UK government announces £2bn Energy Wealth Fund backed by North Sea tax

The UK government announced a £2bn Energy Wealth Fund on 21 October, seeded with North Sea oil and gas tax revenue for clean energy projects.

The same day, the government approved the Jackdaw gas field to begin North Sea operations. Net Zero Investor reported that industry experts questioned the message sent to clean-energy investors by pairing that approval with a clean-energy fund.

The fund will sit alongside the National Wealth Fund, Great British Energy and the Great British Grid, all launched by Labour since 2024. This publication reported in September that a £4bn grid finance body would be drawn from Great British Energy's existing £8.3bn pot, which already carries a £2.5bn nuclear carve-out. The announcement did not specify whether the £2bn is additional to money already allocated through those vehicles.

The government says the investment will 'substantially delink gas and electricity by the end of this Parliament', because more renewable and low-carbon power means gas sets the electricity price less often. The statement cited recent Middle East energy shocks pushing up household bills and said 'at a time of global instability, homegrown energy can be a source of national strength'.

Chancellor John Healey said the fund would invest in 'the clean energy industries of the future', creating jobs and strengthening energy security. Tara Singh, chief executive of RenewableUK, called the fund 'potentially an important part of the energy transition' and said the group looked forward to seeing the detail.

The fund's capital is tied to North Sea tax revenue, so its size will depend on oil and gas activity in the basin. This publication reported in August that constraint payments to wind farms had topped £1bn as the grid lagged behind.

The £2bn is an initial injection. For scale, the Climate Change Committee has put the government investment requirement for net zero at about £110bn over 20 to 25 years, as this publication reported on 6 October. The announcement did not specify what the fund will hold beyond renewable and low-carbon energy projects, what return it targets, or when it starts deploying.