Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential impact of windfall taxes on the level of investment in offshore energy production.

The Energy Profits Levy (EPL) was introduced on 26 May 2022 to respond to exceptionally high prices that meant oil and gas companies were benefiting from unexpectedly high profits. While the EPL is in place, companies can claim around 91p in tax relief for every £1 they invest in the UK. This relief increases to £1.09 for every £1 for money invested towards reducing greenhouse gas emissions from the production of oil and gas. At Autumn Statement 2023, the Government confirmed the technical details of the EPL’s price floor, the Energy Security Investment Mechanism (ESIM), which was introduced in June 2023 to give the sector the certainty to invest. The Government are committed to ending the EPL by March 2028 at the latest, or earlier if oil and gas prices return to historically normal levels due to the ESIM.

The Electricity Generator Levy (EGL) is a time-limited tax on the extraordinary returns of electricity generators. The levy is not payable on renewable generation produced under Contracts for Difference, which will account for most new large renewable generation coming online in future years. To further support new renewables investment, at Autumn Statement 2023 the Chancellor announced an exemption from the EGL for new generation projects.