Tuesday, June 07, 2022

Take with one hand, Give with the other


Last month the chancellor introduced the one-off levy on North Sea oil and gas operators who have raked in outsized profits as energy prices have boomed with the aim of raising £5bn to help fund measures to offset rising household bills. The energy profits levy also offers 91p of tax savings for every £1 of investment made by companies, in a move to encourage firms to reinvest their bumper earnings in the UK and build up domestic energy supplies. More than £8bn of North Sea energy projects could now be given the green light rapidly as fossil fuel firms take advantage of a tax break 

Mike Childs, the head of policy at Friends of the Earth, said: “The financial stimulus offered by the chancellor to encourage more oil and gas exploration means projects teetering on the edge of approval or rejection are now looking more likely. “If there was ever confusion about whether the UK is a climate leader or laggard this has certainly removed all doubt. The science couldn’t be clearer that new oil and gas is incompatible with a safe and livable planet.”

The broker Shore Capital said the tax breaks offered a “powerful incentive for those existing producers who have so far been hesitant to press the button on development-ready discoveries”. The Shore Capital analyst Craig Howie said he expects more investment from North Sea players, adding: “We certainly believe that, because carried forward losses cannot be used to offset the levy, new capital expenditure could be the only effective means of mitigating the higher tax burden that has now emerged.”

climate experts reacted with anger after the government announced it had given the Jackdaw field, to be developed by Shell, “final regulatory approval”. It is estimated Shell will pay £200m less in windfall tax over the next few years as a result.

Sunak’s tax breaks could lead to more than £8bn of North Sea energy projects | Energy industry | The Guardian

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