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Why Are Taxpayers Subsidising Oil and Gas Companies That Jeopardise Our Future?

Published in Oil Industry News on Friday, 3 May 2019

Graphic for News Item: Why Are Taxpayers Subsidising Oil and Gas Companies That Jeopardise Our Future?

Last October, the world’s most renowned climate scientists warned governments that humanity has just 12 years to prevent climate catastrophe. The UK government faces three choices to deal with carbon-heavy fossil fuels: force people to stop using them immediately; facilitate a rapid transition from fossil fuels to renewable energy; or hope business-as-usual market forces solve our problem for us. Strip away the rhetoric, and the Tory government is still relying on the latter option.

A few weeks ago, lost in the never-ending fog of Brexit, the cross-party public accounts committee released a damning report on the public cost of decommissioning oil and gas infrastructure. Their report vindicates every argument Labour has made against the government’s massive tax breaks for oil and gas companies, under its Transferable Tax History (TTH) policy.

TTH uniquely allows companies buying North Sea oil and gas fields to inherit the tax histories of the sellers. The aim is to boost further extraction of oil and gas, when existing companies no longer can. British taxpayers will now subsidise multi-billion-pound companies in accelerating the collapse of our natural world. Extinction Rebellion recognises this threat, and is protesting outside the Treasury today. It questions why we continue to subsidise the very companies that jeopardise our future. I stand in complete solidarity with it.

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These tax reliefs have not brought any tangible benefit in protecting and creating jobs. They simply subsidise big business and facilitate and encourage further North Sea exploitation. As John McDonnell outlined when speaking in Scotland recently, any government intervention must be to secure the creation of new, green, sustainable jobs. The public accounts committee asked the government whether its “support for oil and gas may become incompatible with its long-term climate change objectives”. “No” would be the honest answer.

Our current economic system, and everything that goes with it, is the ultimate cause of global climate breakdown. The government must be forced to explain why, if current production takes us past our climate targets,it is giving corporate tax breaks worth billions for the sole purpose of new drilling?

Shockingly, the public accounts committee noted that the Department for Business, Energy and Industrial Strategy (BEIS) told itthat it expects, with a very high level of confidence, that the UK will need a lot more oil and gas for the next 25 years”. So much for climate stability. Basically, this government department does not expect the government to meet its own emissions reduction targets and is planning accordingly. The Tories are admitting all their talk is just for show.

This won’t shock anybody who has been watching the government’s pathetic record on all things climate – its blatant disregard for the school strikers; its persistent support for fracking; its decimation of the wind and solar sectors; and an ignorance about the triggers Extinction Rebellion warn will tip us into climate breakdown.

UK tax reliefs for decommissioning are forecast to exceed £1bnfor 2018-2019. This will eat up half of our annual oil and gas tax receipts. Moreover, HMRC forecasts the sector’s decommissioning bill will cost the taxpayer at least £24bn. The Office for Budget Responsibility reckonsit may easily cost many billions more. Under “the polluter pays” principle, it is corporations, not citizens, that should pick up this bill.

As production declines and fields are decommissioned, annual tax reliefs will soon exceed oil and gas tax revenues. The government is setting taxpayers up to subsidise one of the wealthiest industries in the world, while Tory austerity economics slashes public services and decimates communities countrywide. The UK could become a global leader in decommissioning skills and technology as we move to a net-zero-carbon economy. But beyond warm words, there is a paucity to this government’s climate and energy policies.

Source: www.theguardian.com

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