High Energy Bills Put Labour’s Net-Zero Plans Under Pressure

Britain’s energy costs are forcing Labour to weigh its net-zero commitments against demands from households and industry for cheaper power. In his Budget speech, Chancellor John Healey said affordability would become the government’s first priority, with clean power presented as part of the solution.

Money Talk·November 13, 2026·reads: 3,306

High Energy Bills Put Labour’s Net-Zero Plans Under Pressure

The shift is already testing ministers. Energy Secretary Miatta Fahnbulleh approved the Jackdaw gas field project, while Equinor awaits a decision on whether to open the Rosebank oil field. Fahnbulleh and Healey have reportedly clashed over whether further drilling fits Labour’s manifesto pledge not to issue new oil and gas licences. Labour backbenchers have publicly opposed Rosebank.

Louise Haigh, who advances Andy Burnham’s agenda in government, is expected to reduce electric-vehicle sales targets to help carmakers. Fahnbulleh has also suggested Labour could abandon its goal of removing almost all fossil fuels from the power supply by 2030 if the affordability challenge is not resolved. Burnham is due to travel to the COP 31 climate summit in Turkey on Thursday, then meet European leaders in Dublin to pursue an energy market deal. Higher international prices linked to the Iran war have increased the stakes.

Ministers plan to give about 10,000 energy-intensive businesses electricity-bill discounts of up to 25 per cent from April, at a cost to taxpayers running into billions of pounds by 2030. The government says further support will come from aligning UK and EU carbon markets and exempting businesses from existing levies. But British industry remains heavily reliant on fossil fuels, and government and international data indicate UK firms pay four times as much for electricity as US companies and about twice as much as European counterparts.

Energy market observers and a cross-party committee of MPs have called for net-zero costs to be removed from electricity bills and funded through general taxation. The Institute for Fiscal Policy found taxes and policy costs account for more than a third of industrial electricity costs for businesses that are not energy-intensive.

A report by Transira Energy and Onward, backed by the Conservatives, estimated that scrapping net-zero rules and taxes could save households as much as £540 a year between 2030 and 2050, but warned that slowing electrification could leave Britain more exposed to international gas-price shocks. The Office for Budget Responsibility said in its 2025 fiscal risks report that, under a scenario of global temperatures rising by 3°C, climate damage could account for around three-fifths of the increase in public-sector debt by 2074. Balancing these costs is central to Labour’s effort to re-industrialise the country.