The North Sea oil and gas industry has called on Labour to scrap the windfall tax on fossil fuel firms three years early, as Britain heads into a winter with energy bills expected to reach their highest level since Russia’s invasion of Ukraine. Offshore Energies UK (OEUK), the industry’s trade body, wants the tax replaced in 2027, rather than in 2030, with a narrower levy that only applies during price spikes. OEUK is also pressing ministers to approve two big North Sea oil and gasfields, Rosebank and Jackdaw, as part of a call for looser regulation of the sector.
The current windfall tax, the energy profits levy, was introduced in 2022 after fossil fuel firms posted record profits when oil and gas prices spiked after Russia’s invasion of Ukraine. Its planned replacement, the oil and gas revenue levy, would charge a 35% tax on revenue only when prices rise above a set threshold. Any decision to ease taxes on oil and gas producers would come before what is likely to be another winter of high energy prices due to the Iran war.
Household energy bills are expected to climb to a three-year high this winter, while wholesale gas on Monday rose to 207p a therm, its highest point since the Russia-Ukraine crisis. Companies including Shell and BP have already enjoyed huge profits in the months after the Iran war, which the campaign group Global Witness described as “cashing in on human misery”. The OEUK chief executive, David Whitehouse, admitted that “from the consumer’s point of view … you can argue that it is a difficult time to make these arguments”.
However, he added that the new levy would “ensure that oil and gas companies pay high levels of tax when prices are high, but encourages investment”. It also projected the change could generate up to £14.9bn more in tax over the next decade than sticking with the current plans. However, only £2.4bn of that would come from levies on oil and gas companies themselves, while the remainder is projected tax revenues from jobs OEUK says the extra investment would create.
Earlier this year, a coalition of charities, unions and campaign groups – including Greenpeace and Tax Justice UK – called on the government to strengthen the windfall tax, rather than ease it, to help fund cost of living support. Whitehouse also called for the approval of Jackdaw and Rosebank along with a wider pipeline of projects behind them, which OEUK says would help make the UK less dependent on imported natural gas. Andy Burnham is under pressure to drive down the cost of electricity generation to help bring down costs for Britain’s many stretched industrial businesses.
A decision on Jackdaw had been expected imminently, but is now thought to be delayed until after the Holborn and St Pancras byelection next month. Rudy Schulkind, a political campaigner at Greenpeace, said: “Asking for tax handouts while turning record profits during a climate emergency takes staggering audacity – even by the fossil fuel industry’s standards.
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