27th May 2022 16:37
(Alliance News) - Oil major Shell PLC has questioned the UK government's decision not to allow its green investment to count towards the tax relief it will get from the new windfall tax.
Activists hit out at the tax's relief system, which encourages new investment to extract more oil and gas from the North Sea.
It does not incentivise investment in renewable energy.
Shell had originally seemed to welcome the new system after it was announced on Thursday.
It said that a tax relief that could give it 91p back for every GBP1 it invested in the UK was "a critical principle in the new levy."
But after sleeping on it, bosses appeared to have some new thoughts on the way the relief works.
"In its current form the levy creates uncertainty about the investment climate for North Sea oil and gas for the coming years," it said.
"And, longer term, the proposed tax reliefs for investment don't extend to the renewable energy system we want to drive forward in the UK and invest in very substantially.
"When making plans for the next decade and beyond, we need certainty."
On Thursday, UK Chancellor Rishi Sunak announced a GBP15 billion support package for households around the country to offset some of the rising energy bills.
At the same time he said that the government would try to raise GBP5 billion by slapping an extra 25% on the tax that North Sea oil producers pay to HM Revenue and Customs.
It came with a promise that the firms can claim heavy tax relief if they invest in the UK, but only for investments in oil and gas.
This decision was criticised by environmental campaigners.
Shell said: "We understand the worry for millions of people about how high energy costs are challenging their household budgets – and the need for support to help make ends meet.
"But at the same time, we must sustain investment in securing supplies of oil and gas the UK needs today, while allocating future spend for the low-carbon energies we want to build for the future."
Rival BP PLC on Thursday said it will review its investments in the North Sea in light of the government's windfall tax plans.
source: PA
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