Source · Select Committees · Environmental Audit Committee
4th Report - Accelerating the transition from fossil fuels and securing energy supplies
Environmental Audit Committee
HC 109
Published 5 January 2023
Recommendations
8
Not Addressed
Para 57
The Government’s current fuel poverty target ‘to ensure that as many fuel-poor homes as is...
Recommendation
The Government’s current fuel poverty target ‘to ensure that as many fuel-poor homes as is reasonably practicable achieve a minimum energy efficiency rating of band C, by 2030’ is vague and unspecific. Informed by the CCC’s Sixth Carbon Budget advice, …
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Government Response Summary
The government response discusses NSTA emissions monitoring rather than the fuel poverty target and energy efficiency taskforce recommendations.
10
Accepted
Para 62
The Government must first act to increase the funding of schemes that are already in...
Recommendation
The Government must first act to increase the funding of schemes that are already in place and have a proven track record of effective delivery. The £1 billion of further funding that the Government has provided to the Energy Company …
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Government Response Summary
The Government states it is investing £6.6 billion this Parliament on clean heat and improving energy efficiency in buildings and highlights existing schemes like ECO, HUG, and LAD to support low-income households. They plan to launch the new ECO+ scheme in spring 2023 worth £1 billion over three years.
11
Accepted in Part
The current ECO scheme is not delivering anywhere near the numbers of energy efficiency improvements...
Recommendation
The current ECO scheme is not delivering anywhere near the numbers of energy efficiency improvements it did at its peak a decade ago. The Government needs to ensure that ECO+ is properly funded to deliver hundreds of thousands if not …
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Government Response Summary
The government acknowledges the ECO scheme's importance and outlines the ECO4 and ECO+ schemes, with a combined budget of £2 billion from 2022-2026, aiming to upgrade homes and reduce energy bills. The Energy Efficiency Taskforce will focus on reducing energy demand by 15% by 2030.
12
Deferred
Para 70
The Government must also urgently bring forward measures to incentivise energy efficiency improvements via the...
Recommendation
The Government must also urgently bring forward measures to incentivise energy efficiency improvements via the mortgage market. The Department for Business, Energy and Industrial Strategy conducted a consultation on how an obligation on lenders could be introduced to improve the …
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Government Response Summary
The government acknowledges the role of mortgage lenders, but cites recent economic pressures as a reason to refine policy in this area based on consultation feedback before publishing a response. In the meantime, they are investing up to £20m through the Green Home Finance Accelerator programme.
13
Acknowledged
Para 71
In response to the Committee’s report on Energy Efficiency of Existing Homes, published in March...
Recommendation
In response to the Committee’s report on Energy Efficiency of Existing Homes, published in March 2021, the Government said that it was considering what further action might be required to catalyse the market for a wide range of attractive and …
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Government Response Summary
The government is prioritizing catalysing the market for Green Finance, citing the Green Home Finance Innovation Fund and the Green Home Finance Accelerator programme, and notes that the Energy Efficiency Taskforce will advise on stimulating investment.
15
Accepted in Part
Para 76
The promise of £6bn further funding from the Chancellor is welcome, but those in fuel...
Recommendation
The promise of £6bn further funding from the Chancellor is welcome, but those in fuel poverty cannot afford three winters of delay. We believe it is a false economy to hold this money back at a time when households are …
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Government Response Summary
The government recommitted to net zero targets through the Department for Energy Security and Net Zero and set an aspiration for as many homes as possible to reach EPC Band C by 2035 where cost-effective, affordable & practical. They cite current investments and planned ECO+ scheme, but do not commit to bringing forward the £6bn of funding.
16
Accepted
Para 77
The Energy Efficiency Taskforce announced in November 2022, if appropriately resourced and commissioned, has the...
Recommendation
The Energy Efficiency Taskforce announced in November 2022, if appropriately resourced and commissioned, has the potential to make a significant practical contribution to policy implementation. In our view it would be well placed to advise Ministers in the Departments for …
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Government Response Summary
The Energy Efficiency Taskforce will advise ministers on delivering the government’s ambition to reduce total UK energy demand by 15% from 2021 levels by 2030, across domestic and commercial buildings and industrial processes, working within existing funding envelopes and policy parameters.
