A recent report on Energy Voice highlights concerns over a potential £5 billion shortfall in funding for the UK’s green prosperity plan.
The government plans to increase taxes on oil and gas profits, specifically targeting North Sea producers, to raise approximately £10.8 billion.
However, research by Rystad Energy suggests that nearly half of this revenue could be at risk if oil and gas developers reduce activities or exit the UK market due to unfavourable tax conditions.
In an interview with Energy Voice, Dane Inglis, a management consultant at Rystad Energy, said: “At least £4.9 billion, or roughly half of what Labour are looking at targeting, could be considered at risk from lower brownfield activity in the North Sea.”
The Energy Profits Levy (EPL) is set to increase from 35% to 38% from November, extending until at least 2030.
Despite this increase, analysts warn that the strategy may not generate the expected revenue if new oil and gas developments do not proceed.
The closure of a tax relief loophole for new North Sea developments could further discourage investment, making the UK less competitive compared to countries like Norway.
Industry response has been cautious, with companies like Deltic Energy and Serica Energy indicating a shift away from the UK market due to these tax changes.
This situation underscores the challenges of relying on fossil fuel industries to fund the energy transition, highlighting a need for careful policy consideration.