The UK Government has been told it “could have gone further” in reforming the North Sea windfall tax.
In its response to a report from the Scottish Affairs Committee, the UK Government said it had “set a clear path for the energy profits levy to end by March 2030 at the latest”, while stressing the tax helps fund “wider public services” and the transition “towards cleaner energy”.
Committee chairwoman Patricia Ferguson welcomed the “reaffirmation of plans to introduce a reformed windfall tax mechanism after 2030”, calling it “a positive step”.
However, the Labour MP warned: “The UK Government could’ve gone further. Keeping the energy profits levy in place for another four years risks accelerating the industry’s decline and job losses, even though it’s well known that the UK will need oil and gas in its energy mix for decades to come as we transition to net zero.”
Ms Ferguson said it was “encouraging” that ministers had made “clear commitments and plans to create more secure clean energy jobs”, but added: “The proof, of course, will be in the delivery. We’ve yet to see concrete evidence of delivery and implementation of these initiatives.”
She said MPs would “continue to monitor the UK Government’s progress closely to ensure it delivers for Scottish workers”.
Russell Borthwick, Chief Executive at Aberdeen & Grampian Chamber of Commerce, said: “The Scottish Affairs Committee is right to warn that extending the Energy Profits Levy risks accelerating industrial decline and job losses. What we are seeing in the North Sea is not a natural transition driven by geology or demand, but a policy-driven one that is actively discouraging investment.
"The reality is stark. The levy leaves the UK with one of the most uncompetitive fiscal regimes in the world, despite the oil and gas price spike ending more than three years ago. As a result, production is falling, investment is stalling and jobs are already being lost at scale across the UK - not just in the North-east of Scotland, but in every nation and region.
"At the same time, the UK is becoming increasingly reliant on imported energy, which is more expensive, more carbon-intensive and supports far fewer domestic jobs. That is the opposite of a just transition.
"The government has already acknowledged that the current approach is flawed by designing a new Oil and Gas Price Mechanism to replace the levy. The logical next step is to bring that mechanism forward and provide clarity and certainty now - not in 2030. Doing so would unlock £50billion worth of investment, protect skilled jobs, safeguard our world-class supply chain and ensure the UK can meet its energy needs while we transition to net zero.”
The Government response said its clean energy jobs plan, published last October, was a “major step forward”, with its “clean energy superpower mission” expected to see jobs in the sector rise from around 440,000 in 2023 to around 860,000 by 2030.