17
Deferred
Para 78
The Government can take further practical measures to make its policy on energy efficiency more...
Recommendation
The Government can take further practical measures to make its policy on energy efficiency more effective. The current system of Energy Performance Certificates still requires a thorough overhaul to ensure that they represent an accurate assessment of the improved energy …
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Government Response Summary
The government acknowledges the role of Energy Performance Certificates and intends to consult on proposed reforms to the Energy Performance of Buildings framework in 2023, including options for an improved set of metrics.
19
Accepted in Part
Para 90
We are encouraged that the Government has now included one of the cheapest forms of...
Recommendation
We are encouraged that the Government has now included one of the cheapest forms of renewable energy—onshore wind—in Contracts for Difference auctions and will consult on proposed changes to national planning policy to relax the de facto prohibition that has …
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Government Response Summary
The Government is committed to increasing onshore wind capacity and will consult on changes to national planning policy to relax the de facto prohibition, considering how to give local authorities demonstrating support for onshore wind a greater say and ensure that local communities benefit from any projects developed. However, they do not explicitly commit to a clear ambition to expand generating capacity from onshore wind by 2035, only stating that they are working across government to deliver a net zero energy system to achieve power decarbonisation by 2035.
20
Not Addressed
It is unclear whether Ministers will maintain the current position whereby grade 3b agricultural land...
Recommendation
It is unclear whether Ministers will maintain the current position whereby grade 3b agricultural land is available for ground-mounted solar installations. We recognise that the Government must balance the needs of energy security with biodiversity protection and food production. Nevertheless, …
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Government Response Summary
The government describes its technology-neutral approach, the importance of renewable energy such as solar panels, and the introduction of uplifted energy efficiency standards. They will explore how they can continue to drive onsite renewable electricity generation in new homes and buildings as part of the full technical consultation on the Future Homes Standard.
22
Acknowledged
Para 105
We welcome the inclusion of tidal power in Contracts for Difference auctions which has resulted...
Recommendation
We welcome the inclusion of tidal power in Contracts for Difference auctions which has resulted in 40MW of clean power from tides being awarded contracts. Tidal and other marine energy projects should be a vital component of the Government’s strategies …
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Government Response Summary
The government welcomes the inclusion of tidal power in Contracts for Difference auctions and recognizes the potential of tidal stream and tidal range technologies to deliver a reliable source of renewable energy.
23
Acknowledged
Para 110
The British Energy Security Strategy appears to reflect a 20th century approach to energy security,...
Recommendation
The British Energy Security Strategy appears to reflect a 20th century approach to energy security, prioritising the construction of big, centralised power generation facilities to meet fixed demand. A move to a smarter, more flexible, digitally-enabled grid, which technological innovations …
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Government Response Summary
The government recognizes the importance of a smart, flexible energy system, and that Ofgem has been working with industry to develop new grid codes and standards and it will bring forward retail market reforms to support system transformation to achieve power decarbonisation by 2035.
25
Accepted in Part
Para 119
If the classes of land available for ground-mounted solar are further restricted, it will make...
Recommendation
If the classes of land available for ground-mounted solar are further restricted, it will make it all the more imperative to mandate the widespread deployment of rooftop solar in new developments where there are appropriate south facing aspects. We recommend …
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Government Response Summary
The government states that its approach remains technology-neutral but that renewable energy such as solar panels are a key part of getting to net zero. It expects most developers will install solar panels or heat pumps. It will explore how it can continue to drive onsite renewable electricity generation, such as solar panels, where appropriate in new homes and buildings.
27
Accepted
Para 132
The best way to reduce the UK’s future exposure to volatility in the price of...
Recommendation
The best way to reduce the UK’s future exposure to volatility in the price of oil is to reduce oil consumption. The rapid growth in electric car sales is encouraging, but it will take many years to replace petrol and …
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Government Response Summary
The government states that decarbonising transport and reducing its contribution to climate change is a priority, referencing the Transport Decarbonisation Plan (TDP) published in 2021. They will continue to consider options, including those put forward by the IEA, and mention existing commitments and initiatives such as phasing out the sale of new non-zero emission vehicles and supporting active travel.
