Spring Budget must boost energy investment and drive growth

 Amid fears the Spring Budget will extend taxes on North Sea energy producers and undermine investment, Offshore Energies UK is again urging the Chancellor and Shadow Chancellor to back a homegrown energy transition and drive economic growth across the nation.

A homegrown energy transition means investing in domestic production not increasing energy imports.

Offshore energy firms, their supply chain and workforce need a fair and competitive tax framework to secure and keep investment here in the UK.

OEUK continues to point out why the current windfall tax, or energy profits levy (EPL), of 75 per cent, is deterring investment in domestic oil and gas with implications for wider investment, hydrogen and carbon capture.

Offshore energy businesses are still facing a windfall tax even as energy prices fall towards levels last seen before the invasion of Ukraine. The energy price cap is also the lowest it has been in two years and inflation is falling. The price of gas in the UK is almost 10 times lower than the peaks seen in mid-2022. The price of oil also continues to trade in line with the 14 year average.

As windfall conditions fall away, concern has been raised that the EPL may be further extended by the Chancellor. This would be a worrying signal for the offshore energy sector.

OEUK’s industry manifesto published last week shows how a new era of homegrown energy, highly skilled jobs and growth can be created if private investment conditions are right.

The Office for Budget Responsibility says net zero will cost the UK £1.4 trillion and the lion’s share must come from industry. OEUK’s manifesto sets out how this capital can be unlocked by policymakers creating the right conditions for the UK to become an irresistible investment environment.

David Whitehouse, CEO Offshore Energies UK said:

"The Chancellor should use this budget to send a clear signal that UK is open for business investment in offshore energy. The cost-of-living crisis has had a huge impact on many, the answer to this must be growing the UK economy and not making it smaller.

"If the energy profit levy is extended, it will be the fourth tax regime two years. The windfall conditions have gone and energy prices are now where they were before the invasion of Ukraine. This instability makes it impossible for companies to plan or set long term objectives which is stifling investment and the transition to clean energy.

"We are in a global competition for energy investment. With the right investment environment, we have shown there is £200bn of investment in oil and gas and the wider energy transition waiting for the green light. This investment will deliver economic growth, support jobs and energy security, and boost our world class supply chain.”

Read the latest issue of the OGV Energy magazine HERE