Subsidies and tax breaks for ‘low-carbon future’

Robert Lea
22 Apr 2009

North Sea oil explorers, windfarmers, gas storers and CO2 capturers have been promised they are Britain's future as the Chancellor announced a Budget-within-a-Budget for the energy and green technology industries.

New multibillion-pound investments, said Alistair Darling, would create hundreds of technology companies and hundreds of thousands of skilled jobs in the UK

“On the back of the discovery of oil and gas in the North Sea we became a world leader in every aspect of oil technology and the industry,” he said. “I am determined we will replicate this success across the renewable energy and low-carbon sectors.”

The Chancellor gave the go-ahead for tax breaks to produce another two billion barrels of oil and gas that, he said, “would otherwise remain under the North Sea.”

Oil companies have long argued that the increasingly difficult-to-lift reserves, generally in smaller fields in the North Sea, need to have incentives or “value allowances” which reduce the current 50% rate of Petroleum Revenue Tax they pay to the Treasury. The North Sea, said Darling, would also become a “hub for energy of the future.”

Energy companies with licences to build wind farms, typically off the coasts of Kent, East Anglia, Lincolnshire and Yorkshire, are to get a further £525 million of subsidies to kickstart projects which have stalled in the credit crisis.

Companies like British Gas which have been converting spent North Sea fields to gas storage installations, are set to get tax incentives.