Windfall tax on oil and gas companies to end in 2030, UK Government confirms

Ministers said they will consult on a replacement regime that protects jobs and delivers “a fair return for the nation, during times of unusually high prices”.

The consultation will also commit to maintaining existing oil and gas fields for their lifetime, while implementing a promise not to issue licences to explore new fields.

The Government said it is committed to working with industry, communities, trade unions and wider organisations to ensure a phased transition for the North Sea, creating tens of thousands more jobs in offshore renewables.

It said existing oil and gas fields will continue to make an important contribution during the clean energy transition, but its plan will help make the North Sea a world-leader in offshore industries, such as hydrogen, carbon capture and wind.

Energy Secretary Ed Miliband said: “The North Sea will be at the heart of Britain’s energy future. For decades, its workers, businesses and communities have helped power our country and our world.

“Oil and gas production will continue to play an important role and, as the world embraces the drive to clean energy, the North Sea can power our Plan for Change and clean energy future in the decades ahead.

“This consultation is about a dialogue with North Sea communities – businesses, trade unions, workers, environmental groups and communities – to develop a plan that enables us to take advantage of the tremendous opportunities of the years ahead.”

Scottish Secretary Ian Murray said: "Scotland is at the heart of the UK Government's clean energy future. We know the existing oil and gas fields in the North Sea will be with us for decades and a crucial part of our energy mix.

“Through our Plan for Change we are working to ensure our vital energy sector continues to deliver economic growth and skilled jobs in local communities both in the north east of Scotland and across the country for generations to come."

Industry figures welcomed the announcement, with the Confederation of British Industry (CBI) saying it highlighted the Government’s commitment to a managed transition.

Tania Kumar, net zero director at the CBI, added: “Success hinges on our collaboration with communities, workers, and businesses to develop a practical plan.

“Robust regulation and the pivotal role of the North Sea Transition Authority will be essential. The UK's net zero economy is growing faster than the rest of the economy - the future is green growth and managing the transition away from fossil fuels to a clean energy future for the North Sea is vital to achieving it.”

David Whitehouse, chief executive of Offshore Energies UK, said: "The UK offshore energy industry, including its oil and gas sector, is responsible for thousands of jobs across Scotland and the UK, and today the government has committed to meaningful consultation on the long-term future of our North Sea.

“That is important and welcomed. Energy policy underpins our national security – how we build a clean energy future and leverage our proud heritage matters.

“Today's consultations, on both the critical role of the North Sea in the energy transition and how the taxation regime will respond to unusually high oil and gas prices, will help to begin to give certainty to investors and create a stable investment environment for years to come.

“We will continue to work with government and wider stakeholders to ensure a future North Sea which delivers economic growth and supports the communities that rely on this sector and workers across right and the UK.”

Dhara Vyas, chief executive of Energy UK, said the announcement “offers a positive step toward a just transition for offshore workers”.

She said: “The North Sea has been an engine of economic growth and energy security for the UK, but it’s critical to ensure pathways are available for offshore workers to transition to the low carbon industries of the future.

“The Government has a sent a strong signal about the UK’s clean energy future, and the role the North Sea will continue to play in fostering clean technologies such as offshore wind, hydrogen, and carbon capture and storage.

“The clean energy mission can help ensure the North Sea’s best days are ahead of it, powering economic growth and enabling the UK to lead the way in the global clean industrial revolution.”

Dan McGrail, chief executive of RenewableUK, said: "The biggest offshore wind farms in the world are being built in the North Sea and even more ambitious projects are being planned.

“Offshore wind is at the very heart of the government's mission to reach clean power by 2030 and net zero by 2050, and the industry also offers the UK one of its biggest opportunities for job creation, industrial regeneration and economic growth.

"The North Sea is already playing a crucial role in powering the UK and this is set to grow in the years ahead. A future focused on offshore wind isn’t just cleaner - it provides a more stable energy system for billpayers as we will be less exposed to volatile international fossil fuel prices.

“Offshore wind also offers opportunities for skilled workers from other industries to transfer into this dynamic and innovative sector."

Mel Evans, climate team leader at Greenpeace UK, said it was a “welcome reaffirmation of the Government’s world leading commitment to end our reliance on North Sea oil and gas”.

She said: “Our over-reliance on volatile and expensive fossil fuels is the reason our energy bills have remained so high in recent years. With yet more uncertain times ahead, this is a step worth celebrating from the government.

“The only way forward for a secure future means ending our reliance on oil and gas.”