29
Acknowledged
In light of the Prime Minister’s confirmation at the Despatch Box to the Chair of...
Recommendation
In light of the Prime Minister’s confirmation at the Despatch Box to the Chair of this committee that he will personally drive cross-government action on climate change, we recommend that the Prime Minister directs the Secretary of State for Business, …
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Government Response Summary
The government says that DESNZ and DLUHC work closely together on climate change policy areas and highlights the Future Homes Standard and Building Regulations. A Transport Decarbonisation Plan exists and will be updated within 5 years.
32
Rejected
Para 180
The UK Government showed admirable international climate leadership at COP26 in Glasgow, pushing for a...
Recommendation
The UK Government showed admirable international climate leadership at COP26 in Glasgow, pushing for a renewed resolve to pursue efforts to limit the temperature increase to 1.5°C. When making decisions about future oil and gas licensing, the UK Government must …
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Government Response Summary
The government rejects the recommendation to set a clear date for ending new oil and gas licensing rounds in the North Sea, arguing that domestic production is already declining and that limiting UK production would not necessarily reduce global emissions.
33
Rejected
Para 192
The emissions targets currently set under the North Sea Transition Deal are not stretching enough.
Recommendation
The emissions targets currently set under the North Sea Transition Deal are not stretching enough. The Climate Change Committee suggests that it is feasible and necessary for oil and gas production emissions to be reduced by 68% by 2030. We …
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Government Response Summary
The government rejects the recommendation to modify the North Sea Transition Deal, stating that the current decarbonisation targets are sufficiently ambitious and will help to reduce emissions, ensuring the UK Continental Shelf reaches net zero by 2050.
35
Accepted
Para 201
To date the NSTA has not published the names of those operators lagging behind in...
Recommendation
To date the NSTA has not published the names of those operators lagging behind in reducing their production emissions. This prevents investors, shareholders and other interested parties from being able to appraise the performance of individual companies against their net …
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Government Response Summary
The NSTA reports domestic production emission data at an aggregated level and has published asset level domestic production emission information in publicly available dashboards; the government supports this approach.
36
Rejected
Para 202
Given the urgency of the climate crisis and the need to deliver significant cuts in...
Recommendation
Given the urgency of the climate crisis and the need to deliver significant cuts in emissions by 2030 to meet the UK’s current Nationally Determined Contribution under the Paris Agreement, mandatory targets for the reduction of oil and gas operational …
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Government Response Summary
The government will not reopen the North Sea Transition Deal for negotiation but will monitor progress closely to ensure the sector is on track to meet the 2030 target.
38
Accepted
Para 216
Oil and gas companies must accelerate their efforts to electrify offshore platforms, stop flaring and...
Recommendation
Oil and gas companies must accelerate their efforts to electrify offshore platforms, stop flaring and address methane leakage. We recommend that all oil and gas companies involved in extraction of fossil fuels from areas within the UK’s jurisdiction report annually …
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Government Response Summary
The government responded that the NSTA already reports domestic production emission data via its annual Emissions Monitoring Report and has published asset level domestic production emission information in publicly available dashboards.
39
Accepted
We are disappointed to observe that only two electrification projects are expected to be commissioned...
Recommendation
We are disappointed to observe that only two electrification projects are expected to be commissioned by 2027. During the development phase of a new project the NSTA approves Concept Select and Field Development Plans. We recommend that the regulator uses …
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Government Response Summary
The NSTA states it already has net zero considerations embedded throughout the project lifecycle and uses the FDP process to incentivise low carbon power solutions.
40
Accepted
Para 218
The routine flaring of unwanted fossil gas must be banned outright, as it has been...
Recommendation
The routine flaring of unwanted fossil gas must be banned outright, as it has been by Norway since 1971. We recommend that the Government introduces an amendment to the Energy Bill to provide for a total prohibition on flaring from …
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Government Response Summary
The government stated it already has ambitious plans to end routine flaring and venting, has signed up to The World Bank Zero Routine Flaring initiative, and the NSTA expects flaring and venting emissions to be at the lowest possible levels.
