UK Energy, Gas and Chemical Sectors Industrial Outlook 2026
The UK energy, gas and chemical sectors enter 2026 in a state of transition. The surge of new Energy-from-Waste (EfW) and hydrogen developments that characterised 2023–2024 has given way to a more mixed picture for the industrial outlook, with some projects reaching completion and others slowing amid market uncertainty.
While hydrogen remains central to the UK’s decarbonisation ambitions, fluctuating prices and evolving policy frameworks have led to a cautious tone across the industry. Nonetheless, significant investment continues in hydrogen, carbon capture and energy transition projects, providing ample opportunity for suppliers of capital equipment and specialist services.
At Protel, we are currently tracking over 450 active UK projects across the energy, gas and chemical sectors, representing an estimated combined investment value exceeding £46 billion. These include multiple hydrogen and carbon capture initiatives, ongoing EfW schemes and a growing portfolio of battery-related and sustainable fuels projects. As several clusters begin to take shape and shape the industrial outlook – most notably in the North-West, Teesside and the Humber – 2026 looks to be a pivotal year in which the UK’s energy transition infrastructure becomes increasingly developed and progressed.
Key Trends in 2026
The market in 2025 is being shaped by several important trends in technology, policy and investment focus that will feature heavily in 2026:
- Hydrogen developments: Following the first Hydrogen Allocation Round (HAR1) and the announcement of HAR2 outcomes earlier this year, a steady stream of new hydrogen plants continues to progress. However, variable hydrogen pricing has led some developers to pause investment decisions. Smaller-scale and partnership-based schemes, such as sustainable aviation fuel (SAF) projects, are gaining prominence as companies seek to mitigate risk. Larger international developers are increasingly seeking UK partners and investors to share exposure and ensure local commitment to delivery.
- Carbon capture and storage (CCS): The decarbonisation drive outlined in last year’s outlook is bearing fruit. New projects frequently incorporate carbon capture elements, while others are being designed with future retrofitting in mind. The North Sea and Liverpool Bay are emerging as key storage hubs, with approvals now granted for injection and sequestration infrastructure. A nascent carbon capture cluster centred on the cement industry has also formed, an indication that CCS is becoming an embedded feature of UK energy capex.
- Energy-from-Waste (EfW): Activity remains relatively consistent, though the wave of new stand-alone EfW projects has receded. Most new facilities are now tied to specific producers of waste rather than developed as merchant operations. With many major plants completed or in late construction, EfW will likely stabilise at a lower but steady level of new investment.
- Emerging technologies: Experimental non-electrolysis hydrogen production methods, such as proprietary aluminium-based thermal processes, are attracting attention for their potential efficiency gains. Meanwhile, battery materials, metals and recycling projects are increasing in visibility. Although many remain outside Protel’s primary scope for coverage, the trend points to continued growth in electrification-aligned capex activity.
- Policy and investment signals: Government backing for hydrogen-powered heavy goods vehicles, agricultural machinery and shipping, alongside renewed investment in SAF, is underpinning confidence in the broader hydrogen economy. Aviation is a particular focus: Airbus has announced plans for a hydrogen-fuelled fleet and several SAF initiatives are now expected to reach capex implementation in 2025–26. The extent to which these become long-term fixtures of UK energy strategy will depend on how quickly supporting infrastructure matures.
Market Sentiment
Market sentiment across the UK energy, gas and chemical sectors can best be described as cautiously optimistic. Many projects have progressed from concept to construction during 2024/25, particularly within hydrogen and CCS clusters, yet hesitancy remains around final investment decisions for some large-scale schemes. Smaller modular projects, joint ventures and technology pilots are more prevalent this year, reflecting an industry that is adapting before committing to its next growth phase.
Geographically, activity continues to concentrate in areas such as Port Talbot, Saltend, and Teesside, where existing infrastructure and skilled workforces support deployment. These regional hubs are now creating positive feedback loops by lowering costs and potentially accelerating timelines for follow-on developments.
How the 2026 Industrial Outlook Presents Opportunities for Suppliers
For suppliers of capital equipment, machinery and project services, opportunities are emerging across several areas:
- Hydrogen generation, compression and storage systems
- Carbon capture modules and cryogenic separation equipment
- EfW plant components linked to industrial and municipal waste streams
- Battery material handling, recycling and associated chemical processes
- SAF production facilities and supporting hydrogen infrastructure
Suppliers positioned to collaborate with main contractors and engineering houses, and those capable of adapting to modular or staged procurement approaches, will be best placed to capitalise as projects advance from planning to delivery.
Protel’s Coverage
Our research team currently monitors more than 450 active UK projects across the energy, gas and chemical sectors, representing an estimated combined investment value exceeding £46 billion. Key developments include:
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Energy, Chemical and Gas – Industrial Outlook for 2026
Looking ahead to 2026, the industrial outlook for the UK’s energy, gas and chemical sectors faces a critical period. Hydrogen remains the focal point but will require greater price stability to unlock large-scale commitment from investors. Carbon capture adoption is accelerating, though costs remain a barrier for smaller operators. EfW investment will likely persist where industrial need exists, while anaerobic digestion continues its gradual decline seen in previous years.
Conversely, nuclear, battery, solar and wind projects are gaining ground and contributing to a broader diversification of the UK energy landscape. Where there is significant processing involved, Protel tracks and reports on these capex projects.
As hydrogen clusters move from planning to operation, the next two quarters should bring the progression of several major projects. This momentum, coupled with EU policy alignment and ongoing UK government support, may help stabilise both market sentiment and input costs across the energy value chain.
For suppliers and service providers, 2026 represents a period of cautious optimism – where steady progress, adaptability and strategic partnerships will be key to success in the UK’s evolving low-carbon industrial landscape.
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