Post: Government urged to cut business energy bills by moving green levies

Government urged to cut business energy bills by moving green levies

The government should move key policy costs and taxes from business electricity bills, a joint report from the CBI and Energy UK has concluded.

With UK businesses paying around 45% more for electricity than the G7 median, Cutting Business Energy Costs: A Blueprint to Boost Growth, which was published on 14 July, argues that tackling business energy costs must be viewed as a central component of economic and industrial policy.

It suggests that removing key policy costs and taxes from business electricity bills could generate more than £130B of additional economic output by 2050, while also boosting private investment and tax revenues.

The report identifies two causes for the UK’s relatively high energy costs: the use of gas-fired electricity prices to set overall costs; and the government’s choice to fund decarbonisation policies through electricity bills, rather than general taxation. 

Gas-fired generation sets the wholesale electricity price 60 per cent of the time, down from 90 per cent in the early 2020s. As the UK transitions to a clean power system, the amount of time gas is used to set the price will reduce, the report says. 

It called on the government to use the upcoming Autumn Budget to “send a clear signal” by announcing the removal of Renewables Obligation (RO) and Feed-in Tariff (FiT) costs for all businesses, as well as eliminating the portion of the Climate Change Levy (CCL) on electricity. According to the report, this could cut total energy costs by up to 20%, depending on the type of business, and close the competitiveness gap with international counterparts. It proposes three alternative ways of financing these policies: moving the policy costs to general taxation; creating a publicly financed energy transition funding scheme or working with the financial services sector to raise private financing.

The report also called for the government to:

• reform business energy taxes
• use the Reformed National Pricing (RNP) programme to cut balancing costs
• raise non-domestic Minimum Energy Efficiency Standards
• launch the Business Energy Upgrade scheme for SMEs
• offer targeted operational expenditure discounts to incentivise electrification
• offer guarantees for Corporate Power Purchase Agreements (CPPAs) to drive market expansion.

“The case for action is clear. The government must make reducing business energy bills a national priority, and work with industry to deliver a system that supports investment, competitiveness, and resilience”, the report said.

25 February 2026

Why electricity prices matter and what businesses can do about it

According to The Adam Smith Institute’s Electricity Tracker, the UK’s industrial electricity prices are dramatically higher than in neighbouring countries, with British industry paying around 81 % more than comparable businesses in France. Here we spoke to GridBeyond Head of Demand Response UK, Shawn Duckett about business energy costs and what businesses can do to mitigate volatility.

Learn more