41
Accepted
Para 224
It is encouraging that the North Sea Transition Authority is in the process of issuing...
Recommendation
It is encouraging that the North Sea Transition Authority is in the process of issuing licences to CCUS projects in the UK. We support the North Sea Transition Deal’s intention to drive forward the deployment of this technology which will …
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Government Response Summary
The government stated that its £1 billion CCS Infrastructure Fund and the £240mn Net Zero Hydrogen Fund, along with work on enduring business models and revenue support, will provide industry with the certainty required to deploy CCUS at pace and at scale and that the Energy Security Bill brings forward provisions to establish CO2 transport and storage, industrial carbon capture and low carbon hydrogen business models.
44
Rejected
Para 247
The Energy Bills Support Scheme and the subsequent Energy Price Guarantee have provided badly-needed support...
Recommendation
The Energy Bills Support Scheme and the subsequent Energy Price Guarantee have provided badly-needed support for billpayers, saving four million households from fuel poverty. While we welcome the support the Government has provided, we note that currently it will only …
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Government Response Summary
The government rejected the recommendation due to fiscal sustainability concerns regarding the use of EPL revenue for a hypothecated fund, citing the volatility of projections of EPL revenues and the constraining impact on the management of public finances.
46
Rejected
The Government is not providing renewable energy generators with the same level of generous tax...
Recommendation
The Government is not providing renewable energy generators with the same level of generous tax reliefs for new investment to enhance the UK’s energy security. We recommend that the Treasury examine how a similar low-carbon Investment Allowance could be introduced …
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Government Response Summary
The government rejected the recommendation, stating that it supports renewables deployment through schemes like Contracts for Difference (CfD) and that the Electricity Generator Levy (EGL) is charged on a different base and at a lower combined rate than the Energy Profits Levy (EPL).
Conclusions (21)
1
Conclusion
Acknowledged
Para 36
The UK is experiencing its biggest energy crisis since the 1970s following major geopolitical instability during a year of worryingly extreme weather. Gas markets look likely to remain volatile for the foreseeable future and the UK remains exposed economically to oil and gas supply restrictions because of its continued dependence …
Government Response Summary
The government acknowledges the Environmental Audit Committee’s report and notes the machinery of government change and the contributions from various departments and the North Sea Transition Authority (NSTA).
2
Conclusion
Acknowledged
Para 37
The UK has become used to reliable global energy markets providing a large proportion of its energy needs. Vladimir Putin’s apparent weaponisation of gas supplies has shown that the physical accessibility of energy supplies remains a crucial policy consideration, at least in the short to medium term. The UK Government …
Government Response Summary
The government welcomes the Environmental Audit Committee’s report and provides context for the response, including mentioning the machinery of government change and contributions from other departments.
3
Conclusion
Acknowledged
Para 38
Whilst the UK continues to be committed to phasing out the use of coal for electricity generation by 2024, the Government has recently announced its intention to allow the opening of a new coal mine at Whitehaven in Cumbria. The coking coal to be mined there has limited application in …
Government Response Summary
The government acknowledges the committee's concern and reiterates its commitment to phasing out unabated coal for electricity generation by 2024, stating that any decision on a new coal mine is independent from this commitment and follows established planning policy.
4
Conclusion
Acknowledged
Para 39
Climate breakdown threatens lives, livelihoods and infrastructure, and taking steps to ensure continued climate stability must be a national security priority for any government. The increasing frequency and ferocity of extreme weather events, floods, droughts and heatwaves which is manifest at the current 1.1°C average heating should serve as an …
Government Response Summary
The Government recognizes that climate change and biodiversity loss pose risks to lives, livelihoods, national security, and infrastructure, and highlights its commitment to tackling these challenges through action and its net zero emissions target by 2050. It is also investing in climate adaptation measures.
