UK Oil Refineries Face £400M Carbon Tax Challenge Amid Industry Call for Policy Change
The UK's four remaining oil refineries are burdened by a £400 million annual carbon tax, impacting competitiveness against foreign counterparts. Fuels Industry UK warns of diminishing refining capacity and increased exposure to global fuel instability. The sector lost two refineries in 2025, with calls for a Carbon Border Adjustment Mechanism to level the playing field. The industry supports 100,000 jobs and needs urgent policy changes to sustain operations and future low-carbon technologies.
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The UK's four remaining oil refineries are significantly impacted by a £400 million annual carbon tax that foreign refineries do not face. Fuels Industry UK warns that this tax places the UK refining sector at a disadvantage, risking job losses and increasing reliance on foreign fuel.
The sector has lost two refineries in 2025, with the closures of Lindsey and Grangemouth. The remaining refineries - Humber, Stanlow, Pembroke, and Fawley - are operated by Phillips 66, Essar, Valero, and ExxonMobil, respectively. The industry body advocates for a Carbon Border Adjustment Mechanism to ensure fair competition, urging the government to recognize the importance of the refining sector.
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