Oil and gas windfall tax must be replaced, say offshore and renewables groups

Groups representing the offshore and Scottish renewables industries have teamed up to call on the Chancellor to replace the oil and gas windfall tax.

In a joint letter to Rachel Reeves and Energy Secretary Ed Miliband, Offshore Energies UK (OEUK) and Scottish Renewables say the Energy Profits Levy must be replaced urgently.

The tax on the profits of oil and gas producers was increased to 38% last year.

Both trade bodies also called on the UK Government to provide more funding for offshore wind.

It is the first time both groups have made such a joint intervention.

Chief executives David Whitehouse of OEUK and Claire Mack of Scottish Renewables warned of a jobs gap if action is not taken.

Their letter says: “Our energy future stands at a critical juncture.

“Unless we slow the pace of decline in North Sea oil and gas while simultaneously accelerating the scale and speed of renewable energy deployment, we face a widening gap in jobs, investment and capability that will weaken our economy.”

They say the Energy Profits Levy must be replaced with a successor regime next year.

Ms Mack said: “The skills, infrastructure and experience built by Scotland’s oil and gas sector are vital assets that must be safeguarded and redeployed as we accelerate the transition to clean energy.

“While oil and gas is financed differently to offshore wind, both sectors are now facing serious investment headwinds at precisely the moment when we need to carefully manage Scotland’s energy transition.

“We have offshore wind projects ready to inject the fresh activity needed to strengthen our supply chain and skills base.

“These projects will underpin our energy security for decades to come, providing a platform for cost reduction.”

The UK Government has previously said it will take a “responsible” approach to replacing the windfall tax, saying the oil and gas sector in the UK will continue for decades to come.