What could the Budget do to help the environment, nature and climate change ambitions?

To meet its net-zero ambitions, the UK government really needs to focus on insulating these energy-inefficient buildings. It could do so by:

1. Maintaining or extending the ECO/Warm Homes Plan. Energy efficiency, particularly home insulation, is one of the most cost-effective ways to reduce emissions and tackle fuel poverty. Reducing this risks undermining both climate goals and social equity, with many groups pressing government not to cut ECO funding.
2. Restore or increase grants and subsidies for heat pumps. Rather than restricting these to a narrow group, more generous support could accelerate the transition away from gas boilers to green alternatives, reducing long term emissions. According to the English Housing Survey (2023-2024), around 21.2 million households in England alone use a gas-fired main heating system, which equates to around 86% of English households. Tightening eligibility further would risk losing a significant opportunity.

2. Tax measures to discourage fossil-fuel use and encourage clean alternatives

1. Reform fuel duty and green transport taxes. The Chancellor could consider gradually phasing out favourable treatment of fossil-fuel via fuel duty or other green taxes. Alternatively, the Chancellor could make public transport and low-carbon travel cheaper.
2. Green tax credits and capital allowances. The Chancellor could offer more generous tax breaks for businesses investing in clean technologies such as clean energy, green hydrogen, carbon capture, and energy-efficient infrastructure. Previous budgets have supported these types of investment. 
    

3. Boost Public investment in clean energy and nature

1. Increase spending on carbon capture, hydrogen, and nuclear. These are key technologies for decarbonizing industry and the power sector. The last budget included some funding.
2. Nature restoration. More capital could be allocated to peatland restoration, reforestation, wetlands and salt marshes. Nature-based solutions not only help biodiversity but also act as carbon sinks. The UK government’s own strategy highlights restoring woodlands and peatlands.
3. Sustainable farming and environmental land management schemes. Farmers could receive increased payments for delivering environmental public goods including biodiversity, soil health, and carbon storage, through Environmental Land Management (ELM). The government already has plans to invest in sustainable farming.
    

4. Adaptation and resilience

1. Flood defence funding. More resources could be allocated to flood resilience. Poor investment is a false economy due to the enormous damage flooding can do to people, property, livelihoods, businesses and communities. Climate change is increasing the risk of flooding, and investing in defences protects both people and nature. In 2024, the Budget allocated money for flood resilience.
2. Climate-resilient infrastructure. Increase investment in research and innovation for climate adaptation such as drought resilience, resilient crops, and early-warning systems. The CIEH (Chartered Institute of Environmental Health) has pressed for stronger environmental health perspectives related investments.
    

5. Incentivise private finance in nature and green projects

1. Use tax incentives, green bonds, or public guarantees to mobilise private capital for nature restoration (peat, trees and wetlands).
2. Although more regulatory than fiscal, the Chancellor could support measures to link tax or other incentives to corporate biodiversity targets, thereby encouraging companies to invest in natural capital.

6. Support for circular economy

1. Provide grants or tax relief for circular-economy businesses investing in the ‘three Rs’: ‘recycling, re-use and repair’.
2. Government procurement could be more explicitly directed towards low-carbon, nature-positive goods and services, stimulating demand fo sustainable production.
    

7. International climate finance

1. The Chancellor could choose to boost the UK’s commitment to international finance, especially for nature-based solutions in developing countries. The UK’s Carbon Budget Delivery Plan already includes international climate financing, with a portion dedicated to nature-based climate solutions.
    

8. Regulatory and structural reforms

1. The government could review environmental quangos and agencies to reform them to become more effective, rather than simply cutting.
2. CBAM (the Carbon Border Adjustment Mechanism) could be strengthened and accelerated to prevent carbon leakage and promote cleaner production globally.

Of course we recognise that the Chancellor is facing a monumental juggling challenge as government interest payments rise, productivity and the economy is under pressure and a myriad organisations and interests vie for consideration.

Some actions may also prove politically bitter.

Clearly significant green spending, or tax cuts, could clash with fiscal consolidation, however as is becoming increasingly clear, climate and nature harm has a price, and mortgaging the nation’s future is not really the option it might appear to be.

Some green measures might also prove unpopular, such as raising fuel duty, and reducing fossil-fuel subsidies.

Policies also need to be designed to protect and not disadvantage low-income households. For example, ensuring fair benefit from any heat pump support.

Green capital project investments, such as those for CCS and hydrogen programmes, require long lead times, so budget announcements would need to be paired with credible delivery mechanisms. 

Public funds alone may not be enough. The Chancellor will need to unlock private finance, which means good incentives, stable policy signals and risk sharing.

All of these competing demands make the 2025 November Budget a particularly difficult one for the Chancellor.

As the rumour mills continue to churn, it is difficult to predict the degree of prominence the Budget will give to climate and nature issues.