Today, HM Treasury and HM Revenue and Customs have published a consultation on how the oil and gas fiscal regime will respond to future oil and gas price shocks once the energy profits levy (EPL) ends.
The EPL was introduced in 2022 in response to extraordinary profits made by oil and gas companies driven by global events, including resurgent demand for energy post-covid 19 and the invasion of Ukraine by Russia. The EPL will end in 2030, or earlier if the EPL’s price floor, the energy security investment mechanism, is triggered.
The Government are committed to ensuring that there is a new permanent mechanism in place to respond to future oil and gas price shocks. This new mechanism will form an integral part of the fiscal regime, responding only when there are unusually high prices. This will also ensure that the oil and gas industry has the certainty it needs on the future fiscal landscape helping to protect businesses and jobs now and for the future.
The consultation sets out the Government’s policymaking objectives and design options for a new mechanism inviting stakeholder feedback. The Government will work together with the sector and others to ensure we take account of as wide a range of views as possible during this consultation.
The consultation will remain open for three months, closing on 28 May. After this, the Government will consider findings before announcing the final design of the new mechanism in due course.
The Department for Energy Security and Net Zero has launched a separate consultation, “Building the North Sea’s Energy Future”, which sets out the framework for the future of offshore energy in the North sea to support our mission to become a clean energy superpower. This Government want to foster a leading offshore clean energy industry, which ensures good, long-term jobs, growth and investment across the North sea, in tandem with a sustainable transition from oil and gas. Both consultations are integral to the Government’s wider efforts to build the UK’s energy future while promoting economic growth and environmental sustainability.
We look forward to receiving responses from stakeholders, industry and the public.
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