Fuels Industry UK has warned that recent Budget announcements
have failed to provide the clarity and immediate support needed
to safeguard the UK's remaining refineries and the skilled jobs
they underpin.
The UK has already lost one-third of its refineries in the past
year. Without urgent action, the remaining four sites face the
same pressures: higher carbon and energy costs than competitors
abroad, and growing uncertainty over long-term policy.
Despite positive signals that the Government is considering
refined fuels for inclusion in a UK Carbon Border Adjustment
Mechanism (CBAM), no concrete decision has been
made. The sector cannot wait years for CBAM to take
effect without change in the meantime.
Key concerns from the last month include:
-
Lack of CBAM clarity: The Budget's
recognition of refining's role in our economy is positive, but
without a firm commitment to include refined fuels, the UK
risks falling further behind international competitors.
Refineries need certainty now to plan investment and maintain
operations.
-
Exclusion from industrial support
schemes: The new British Industrial
Competitiveness Scheme (BICS) appears to exclude refineries,
despite being designed to lower energy costs for heavy
industry. This omission leaves the sector exposed to some of
the highest industrial energy prices in the world.
-
ETS policy gaps remain: Changes to the UK
Emissions Trading Scheme (ETS) still do not address fundamental
issues with refinery benchmarking. Free allocations are set to
fall while compliance costs - over £200m in 2024 - continue to
rise.
-
Elizabeth de Jong, Fuels Industry UK Chief Executive
Officer, commented:
“Refineries are closing because the UK is now one of the
highest-cost places in the world to operate. Recent announcements
have done nothing to change that. Without urgent and meaningful
action, the UK risks losing more refineries — and with them the
growth, skills, industrial base and energy resilience they
provide.”
“We need a clear commitment on CBAM, immediate interim measures
to address carbon costs now, and access to industrial energy cost
reduction schemes. Without this, the UK's refining base — and the
security it provides — will continue to erode.”
ENDS
Notes for Editors:
- Fuels Industry UK represents the companies that manufacture
and supply over 85% of the UK's transport fuels, investing in
sector-wide transformation to help the country reach net zero.
That includes conventional and lower carbon alternative fuel
suppliers alongside terminal and pipeline operators.
- Member companies have invested over £9 billion in the UK over
the last ten years and employ 100,000 people across the UK sector
in highly skilled, productive and well-paid jobs. The sector
collected over £37 billion of fuel duty and VAT in 2024, with £11
billion of products exported globally.
- The November
Budget (26/11) contained the following
statement on refineries:
“3.65 The government recognises that refineries play a role
in energy security and the UK's industrial base, and will publish
a call for evidence on the fuel sector. The government is also
considering the feasibility and impacts of including refined
products in the Carbon Border Adjustment Mechanism (CBAM) in
future.”
- Government published its consultation on the British Industry
Competitiveness Scheme was published 24/11 and can be found
here.
- The UK Emissions Trading Scheme: Free Allocation Review
consultation outcome was published 26/11 and can be found
here.
