The UK government is said to be weighing an early end to the controversial Energy Profits Levy (EPL) or windfall tax, amid sustained pressure from the oil and gas industry.
Treasury officials and North Sea operators have engaged in an “intense schedule of meetings” over the past three weeks ahead of the Spring Statement, according to trade outlet Upstream.
The levy is a 38% tax on UK oil and gas company profits, effective from 1 November 2024, designed to capture excessive gains from high energy prices. It brings the total headline tax rate to 75%. The tax lasts until 31 March 2030, but includes an Energy Security Investment Mechanism (ESIM) to end it early if prices fall.
Energy firms, lobby groups and opposition parties have been demanding the mechanism is brought about before the 2030 deadline to stem the loss of jobs and investment in the North Sea, currently running at 1,000 jobs per month.
Scottish Energy Secretary Gillian Martin has called on the UK Government to immediately end the levy, highlighting the risk it poses to Scotland’s just energy transition.
In a letter to Secretary of State for Energy Security and Net Zero Ed Milliband and Chancellor Rachel Reeves, Ms Martin urged the UK Government to announce the immediate removal of the EPL in its Spring Statement next week.
She says: “There are […] reserved policy areas, such as the retention of the EPL, where UK Government decisions are driving an accelerated decline in North Sea oil and gas and opening up a gap with the renewables industry. This is a gap into which jobs and livelihoods are being lost.”
The letter also follows up on recent meetings between the First Minister and Prime Minister, where the UK Government has been urged to act on energy policies to avoid risking the irreversible deindustrialisation and decline in Scotland’s economy.
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