No Windfall Tax On Renewable Energy
By Paul Homewood
The Chancellor has just announced his new package to cut energy bills:
I will let others comment on the merits or otherwise!!
But the package is being partially funded by a levy on North Sea Oil & Gas producers:
There have been misinterpretations about how this levy would operate, with some suggestions that it would apply to all of the business of BP, Shell and other UK registered companies. The Treasury has clarified this is not the case:
The concept is not a new one – indeed, the whole arrangement for taxation of North Sea oil is nothing more than an “excess profits levy”. And, of course, George Osborne did exactly the same as Chancellor when he increased the Supplementary Charge from 20% to 32% in 2011.
This time however there is a clever twist:
In short, this investment allowance will allow oil companies to avoid the new levy entirely, in so far as 80% of new investment is concerned, assuming the levy is short lived. If global oil prices remain high and the levy is retained, oil companies will still enjoy the bumper profits.
If these changes succeed in boosting new North Sea investment, it will be a remarkably astute move by the Chancellor. And, in turn, new investment will pay back government amply in years to come.
Sadly however, the government has succumbed to pressure from the overly powerful renewable lobby, and decided not to levy the windfall tax on electricity generators, principally nuclear and renewable:
The case for a windfall tax is really unanswerable, as not only are they making extraordinary profits, they are are also still receiving obscene subsidies.
Over the last six months, October to April, wind and solar companies have received an average price of £187.46/MWh, according to the CfD database. Compared to a historic market price of £50.00/MWh, this represents excess annual profits of £7.9bn for renewable generators under the ROC scheme. On top of that, of course, they have also received over £4bn in subsidies.
The renewable lobby has, naturally, been moaning that a windfall tax would destroy future investment in renewable energy. This is nonsense, as the ROC scheme is now shut to new projects, which will instead be paid a guaranteed fixed price, hence no need for any windfall levy. And as they keep telling us that wind and solar are much the cheapest generation, it is hard to see how they can fail to make a healthy profit regardless.
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NOT A LOT OF PEOPLE KNOW THAT 
Windfall Tax?
As at January 3, 2022, according to data compiled by the Renewable Energy Foundation, we have been forced to pay £1,076,455,630 to the Wind Industry for providing absolutely nothing and the majority is paid out in Scotland by all UK consumers.
George, is that a stat that really needs to be shared with the press – assuming that at least some of them remain objective?
I have been sending the £6 billion in ROC subsidies calcs that Paul Homewood presented here a few months ago to GBNews on a regular basis. They have ignored it. In terms of news broadcasters, if GBNews won;t pick it up I doubt any will.
Maybe Daily Mail will?
Not quite so clever as you think. It will bring forward investment that would have occurred in later years and *might* provide an incentive for new investment. However, you need to bear in mind that capacity in the offshore supply sector is already highly stretched and costs are very sensitive to the level of demand. Much of the benefit of the investment allowance will finish up in the hands of offshore suppliers. Since the offshore wind industry is already complaining about rises in materials and service costs, they will have even more to moan about.
This has all of the feel of a Hail Mary strategy from a government that is desperate. Of course, oil & gas exploration and production firms may think of dusting down some projects that they have on the shelf, but nothing changes the sense that the UK sector is barely iinvestible because of incoherent and rapidly changing policies. Is it really so much better than offshore prospects in Africa or Latin America?
National grid must also be making a fortune piping natural gas to Europe, that comes in to Milford Haven as LNG from USA. It is also rather a fortunate coincidence that all these subsidies are announced the day after the release of Sue Gray’s damning report on partygate. Boris as usual throws a “Dead Cat” on the table to distract us from the Downing street piss ups.
