Implementing permanent taxes on oil and gas producers in the UK could generate enough revenue to help North Sea workers transition into green jobs, according to new research. The findings suggest.
The report indicates that reducing current subsidies for fossil fuel producers would free up additional funds for shifts toward a low-carbon economy.
About £1.9 billion per year will be necessary to retrain oil and gas workers and develop new infrastructure along with green job creation for an equitable transition from fossil fuels.
Out of this total, roughly £1.1 billion would be allocated to advancing the wind industry and generating green employment. An investment of around £440 million is earmarked for ports, enabling the construction and maintenance of wind turbines offshore. Additionally, £355 million would be designated for training for workers transitioning from oil and gas.
Following the spike in oil and gas prices due to Russia’s invasion of Ukraine, the report examined the impact of a permanent Windfall tax, also known as an energy profits levy, which could yield hundreds of billions in excess profits globally, with at least £200 million for the UK.
“They’re capitalizing on the situation,” remarked Rosemary Harris, a senior campaigner at Oil Change International (OCI). “Transitioning to a renewable energy economy presents a significant opportunity for the UK to forge stable, well-paying jobs and advance a fairer future. It’s perplexing how governments are choosing inaction that undermines their own citizens’ interests.”
One promise from the workers’ manifesto urged an end to the issuance of new licenses in the North Sea, a move currently facing criticism from conservatives and reformists.
Compounding the issue, fossil fuel reserves in the North Sea are depleting quickly, meaning job opportunities will diminish regardless of external factors. Harris pointed out, “The government must genuinely address workers’ needs through well-planned interventions. It’s obvious that relying solely on the market or industry leaders isn’t sufficient.”
OCI also advocates for closing tax loopholes, including the “carried interest” provisions related to capital gains tax, which permit private equity managers to pay a significantly lower tax rate compared to what income tax would require. Closing these loopholes could potentially generate an additional £490 million annually.
According to Global Justice Now (GJN), fossil fuel producers benefit from approximately £17.5 billion in government support each year, the highest level in nearly ten years, with prospects of further increases in the upcoming Congress.
The report estimates that tax breaks for fossil fuel producers, including those engaged in oil and gas extraction from the North Sea, come to around £2.7 billion annually. It also cites roughly £900 million in annual investments in carbon capture and storage technology aimed at achieving the UK’s net-zero emissions target by 2050 as subsidies for the fossil fuel sector.
The UK has committed to phasing out fossil fuel incentives as part of a coalition at the UN COP29 Climate Summit, agreeing to eliminate “inefficient” fossil fuel subsidies.
However, some measures categorically classified as grants in the GJN report are responses to fluctuating fossil fuel prices and increases in living costs, disproportionately affecting the nation’s poorest households. These include VAT reductions on gas and other fuels, costing about £6 billion each year, along with fuel tax relief amounting to £4.7 billion.
The author of the report suggested that certain measures need to be reassessed to shield low-income families from adverse effects.
A government spokesperson stated, “We are building a clean energy superpower in the UK to safeguard the finances of families and the national economy. The UK does not provide fossil fuel subsidies and supports international reform efforts.”
