THE oil lobby has been accused of a “brass neck” after calling for the windfall tax to be scrapped just days after energy firms reported billions in profits.
At a press briefing for Offshore Energies UK (OEUK), the rebranded trade group formerly known as Oil and Gas UK (OGUK), on hydrogen energy, the industry group suggested they would want to see the windfall tax “fall away”.
It comes just days after BP posted record-breaking profits of £23 billion, Shell £33bn and Equinor £23.8bn, while many households in the UK are still facing unaffordable energy bills, and with government support likely to be dropped in April.
The 25% Energy Profits Levy, introduced by Rishi Sunak during his time as chancellor, increased to 35% in January and is expected to run until March 2028, rather than the end of 2025.
While the levy applies to profits made from extracting oil and gas, firms can claim tax savings worth 91p out of every £1 invested in fossil fuel extraction in the UK.
Meanwhile, OEUK touted hydrogen as the next big industry but admitted that it would require “a heck of a lot” of licenses for natural gas production, something scientists and climate activists have warned must stop if global warming is to be brought under control.
At a virtual briefing hosted by the trade association, the attendees were asked how they have seen the “investment in climate change after seeing the windfall tax introduced”.
Mike Tholen, OEUK’s sustainability director, and former Shell employee, said he didn’t believe the windfall tax continuing was “vital”.
He said: “A number of companies across the whole business pool are scratching their heads on the nature, the basin and the nature of confidence as we look to the Budget.
“We're very clear we would like to have some signals that as windfalls fall away, the tax falls away, so will the price trigger.
“That remains part of investors trying to understand the nature of the regime, the nature we're trying to invest in. So I think there's still going to be some caution on investment until we get through the Budget and understand what the longer-term thinking is.”
Tholen added that he preferred energy and government “engaging together” rather than government fiscal “dictats”.
During the briefing, OEUK were also asked about the scale of production needed on the UK continental shelf to get the hydrogen industry off the ground, with much of the focus evidently on blue hydrogen, which is produced from fossil fuels.
Will Webster, OEUK’s energy policy manager, said that the UK currently only produces half the natural gas it needs, and has to import the rest.
He said: “So even if we didn't do any hydrogen at all, we probably need every bit of gas we can find in the UK CS just to do gas let alone hydrogen.
“I wouldn't say it made any difference really, to how much more gas we need, because we still need a heck of a lot of natural gas.
“We can start using that as hydrogen if we make some of the changes that we've been talking about today. So I kind of look at it a bit that way round, rather than say we're gonna need more gas as a result, because we need all the gas we've got anyway.”
Earlier in the briefing, Webster said that the hydrogen industry would require a “steady flow of gas production licenses”.
Freya Aitchison, Friends of the Earth (FoE) Scotland oil and gas campaigner, said the windfall tax was already an “insufficient attempt” at clawing back “obscene profits” from energy companies.
She said: “It takes an incredible brass neck for the oil industry to call for an end to the windfall tax just after they have posted all-time profit highs.
“The public will not fall for the fossil fuel industry’s claims that the windfall tax is damaging their business.
“Companies such as Shell, BP and Equinor all posted record-breaking profits even with the introduction of the windfall tax, and now they are advocating for it to be lifted so that they can pocket these profits while millions struggle to pay their energy bills.”
Aitchison also blasted the “deliberate loophole” in the windfall tax allowing companies tax breaks for investing in new oil and gas.
She added: “This shows a complete disregard for the climate as well as a clear prioritisation of the interests of these polluters over those of ordinary people. The windfall tax must be enhanced and the loophole closed, not weakened even further as industry lobbyists would like to see.
"Instead of allowing bosses and shareholders at these big polluters to get even richer, we must chart a clear path away from oil and gas and towards an energy system that is built on more affordable, reliable renewables.
“Politicians must listen to the science which tells us that to meet climate targets in a fair way, fossil fuel extraction needs to be phased out in the next decade.”
