UK Raises Windfall Tax on Oil and Gas Amid Renewables Push

The UK has announced a 3% increase in the Energy Profits Levy on oil and gas producers, raising the tax to 78%. The move aims to fund renewable energy initiatives but has sparked concerns among North Sea drillers. Critics warn it could deter investment and impact energy security.

The United Kingdom has decided to increase the windfall tax on oil and gas producers by 3%, bringing the Energy Profits Levy to a significant 38%, and the overall tax rate on these activities to 78%—one of the highest globally.

The Labour government's decision, effective from November 1, also removes the 29% investment allowance and extends the levy's duration to March 2030. This move comes as part of efforts to fund renewable energy projects and decarbonize the energy sector by 2030, according to a Treasury spokesperson.

Industry experts, however, have raised alarms. Francesco Mazzagatti, CEO of Viaro Energy, stated the new policy hinders net-zero goals, while David Latin, Chairman of Serica Energy, warned that the measures might freeze investments in the North Sea, accelerating its decline. Consultants from Wood Mackenzie expect the tax could generate £1.2 billion annually but anticipate a drop in sector investment.

(With inputs from agencies.)