Politics Home Article | Now is the time to strengthen the UK’s longer-term fuel resilience

Energy security is at the top of the political agenda as a result of the conflict in the Middle East. This crisis is a reminder that, in a more uncertain world, the United Kingdom must become more resilient to external pressures and shocks. That is especially true for fuels.

The UK fuels sector provides 47 per cent of the UK’s final energy consumption. It supports transport, freight, aviation and manufacturing, and provides hundreds of other non-fuel products that feed chemicals, building and other sectors. Domestic refining capacity has fallen from nine refineries in 2000 to four today, with two closures in 2025 alone. Import dependence has grown sharply.

Once domestic refining capacity is lost, it is almost impossible to replace.

Resilience is not simply about whether imports are available in stable times. It is about whether the UK has the right balance of domestic capability, flexibility and supply diversity when international markets tighten or global tensions rise. The ability to refine crude oil provides stronger protection for British supply.

To preserve our energy resilience, the UK needs to level the playing field for domestic refiners so they can be globally competitive. On carbon costs, this can be achieved through the introduction of a Carbon Border Adjustment Mechanism (CBAM) that includes refined products.

UK refiners face carbon costs that many international competitors do not. That creates a clear imbalance, particularly against producers in the United States, the Middle East and India. Other countries have understood that if carbon costs rise too far ahead of competitors, investment falls and domestic capacity is put at risk. The UK should take the same practical approach.

Government has already recognised the issue. In the Autumn Budget, it committed to explore the inclusion of refined products within the UK CBAM. But the sector has been told that it has been turned down for 2028, with no guarantee of a later date.

At such an important time, that is a blow to an industry that underpins critical infrastructure and long-term energy security.

But it is not too late.

The government still has it within its gift to implement this policy by 2028, should it choose to do so, by making changes in this year’s Finance Bill that would avoid further job losses and a weakening of UK energy security.

This is not about abandoning net-zero; the CBAM supports climate ambition. It is about ensuring policy works in practice and in the UK interest. If domestic production is displaced by imports, it does not eliminate demand or reduce global emissions. It simply exports production, and the associated carbon, as well as jobs, abroad.

A CBAM would help prevent that.

It would support investment, protect domestic capability and ensure the UK’s climate ambition strengthens, rather than weakens, long-term energy security.

Now is the time to act.