reduce emissions, CCS technology will allow these industries to continue operating within stricter carbon limits. In the long term, the development of CCS could also benefit the fossil fuel industry by making carbon-neutral fossil energy a feasible option as the UK transitions to a low-carbon economy.

Freezing of Fuel Duty and Revenue Measures

Labour has extended the fuel duty freeze, helping households manage costs at a time when living expenses remain high. The government will raise revenue for these investments by increasing taxes on high-income individuals and capital gains. This approach aligns with Labour’s goal of redistributing wealth to support green initiatives and essential public services.

Impact on the Energy Market

By freezing fuel duty, Labour aims to ease the financial burden on UK households. However, the reliance on higher taxes for funding these initiatives may present challenges for investors. Higher capital gains taxes could impact investment in energy projects, especially from private-sector players, although GB Energy’s presence might counterbalance this by leading key projects that align with Labour’s policy objectives.

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Labour’s 2024 budget sets a clear course for a greener, more stable UK energy market. From establishing GB Energy to boosting renewable energy funding and supporting CCS technology, these measures reflect a commitment to transitioning the UK to a low-carbon economy. Although these changes will bring adjustments for energy companies, the long-term benefits of greater energy security, affordability, and reduced carbon emissions promise a more resilient energy market for the UK.

With significant investments, regulatory shifts, and public ownership, Labour’s energy-focused budget has the potential to reshape the UK energy landscape, paving the way for a sustainable and affordable energy future.