The UK government plans to cut green levies on businesses to lower energy costs and give manufacturing a boost. On the surface, that sounds like good news—especially for industries that have been feeling the pinch. But is it really that simple?
The Upside
If you’re in manufacturing, you know energy costs can be brutal. With projected energy bill savings of up to 25%—amounting to hundreds of millions annually—this could free up cash for equipment upgrades, talent acquisition, and finally getting Smart Factory programmes over the line.
In our upcoming paper “Closing the Smart Manufacturing Gap”, we talk about the “pilot purgatory” many manufacturers face—where promising initiatives stall due to cost and complexity. So, if lower energy bills help unlock those investments, that’s a win.
There’s also the potential for UK manufacturing to become more competitive globally. Lower overheads could lead to increased reshoring and innovation right here at home.
The Flipside
But with any policy, there’s always a catch. These green levies help fund the UK’s transition to cleaner energy and a more modern grid. And right now, our grid is under serious pressure.
While more electric vehicles, heat pumps, and smart homes are great for the planet, they’re pushing an already ageing grid to its limits. Our upcoming Cognizant Ocean perspective on "Energy Prosuming" explores how households will increasingly contribute to energy production. This means the grid needs to be smarter, more flexible, and more resilient—all things that require funding.
Without a backup plan, these desperately needed upgrades could be delayed. And that would actually make it harder for manufacturers to electrify and modernise.
The Solution
We can still support manufacturers and invest in the grid by ensuring there are other ways to fund (and protect) grid investments. This could be as simple as adopting AI to cut waste and boost performance—something our Cognizant Ocean team has already demonstrated in the water sector—freeing up funding for reinvestment.
Similarly, incentivising manufacturers to adopt energy-efficient technology and participate in flexible energy programmes will ease the immediate pressure and give the grid the time it needs to transform.
While cutting green levies is a big boost for UK manufacturing, we can’t lose sight of the bigger picture. A strong, modern grid is the backbone of a smart, sustainable manufacturing future. Let’s make sure we’re building both—together.
To find out more, contact us.
