Sunak’s tax breaks could lead to more than £8bn of North Sea energy projects
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 in Rishi Sunak’s windfall tax, analysts have forecast.
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. The increased tax rate is in place until either prices return to a “historically more normal level” or the end of 2025.
However, campaigners warned ramping up North Sea production risked hindering efforts to tackle climate change. 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”.
Analysis shows there are more than £8bn of oilfield projects awaiting a final investment decision in the North Sea. These include the Rosebank field, owned by Norway’s Equinor, which lies 80 miles north-west of the Shetland
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