The Government’s approval of the Rosebank oil and gas field has been met with criticism from campaigners and politicians for keeping the country hooked on expensive fossil fuels.
Fewer than one in ten people think that more oil and gas production will reduce bills and increase energy security, a poll suggests.
But even business and energy experts have concerns. The former Chancellor of the Exchequer, Rt Hon Kwasi Kwateng MP, previously said that additional UK production will not “materially affect the wholesale price” of gas that households pay.
Reporters at Bloomberg concluded that: “The field won’t begin pumping oil and gas until at least 2026, and isn’t large enough to have an impact on the security of UK energy supply nor prices. However, it was seen as a test case for whether a country like the UK, which claims leadership in the area of low-carbon policies, should continue to tap fossil fuels.”
Most of the investment from Norwegian oil giant Equinor, which made £4.5bn in post tax profits in the first six months of 2023, will be subject to a tax break as part of Windfall Tax loopholes. If these loopholes were closed, it could raise money to help those in fuel poverty.
In addition, experts calculate that there is a potential loss to the Exchequer. This is based on the gap between the tax breaks being handed to Rosebank’s developers to kick start the project and then the predicted tax payments from the profits of selling Rosebank’s oil reserves coming after the current 75% windfall tax period has elapsed.
Fiona Waters, a spokesperson for the Warm This Winter Campaign, said:
“Our energy system is broken, yet rather than helping the millions of people who are facing another winter of sky high bills, the UK government is choosing to dish out billions in tax breaks to Norwegian oil giant, Equinor. Drilling the Rosebank oil field will not make one bit of difference to UK fuel bills. All while the government delays access to cheap onshore renewable energy that could be powering our homes and bringing down our energy bills.
“The government needs to stop acting for the oil and gas companies and taking decisions that boost their profits, and instead prioritise action that will cut our energy bills and benefit ordinary UK households for good.”
The coordinator of the End Fuel Poverty Coalition told The Guardian:
“Hidden in the small print of the deal is that this project can only go ahead thanks to a massive tax break the Government is giving to international oil and gas giant Equinor.
“Households struggling with their energy bills will be shocked that the new Energy Secretary has chosen to hand a multi-billion pound tax break to this Norwegian firm, rather than help people in the UK suffering in fuel poverty.
“This sum alone could have provided much needed additional support to help disabled households, those living off the gas grid and the elderly.
“The Government’s major drive to keep the country hooked on fossil fuels will be for little reward. Figures show that more North Sea production will only give us an extra year of domestic gas, which will be charged to struggling households at global market prices.”