Re Milford Haven: capacity is finite. The UK ‘has imported so much LNG that it is beginning to run out of storage’ – it says here…
https://oilprice.com/Energy/Natural-Gas/UK-Ramps-Up-LNG-Imports-But-Consumers-Unlikely-To-See-Relief.html
National Grid has certainly been doing very nicely
https://www.current-news.co.uk/news/national-grids-profit-surged-to-4-4bn-acquisition-of-wpd-boosts-company
Being able to dictate policy through writing the Future Energy Scenarios to suit themselves has been a great boon.
So, the govt actively works to shut down oil/gas supplies & prevent new supplies, causing the price rises (supply & demand), then hits the producers with a tax to kick them even harder. Right!
BJ lives in his own echo-chamber designed by the WEF and the Greens.
The way to reduce prices caused by supply and demand imbalances is to ensure that new supply gets taxed heavily so that nobody bothers to develop new supply.
If you are an dumb as a dead hamster.
Only the CommieCons could think of a new tax on already highly taxed and expensive oil to try to reduce the inflation damage caused by govt. policies. Why not have a windfall tax of 12 Billion on wind energy, so far largely untaxed, but over-subsidised ? Instead the cons. bring forward their looming recession.
Why not reduce the amount of tax we all pay if we are struggling to make ends meet with our post-tax incomes?
For many people, tax (all taxes) are their single biggest expense. Somebody on £30,000 pays £6,150 in income tax and NI. Add £2,800 for employers NI, and say £2,000 for VAT and other duties (beer, wine insurance) on purchases. Say £1,000 for council tax and £1,000 for road and petrol taxes. Thats £13,000 in tax, an all-in rate of over 43%. We could add in corporation tax (paid from revenues) and the cost of tariffs, which would get us closer to the £20,000/adult that government spends. But that cost can’t be touched.
O/T
I see the cowardly PR folk at National Grid sing the praises of Lurch and then only allow responses from Lurch and WEF – circle-jerk much?
I wonder if there will be another windfall tax next year?
NET ZERO go go go.
I wonder how many non executive seats on the boards of worthless wind power companies have been promised in return for allowing them to continue robbing us blind?
Once again the consumer will be hit right in the nuts and hard, the green agenda wins again. Johnson and his princess nut nuts shriek in glee, and the chancellor knelt.
To George above:why are we paying that huge amount for,as you say,absolutely nothing?
Anything is possible if the Government turns a blind eye to the science.
Mark Steyn “The World Economic Forum doesn’t seem interested in economics, rather they are about control
Here’ the head of Alibaba telling us about their project
“Individual Carbon Footprint Trackers” To Score You Based On Climate Impact
“Where are they travelling? How are they travelling? What are they eating?…. [An] individual ‘Carbon Footprint Tracker’. Stay tuned…. this is something that we’re working on.”
Your carbon footprint stats are already mined by the OS of Apple, Android and Windows. Plus all the data mining that all those endless duplicate landing sites were designed for. This was all planned long ago.
I have 3 devices active and although they have different email identification, they know it’s the same person using them.
So as Paul Homewood detailed here a few months ago, renewables are getting £6 billion a year in direct subsidies via ROC’s paid from our electricity bills. Which gives them 30-50% extra free double cream money on top of the “excess” profits they are already making at over £200 / MWh.
And the answer is to levy an additional tax on North Sea Oil & Gas production to the tune of £6 billion?
The madness of of 20 years of climate change policy on energy policy continues with the consumer left as piggy in the middle.
Let’s not forget that renewables are now the cheapest form of energy supply (tongue in cheek), so why is that not holding down prices? And surely its the wind companies then that must, by definition, be making the most “excess profits” in the current market?
Levy on oil & gas = £5 billion!
, or dodgy vaccine supliers.
For the same reason we have two genders (too much corruption of fetal DNA), one world government will not work (too much corruption). We need a community of sovereign nations.
And yet again ignoring the fact that it is the extortionate tax at point of sale for petrol and diesel that is the real problem for high prices. Particularly bad for diesel as that increases the price of _everything_
>>extraordinary profits of oil and gas