Commons Sense

House of Commons · Ministers' Questions

Glasgow Climate Pact: Fossil Fuel Taxation

Tuesday 1 February 2022 · 2 questions

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Answered 0 Partly answered 2 Not answered 0

Key points

  • Caroline Lucas questioned the compatibility of the Government's fossil fuel taxation policies with the Glasgow climate pact.
  • Caroline Lucas highlighted the UK's lax tax regime for the oil and gas sector compared to Norway.
  • The Minister responded that the UK oil and gas sector has paid over 375 billion in production taxes.

Topics (select to filter)

Questions & Answers

Q1 Caroline Lucas Green
Taxation Climate
Context

The question arises from concerns about the compatibility of government policies on taxing fossil fuel companies with international climate commitments.

Question

What assessment he has made of the compatibility of his policies on the taxation of fossil fuels with the Glasgow climate pact. The Government's carbon pricing policies, including through the UK emissions trading scheme, have reduced carbon emissions, but there are concerns about the lax tax regime for oil and gas companies compared to international standards.

Answer from Lucy Frazer

I am pleased to underline the Government's commitment to reducing carbon emissions through taxation and the UK's success in limiting global emissions at COP26. The Government have reduced carbon emissions through their carbon pricing policies, including through the UK emissions trading scheme. We are committed to delivering on our carbon targets, and our net zero strategy sets out a roadmap for reaching net zero by 2050.

Partly answered

Not addressed: The questioner asked specifically about the compatibility of policies with the Glasgow climate pact, but the answer provided general statements without addressing this specific issue.

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Q2 Caroline Lucas Green
Taxation Climate Energy
Context

Concerns over tax exemptions and lower tax rates for the UK oil and gas industry compared to other countries, such as Norway. The oil and gas industry is currently making near-record profits while households face a real cost of living crisis.

Question

I thank the Minister for her answer, but she will know that the UK has one of the most lax tax regimes in the world for the oil and gas sector. In 2019, companies got away with paying 12.5 times less tax for a barrel of oil produced here compared with in Norway. In 2020, Shell paid absolutely no tax in the UK, the only country where this was the case. For 2021, HMRC expects that the industry will pocket £910 million-worth of tax reliefs for decommissioning. Given our commitments under the Glasgow climate pact and the current situation of record profits for oil and gas companies versus household struggles with a real cost of living crisis, will the Minister address this imbalance and commit to reviewing the tax regime?

Answer from Lucy Frazer

The hon. Member will know that the oil and gas sector does pay significant taxes. Indeed, it pays additional taxes, and to date it has paid more than £375 billion in production taxes.

Partly answered

Not addressed: The questioner asked for a review of the tax regime, but the answer provided general reassurance about the amount of taxes already paid without addressing the request for a specific review.

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