Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment has he made of the potential impact of the Energy Profits Levy Investment Allowance on (a) the UK’s carbon emissions and ability to achieve its net zero target and (b) the UK’s ability to deliver its commitments towards international climate change targets.

The Energy Profits Levy was introduced from 26 May in response to sharp increases in oil and gas prices. It is an additional 25% surcharge on UK oil and gas profits.

The Net Zero Strategy was clear that the North Sea basin has a key role to play in contributing to the transition towards net zero, and the Government has been clear that it wants to see the oil and gas sector reinvest its profits to support the economy, jobs, and the UK’s energy security

That is why the levy includes a new 80% investment allowance to support capital expenditure on oil and gas related activities purposes. It means the total tax relief on investment nearly doubles - for every £1 businesses invest they will overall get a 91p tax saving.

The Government has calculated that it expects the levy to raise over £7 billion in 2022/23, and around £28 billion over the period to 2025/26. This is inclusive of the impact of investment expenditure relief.