The UK government announced plans Sunday evening to shield its remaining oil refineries from rising carbon costs, ahead of a formal call for evidence set to be issued Monday — the latest response to two refinery closures within the past year.
The Department for Energy Security and Net Zero will issue a call for evidence on Monday to inform its upcoming Future of Fuels strategy, due later this year. The move follows the closures of Grangemouth in Scotland and Prax Lindsey in North Lincolnshire, both driven out by elevated carbon costs and competition from cheaper plants in Asia and Africa.
ExxonMobil, which operates the UK’s largest oil-processing plant, warned in October 2025 that the entire domestic refining sector faces eventual closure if carbon costs keep rising. The company pushed for the government to extend its Carbon Border Adjustment Mechanism (CBAM) — a levy on imports produced under weaker environmental standards — to cover refined petroleum products, leveling the playing field against foreign competitors who currently face no equivalent charges.
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The government committed in November 2025 to assessing that option, and Energy Secretary Ed Miliband told industry leaders this month he is working with the Treasury to move quickly. Minister for Energy Michael Shanks met with sector representatives on February 4 ahead of the formal consultation launch.
“While previous governments have accepted a state of decline and failed to engage, we are determined to support this sector,” Shanks said in a statement.
The Future of Fuels strategy is expected to set out a clearer policy path for the industry before the end of 2026.
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