5
Conclusion
Acknowledged
Tackling the immediate energy security and affordability issues caused by the war in Ukraine does not entail abandoning climate ambitions or putting them on pause. The energy trilemma can be solved by tackling all three issues together. There are many opportunities to achieve synergies between affordability, security and sustainability. Accelerating …
Government Response Summary
The government agrees that energy security and climate ambitions are compatible and that transitioning away from fossil fuels is the best way to enhance energy security. They highlight existing progress in decarbonising the economy and improving energy efficiency.
6
Conclusion
Acknowledged
The Government acted swiftly to publish a British Energy Security Strategy following the invasion of Ukraine and the resulting gas supply crisis. We commend it on its rapid response. The Strategy has some merits. Its ambition on decarbonising the electricity system is welcome, and it sets strong and stretching targets …
Government Response Summary
The government welcomes the Committee’s recognition of the merits of the British Energy Security Strategy and states that it sets out a comprehensive plan to boost energy security, reduce reliance on fossil fuels, and accelerate the transition to a clean energy system.
7
Conclusion
Accepted
Para 47
There are, however, significant gaps in the Strategy. It is in essence an energy supply strategy, with much of its focus on electricity generation and oil and gas supply. To deliver genuine energy security, the strategy should have placed far greater emphasis on energy saving measures. Transport should also have …
Government Response Summary
The Government agrees energy efficiency is crucial and highlights measures in the British Energy Security Strategy to improve energy efficiency in homes, businesses, and transport, including a 15% reduction target by 2030 and investments in various efficiency measures.
9
Conclusion
Acknowledged
Para 61
Poor implementation has been a recurring issue for energy efficiency schemes for owner occupiers in England, which has undermined confidence among consumers and contractors. The Green Deal failed to offer sufficiently attractive loans to incentivise large scale take up. More recently, the Green Homes Grant was administered shambolically. The scale …
Government Response Summary
The government acknowledges the need for improving energy efficiency and states its commitment to achieving net zero carbon emissions by 2050 and reducing the UK’s final energy consumption from buildings and industry by 15% by 2030 against 2021 levels through the Energy Efficiency Taskforce (EETF).
14
Conclusion
Accepted
Para 75
We welcome the new interim target set by the Government in the Autumn Statement to reduce energy demand in this country by 15% by 2030. This goes some way to plugging the gap in the Energy Security Strategy which did not address reducing demand. We nevertheless regret that Ministers missed …
Government Response Summary
The government states that existing plans are expected to deliver around half of the new ambition to reduce the UK’s energy consumption by 15% by 2030 and highlights £6.6 billion already being spent this Parliament.
18
Conclusion
Acknowledged
Para 89
On the supply side, we welcome the clear and ambitious targets that the Government has set in the Energy Security Strategy for the roll out of low-carbon electricity generation. We are concerned that the Government is not doing enough to remove the barriers preventing the cheapest and quickest onshore low-carbon …
Government Response Summary
The government states that it will bring forward retail market reforms, that will deliver a market that works for consumers and supports system transformation. To achieve power decarbonisation by 2035 and support energy independence it will work across government.
21
Conclusion
Acknowledged
Para 104
As an island nation the UK has abundant tidal energy resources that could be tapped, yet tidal technologies received scant attention in the British Energy Security Strategy. We have been told that tidal range energy projects are now capable of being delivered at a similar overall cost to nuclear and …
Government Response Summary
The government welcomes the inclusion of tidal power in Contracts for Difference auctions and recognizes the potential of tidal stream and tidal range technologies to deliver a reliable source of renewable energy.
24
Conclusion
Para 111
The converted Drax power station provides 12% of the UK’s renewable power from the burning of wood pellets. This source of power is reliable and flexible and supports more intermittent renewables, such as wind and solar. However, we note that concerns have been raised about its sustainability and short-term climate …
26
Conclusion
Accepted
Para 131
Despite the UK’s heavy dependence on oil for transport, and transport’s status as the highest emitting sector, it is barely mentioned in the British Energy Security Accelerating the transition from fossil fuels and securing energy supplies 85 Strategy and was left out of the new national ambition to reduce energy …
Government Response Summary
The government states that decarbonising transport is a priority and references the Transport Decarbonisation Plan (TDP) published in 2021 that sets the sector on an ambitious path to net zero by 2050.
