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Press Release22nd Nov 2023

OEUK Autumn statement response: Investment in homegrown energy key to UK growth

Offshore Energies UK (OEUK) has responded to the Autumn statement, recognising its focus on business investment as fundamental to energy security, jobs and a pragmatic energy transition. Homegrown energy is at the heart of the nation’s economic growth and central to maintaining the UK’s position as an energy and net-zero leader in the G7. 

OEUK believes the Chancellor’s announcement of £4.5 billion of investment, including £960 million in manufacturing capabilities for the clean energy sector, is one of a number of important steps in building the nation’s future low carbon infrastructure and economy.  

“The Chancellor hit the right notes today, now we must fully orchestrate our approach to making the UK an irresistible place in which to invest and innovate. The decarbonisation of our economy is one of the greatest challenges of our time, but we must also seize its opportunities,” says OEUK’s chief executive David Whitehouse.

“The fiscal announcements, allowances, apprenticeships, planning and grid reforms announced today will help firms invest in low carbon infrastructure, R&D and our world class workforce. We need these investments to grow the economy, support jobs and deliver reliable homegrown energy to people across the UK.” 

“It’s heartening to see an emerging cross-party consensus on the need for long term investment. The UK needs reliable supplies of homegrown energy that boost our economy and help us reach net zero. By the mid-2030s, oil and gas will still provide 50% of our domestic energy needs. The UK’s offshore energy industry has the skills, people and supply chains we must nurture to build a UK business-led energy transition. Today’s statement helps to give businesses the right conditions to invest in these critical components of our low carbon future and drive UK growth.” 

To guarantee the future of more than 200,000 jobs, unlock £200 billion in investment before 2030 and allow the UK to develop its pathfinding capacity for wind and hydrogen power generation, OEUK has asked government to prioritise: 

Protecting UK energy security and driving economic growth by incentivising investment in domestic energy production through effective tax policy, including headline rates and reliefs.  

Delivering a homegrown transition which champions UK technology and innovation by accelerating UK offshore wind, hydrogen, and the carbon capture and storage. There must be a better strike price in the wind Contract for Difference scheme and a properly linked UK and EU emission trading schemes.  

Supporting and growing a diverse workforce with good jobs now and in the future by anchoring and expanding job opportunities in the UK with a skills passport that engages the current and future workforce. 

The companies investing in new opportunities like fixed and floating offshore wind, hydrogen and carbon capture and storage require the cashflow from a stable and predictable oil and gas business. The long-term goal should be to grow these sectors in a way that avoids long term government subsidies. The Office for Budget Responsibility (OBR) says net zero will take £1.4 trillion of investment, £1.2 of which must come from the private sector.  

To make sure this happens, OEUK says we need: 

  • Fiscal and regulatory reform supporting all forms of energy investment and associated infrastructure 
  • Political consensus at the start of the next parliament to reduce the headline tax burden from its current 75% 
  • Statutory mechanisms to speed up approval for new offshore energy projects and avoid further flight of capital, people, and supply chain.  
  • Green policy levers that accelerate growth and reduce reliance on state support.  
  • Reform of the Contract for Difference process to make it competitive for all companies to invest in wind energy 
  • Clear route to market for wind developers and linking of UK and EU energy trading schemes,  
  • Cohesive policy developed in partnership with industry to define the long-term plans for energy infrastructure including offshore wind, CCS, and hydrogen 
  • A strategic approach to meet the UK’s infrastructure requirements, including upgrading ports, transmission systems, storage, and other facilitating infrastructure including a coherent national security investment act. 
  • Retention of the extension of 100% first year allowances for plant and machinery and consideration of special rate assets.  
  • Investment mechanisms to support decarbonisation and low carbon technologies which should become a permanent feature of the tax regime, along with clarity around investment and a commitment to regular funding allocation rounds. 
  • Market mechanisms that deliver long term certainty to support hydrogen production in the UK, including demand options such as a decision on blending.  
  • Diverse and growing offshore energy workforce with the skills needed to deliver energy today and in the future  
  • Develop and fund local and regional centres of energy excellence in universities, further education institutions, vocational and non-formal learning, and training routes to secure a skilled workforce for the future 
  • Alongside longer-term planning of the energy transition clusters, policy must deliver national and local infrastructure such as rail networks, roads, digital connectivity, and housing stock. 

Many companies that support energy production are mobile and operate internationally in a multitude of supportive fiscal and regulatory regimes. The Energy Profit Levy and Electricity Generator Levy risk further undermining the UK’s homegrown future success and there is already evidence of capital, supply chain and work force flight.  There is always intense competition for capital investment and the government must use every available lever to ensure it stays in the UK. Our domestic energy needs confidence to invest in the next generation of energy security through fiscal certainty, competitive returns, and long-term commitments by policy makers.