Following the Chancellor’s announcement of a windfall tax on oil and gas companies to tackle the cost of living crisis, Molly Scott Cato, Professor of Economics at the University of Roehampton and former Green MEP, argues that the 90% tax relief for the same companies will encourage greater fossil fuel investment at a time when the UK should be doubling down on renewable energy:
“While the 25% windfall tax on oil and gas companies is welcome, the 90% tax relief announced for the same companies will incentivise them to continue pumping resources into fossil fuels rather than embracing renewable projects and R&D developments tilted towards the sustainability transition.
“To insulate ourselves from further global energy shocks like that caused by the war in Ukraine, the UK must focus on making the most of our abundant renewable energy resources. For example, onshore and offshore wind and solar power are the cheapest forms of electricity generation, and, most importantly, are the ones that will provide domestic energy security. The government should prioritise this and incentive businesses to pursue renewable energy investment rather than fossil fuels, as well as putting more resources into encouraging home insulation across the UK.
“As serious as they are, the war in Ukraine and Covid-19 are short-term issues. The Chancellor must not lose sight of the greatest crisis we are facing: the climate change crisis. Ultimately, today’s announcement signals the Government’s inconsistent and disappointing approach to meeting its net zero commitments and targets despite its pledges at COP26.”