Hammond must avoid more North Sea oil subsidies in autumn statement
18th November 2016 | Commercial Energy
Nine leading sustainable energy campaigners write, “Philip Hammond should put an end to the taxpayer-funded bonus for oil and gas companies and set the UK on a pathway to a more prosperous, clean energy future.”
Ahead of the autumn statement next week (Report, 18 November), we urge the chancellor not to answer calls from oil producers in the North Sea for another round of government subsidies.
Instead, Philip Hammond should put an end to the taxpayer-funded bonus for oil and gas companies and set the UK on a pathway to a more prosperous, clean energy future. If the world is to deliver on the Paris agreement on climate change, most of the known oil, gas and coal reserves must remain untapped. Yet in spite of warnings about risks of stranded assets from the governor of the Bank of England, the UK continues to promote the production of yet more oil and gas.
The tax breaks introduced by former chancellor George Osborne in 2015 and 2016 have been costly. The Office for Budget Responsibility estimates that the Treasury will hand oil and gas companies a net £4.8bn in rebates between 2015 and 2021. These tax breaks have also failed to protect jobs. Even with current subsidies, North Sea oil and gas operators expect to lay off one in six UK-based workers this year. By contrast, a recent UK Energy Research Centre study found that similarly sized renewable energy projects create 10 times more jobs than their fossil fuel counterparts.
As the industry is now asking this government to shift wider production costs and even more of the £70bn in decommissioning costs to the taxpayer, the government must acknowledge that the transition to a low-carbon future offers a much larger benefit to the UK than continuing to chase uneconomic fossil fuel production. Removing existing tax breaks is critical for establishing a financial framework for a prosperous and clean energy future. In next week’s autumn statement, the chancellor should eliminate these perverse incentives which do not serve the UK’s economic and environmental interests. This would be an important first step for the UK in meeting a call by businesses and civil society to phase out all fossil fuel subsidies by 2020.
The nine writers are: Shelagh Whitley Head of climate and energy, Overseas Development Institute, Stephen Kretzmann Executive director, Oil Change International, Mika Minio-Paluello Programme coordinator, Platform UK, Marc Stears Chief executive, New Economics Foundation, Dylan Tanner Executive director, InfluenceMap, Peter Wooders Group director, energy, International Institute for Sustainable Development, Mike Barrett Acting executive director, global programmes, World Wildlife Fund UK, Simon Bullock Senior campaigner, climate change and energy, Friends of the Earth England, Wales and Northern Ireland,Richard Dixon Director, Friends of the Earth Scotland
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