Autumn Budget 2024 - PwC comments on energy announcements

Energy Profits Levy 

The Energy Profits Levy (EPL) rate will increase by three percentage points to 38% from 1st November, with its expiration now the 31st March 2030. Additionally, the normal investment allowance has been abolished while the decarbonisation investment allowance is retained. 

Colin Smith, Energy Tax Partner at PwC UK, said: 

“Perhaps surprisingly, given the Government's earlier comments, there will be no change to the availability of capital allowances for Energy Profits Levy purposes. While many in the industry may not be pleased with the rate increase, extension and removal of the investment allowance, there will be some relief that the Government has listened to concerns about the detrimental impact on investment, jobs and tax take that removing tax deductions for EPL purposes would have had.”   

GB Energy, carbon capture and hydrogen investment  

The Chancellor reconfirmed investments in carbon capture and storage, the creation of GB Energy, as well as the intent to deliver 11 new green hydrogen projects at commercial scale across the UK, a priority focus of the newly created National Wealth Fund. 

Vicky Parker, Power and Utilities Leader at PwC UK, said: 

“This is welcome but reflects a continuation of previously announced policy identified in the hydrogen allocation round one process in 2023.  

“Overall, the Budget was light on specific funding announcements for the energy sector. Given the stated clean power ambitions for 2030, a large proportion of that success will be dependent on the role that GB Energy and the National Wealth Fund ultimately play in attracting capital to help mobilise investment.   

“It cannot be emphasised enough that the large-scale programmes required to fundamentally change the UK’s energy system are acutely reliant on private capital being adequately incentivized and assured to deploy investment and in parallel, the public sector being able to move at the required pace.”