The UK Government's energy-transition ambitions do not match up with the "unpredictable" fiscal policies surrounding oil and gas, according to a leading trade body.
Offshore Energies UK energy policy manager Will Webster said low-carbon fuel could help underpin the country's future energy system, but predictable regulations and taxation, as well as a steady flow of gas production licenses, would be essential to meeting targets.
Energy Voice reports that industry has plans to invest around £9billion in up to 10 gigawatts of hydrogen infrastructure by 2030, but Mr Webster suggested many of the trade body's members would be reluctant to commit cash without a stable framework from the UK Treasury.
It comes amid discontent around the effects of windfall tax on the sector's ability to invest in energy-transition projects.
Mr Webster added: "We see a massive disconnect between the kind of detailed policy development government is doing across the whole range of topics - whether it's renewables, wind, hydrogen etc. - where they are going into a lot of effort in developing incentive mechanisms, but at the same time we have a fiscal mechanism that is pretty unpredictable, we don't really understand where it's going, and it's very unsupportive of investment.
"Across the energy sector, there's a huge disconnect there and that's definitely something we're talking to government and Treasury about - going back to something that's a bit more long-term and will promote investment across the board."
Main concern
OEUK sustainability director Mike Tholen said that the main concern among investors in projects was long-term certainty.
He went on: "People have to be confident that what they start today will still work two or three years' down the road, never mind five or 10 years.
"The current political dynamic coupled with the yo-yoing on fiscal (policy) makes it really hard to see our way through."
Many in the oil and gas sector have warned that the government's energy profits levy (EPL) on producers has sent North Sea investor confidence to an all-time low, prompting job cuts and a reduction in planned capital expenditure.
Mr Tholen added that many in the sector had been also "blindsided" by the scale of the US's Inflation Reduction Act, with the UK now on the back foot as many multinationals look to deploy capital elsewhere.
But he also pointed to some recent bright spots, including an investment decision on Shell's Jackdaw project last year and a play-opening discovery at Pensacola in the southern North Sea last week.
Severe challenges
However, Mr Tholen also acknowledged that some companies such as Harbour Energy were facing severe challenges as to how they respond to the current environment.
"There is a focus on some new developments longer term, but a number of companies - not just the Harbours of this world - are scratching their heads on the nature of the basin and the nature of confidence."
He also reiterated the sector's call for a price-floor mechanism to be built into the EPL, especially with recent falls in hydrocarbon prices.
"As we look to the Budget, we've been very clear we'd like to have some signals that, as windfalls fall away, the tax falls away with a price trigger," Mr Tholen commented.