Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make it his policy not to use public money to fund any new fossil fuel projects in the UK.

The government is fully committed to green growth and net zero by 2050, including speeding up the deployment of clean and renewable technologies such as nuclear, hydrogen, solar, carbon capture and storage and wind – where the UK is already a world leader in offshore generation. The UK’s omissions have also fallen by over 44% between 1990 and 2019. However, oil and gas are not incompatible with this, as the UK will need these fuels for decades to come to support our energy security through the transition to clean energy.

The government places additional taxes on the extraction of oil and gas, with companies engaged in the production of oil and gas in the UK and on the UK Continental Shelf subject to a combined headline tax rate on their profits of 40%. The Energy Profits Levy was introduced in May as a temporary 25% tax on top of this (the rate will rise to 35% from 1 January 2023). The Energy Profits Levy will end on 31 March 2028.

The government has always sought to balance delivering a fair return for the UK from the use of its resources while providing the right conditions to attract investment in the North Sea that is key to support domestic jobs and the nation’s energy security. That is why companies investing in new or existing projects can claim a deduction against their taxable profits taking into account the cost of their investments. The UK will receive tax revenues from these investments as and when they generate a profit.