Taxpayers to pay for offshore wind to power oil platforms in North Sea

A new tax break is set to be introduced in the spring which would allow firms to claim a £109 tax break for every £100 they spend on decarbonising their assets – including by powering their oil and gas platforms with renewable energy.

But climate campaigners say that this amounts to taxpayers footing the bill for projects that oil and gas firms could easily pay for themselves.

Indeed, the tax relief could reduce the overall take of the windfall tax on energy companies by billions.

Last year, profits at the seven biggest oil firms were found to be in excess of £150 billion as Russia's invasion of Ukraine pushed up energy prices worldwide. 

Freya Aitchison, an oil and gas campaigner for Friends of the Earth Scotland, told The National: "The irony should not be lost on anyone that as the fossil fuel industry is given huge handouts to power platforms with renewables, they are also pushing to drill every last drop of oil and gas.

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"We must not forget that cutting emissions from producing oil and gas is a drop in the ocean compared to the pollution from actually burning the final oil and gas produced.

“Every new North Sea field that is approved takes us further away from a fast and fair transition that supports workers and communities. By encouraging and incentivising new projects like Rosebank and Cambo, the UK Government is denying the reality of the climate emergency.

“Both climate science and energy experts are crystal clear that there can be no new oil or gas developments if we want to stay within the agreed limits of global temperature rises, no matter how much the industry and the UK Government tinkers around the edges of North Sea emissions.”

A windfall tax was levied on oil and gas companies in the North Sea in May 2022, increasing the effective tax rate from 45% to 65%.

However, the UK Government also brought in generous tax breaks in an attempt to encourage companies to invest in the industry.

Now, with the effective tax rate rising to 75% until 2028, the tax relief on offer has been simultaneously increased from £91 for every £100 invested to £109 for every £100 of “decarbonisation expenditure”.

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This includes installing wind turbines to power oil and gas platforms.

Tessa Khan, executive director of fossil-free campaign group Uplift, said: “It’s beyond absurd that we should be paying for wind energy to produce oil that will likely be exported and will do nothing to lower bills, when wind projects that connect to the grid, which would lead to lower energy costs for consumers, continue to be blocked by Ministers.

“Unfortunately this is typical of this government, which will jump through hoops for the fossil fuel industry but is sitting on its hands when it comes to taking action on energy that will benefit everyone, such as rolling out home insulation and onshore renewables, both of which will lead to permanently lower bills.”

A spokesperson for the Treasury said: “The Energy Profits Levy strikes a balance between funding cost of living support while encouraging investment in order to bolster the UK’s energy security.

"We have been clear that we want to encourage reinvestment of the sector’s profits to support the economy, jobs and our energy security, which is why the more investment a firm makes into the UK, the less tax they will pay.”