28
Conclusion
Acknowledged
Para 139
The Department for Business, Energy and Industrial Strategy has overall responsibility for net zero delivery, but the gaps in its British Energy Security Strategy suggest that it is failing to drive the departments responsible for other high emitting sectors, such as transport and buildings, to accelerate their own contribution to …
Government Response Summary
The government says DESNZ and DLUHC work closely together, and they remain committed to meeting the net zero emissions target by 2050. They describe current building standards and the Future Homes Standard, and refer to the Transport Decarbonisation Plan.
30
Conclusion
Acknowledged
Vladimir Putin’s aggression in Europe, and the energy crisis that it has provoked, provides a new impetus to accelerate the transition away from polluting fossil fuels. Driving this transition through greater investment in energy efficiency and low- carbon technologies enhances energy security, protects households from fossil fuel price volatility permanently, …
Government Response Summary
The Government agrees that accelerating the transition from fossil fuels and securing energy supplies are vital for enhancing energy security, protecting households from fossil fuel price volatility, saving public money and cutting climate-changing emissions.
31
Conclusion
Acknowledged
Para 176
During this transition the UK must nevertheless continue to be able to access oil and gas to ensure that the country can continue to heat its homes, fuel its transport and generate a declining proportion of power. We have found consensus on the overarching need to accelerate the transition from …
Government Response Summary
The Government agrees that during the transition the UK must nevertheless continue to be able to access oil and gas to ensure that the country can continue to heat its homes, fuel its transport and generate a declining proportion of power.
34
Conclusion
Accepted
Sectoral involvement in drafting a deal of this nature is normal. It also makes sense for the industry to be involved in the monitoring and governance of a voluntary deal. However, we are concerned that the targets and accountability arrangements in the Deal are weak and lack the urgent and …
Government Response Summary
The government believes the current approach to targets and accountability arrangements in the North Sea Transition Deal is appropriate, citing a decline in upstream GHG emissions and actions taken by the NSTA to hold industry accountable.
37
Conclusion
Acknowledged
Para 206
Offshore oil and gas workers have many of the skills that will be needed elsewhere in the economy as the UK accelerates the energy transition. It is vital that Government works with training bodies, unions and the industry to offer adequate support in the transition to retrain and reskill for …
Government Response Summary
The Government recognizes the importance of a skilled workforce and is working with industry, trade unions, training providers to support workers to reskill, citing the North Sea Transition Deal commitment to create a people and skills plan, investment in skills and training programmes, and a Hydrogen Skills Assessment.
42
Conclusion
Acknowledged
Para 245
Oil and gas companies have understandably complained of the impact on the certainty of their revenue projections arising from sudden changes in the fiscal regime applying to their operations. But these are exceptional times. It would be politically and morally unacceptable for oil and gas companies to pocket record profits …
Government Response Summary
The government introduced and increased the Energy Profits Levy (EPL) to address exceptional profits being made by oil and gas companies, and recognizes the impact on the oil and gas industry while believing it is necessary to ensure they pay their fair share of tax.
43
Conclusion
Acknowledged
Para 246
The original 65% tax rate under the Energy Profits Levy was lower than the international average tax rate of oil and gas producers (of 71%), so we welcome the Chancellor of the Exchequer’s proposal to increase this rate to 75%, while noting that it remains below Norway’s tax rate of …
Government Response Summary
The government acknowledges the committee's welcome of the increase to the Energy Profits Levy and states the changes will bring the overall tax rate for oil and gas companies to 75%, in line with the international average.
45
Conclusion
Acknowledged
Para 248
The tax system should help, not hinder, the transition to a low-carbon economy. The original way in which the Investment Allowance was structured provided a perverse incentive to accelerate investment in high-carbon oil and gas installations at a time when the public policy imperative was to accelerate the transition away …
Government Response Summary
The government acknowledges that the tax system should support the transition to a low-carbon economy and highlights changes made to the Investment Allowance to target investments that reduce emissions from oil and gas production.