6th Mar 2025 12:09
(Alliance News) - The UK government has announced plans to end the windfall tax on oil and gas profits in 2030 as it launches a consultation on the future of the North Sea energy sector.
Starting on Thursday, the Department for Energy Security & Net Zero, DESNZ, will talk to communities, businesses, trade unions, workers and green groups to develop a plan for a phased offshore energy transition in the region.
The two-month consultation will look at harnessing the North Sea's existing infrastructure, natural assets and expertise to deploy new technologies, such as hydrogen, carbon capture and storage, and renewables.
Alongside this, the Treasury confirmed that the Energy Profits Levy will end in 2030 and said it will consult separately on a new regime that responds to the potential for future price shocks.
The tax was introduced in 2022 to help fund support for households struggling with rocketing energy bills following Russia's invasion of Ukraine.
Under DESNZ's proposals, the government set out its commitment to continued extraction of oil and gas from existing fields for their lifetime.
It also stood by its pledge not to issue any licences to explore new fields – a move in line with the science of what is required to limit dangerous global warming.
But in a bid to maintain existing licences, the government said oil and gas firms will still be able to extend their permits beyond their expiry date or transfer them to other firms.
Licences for carbon storage, gas storage and methane drainage will also not be affected by the plans.
The move comes as the government seeks to give the oil and gas sector long-term certainty on the future fiscal landscape, helping to support investment and protect businesses.
Ministers are also looking to reassure workers and trade unions, who have called for a coordinated plan to protect good jobs, pay terms and conditions in the region.
Energy Secretary Ed Miliband said: "The North Sea will be at the heart of Britain's energy future. For decades, its workers, businesses and communities have helped power our country and our world," he said, adding that oil and gas production will "continue to play an important role".
"This consultation is about a dialogue with North Sea communities – businesses, trade unions, workers, environmental groups and communities – to develop a plan that enables us to take advantage of the tremendous opportunities of the years ahead," he said.
Elsewhere, the new proposals could see changes to the regulator North Sea Transition Authority, NSTA, so that it can better support the government's vision for the area's energy transition.
The proposals also set out the government's commitment to end new licences for onshore oil and gas exploration and production in England.
Treasury minister James Murray said: "We are committed to working together with the sector on the future of the North Sea by providing the stability they need to keep investing and supporting jobs across the country while ensuring they make a fair contribution at times of unusually high prices."
Tania Kumar, net zero director at the Confederation of British Industry, said: "Today's consultations highlight the government's commitment to a managed transition.
"Success hinges on our collaboration with communities, worker and businesses to develop a practical plan.
"Robust regulation and the pivotal role of the North Sea Transition Authority will be essential."
Stuart Payne, NSTA chief executive, said: "The NSTA welcomes this important step towards clarity and long-term certainty.
"We know from dialogue with industry this is what is needed to make effective plans for the future and for investment.
"As I've said many times, the North Sea is the crown jewel in the UK's energy system and can continue to play a pivotal role in a prosperous future through the energy transition."
Mel Evans, climate team leader at Greenpeace UK, also welcomed the announcement.
"The only way forward for a secure future means ending our reliance on oil and gas," she said.
"The government clearly recognises that creating a renewable energy system can provide this country and its energy workers with economic opportunities and stable, future-proofed jobs."
By Rebecca Speare-Cole, PA sustainability reporter
Press Association: Finance
source: PA
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