Offshore Energies UK (OEUK) is disappointed by today’s Spring Budget statement’s lack of recognition for oil and gas as the key pillar in UK energy security – providing 75 per cent of the nation’s energy.
Over 90 per cent of OEUK’s operator members are looking to scale down investment in homegrown energy because of the energy profits levy (EPL). OEUK is ready to work in partnership with all parties to boost energy investment and to meet with ministers in the coming weeks to deliver the energy transition whilst maintaining energy security. However OEUK praised new support for tomorrow’s energy technology, such as carbon capture and storage (CCS) as part of a longer term approach.
Consistent government and independent forecasts show the UK will continue to have a demand for oil and gas. Producing this energy as cleanly as possible, here in the UK, whilst supporting hundreds of thousands of jobs is vital. Otherwise the UK will become increasingly reliant on imports – which were up to £117 billion in 2022.
Today’s newly announced capital allowances for the wider economy could be critical levers to encourage more private investment into the UK and deliver growth. However, we need to see targeted encouragement of the private investment needed across the entire energy landscape if the nation is to become a genuine global leader in energy.
Before the Budget, OEUK CEO David Whitehouse wrote to the Chancellor with three key asks:
- Support decarbonisation and CCS: With investment in projects and new technologies
- Boost investment: Establish a long-term predictable and attractive fiscal and regulatory regime
- Amend the Energy Profits Levy (EPL): So it only applies when profits surge
After today’s statement, David Whitehouse comments:
“While we welcome the support for decarbonisation and carbon capture and storage, the UK risks becoming a hostile environment for wider investment in domestic offshore energy. We must work together to make the most of our homegrown industry and use this as the platform for a low carbon future.
“Today’s Budget statement offers some helpful support for our emerging technologies but we are disappointed that it has not removed obstacles for offshore energy firms and the homegrown oil and gas producers keeping the nation’s lights on. It is vital that HM Treasury offers investors fiscal predictability and regulatory certainty making the UK an attractive place to invest for the long-term. We need the government to take a far-sighted approach focused on reducing investment risk if we are to build a secure, affordable, low carbon energy market in the UK. “The commitment on CCS from the chancellor today was important, recognising its role as a critical technology in which the UK can take a global lead. A successful carbon capture and storage economy in the UK requires supportive government policy, a stable fiscal regime and a first mover advantage. This type of initiative is exactly what will help the UK and its supply chain pivot and position as a world-leader in this low carbon opportunity. The Government should now speed up the progression of all CCS projects, including introducing additional licencing rounds for storage sites.”