Commons Sense

House of Commons · Ministers' Questions

Oil and Gas Exploration: Subsidies

Tuesday 23 May 2023 · 3 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 3 Not answered 0

Key points

  • Jeff Smith questioned the government's policy on subsidies for new oil and gas exploration, citing a 11 billion tax deduction loophole.
  • The Minister dismissed the idea of subsidies, pointing out the 25.9 billion in revenue from a windfall tax on the sector.
  • Kerry McCarthy highlighted concerns about the Rosebank oilfield project, emphasizing that 80% of fossil fuels produced would be exported, and questioned the government's commitment to net zero emissions.

Topics (select to filter)

Questions & Answers

Q1 Jeff Smith Lab Manchester Withington
Climate Energy
Context

At COP26 the UK pledged to eliminate inefficient fossil fuel subsidies, but critics argue that recent windfall tax policies are counterproductive.

Question

What his Department's policy is on subsidies for new oil and gas exploration. At COP26 the UK signed up to a pledge to eliminate inefficient fossil fuel subsidies, but now the windfall tax has a super deduction loophole worth £11 billion to oil and gas companies—a benefit enjoyed by no other industry. That money could pay to insulate 4 million homes or build renewable power for millions of homes. This will not reduce bills, and it will drive a coach and horses through our climate commitments. Is it not a terrible way to spend public money as well as breaking our climate obligations?

Answer from Graham Stuart

Only for Labour Members—and perhaps some other people on the Opposition side of the House—is it possible to have a 75% tax on the sector, with the levy alone bringing in £25.9 billion between 2022-23 and 2027-28, and then talk about subsidy. Tens of billions of pounds come from the oil and gas sector in this country, and it provides energy security, keeps the lights on and keeps people warm.

Partly answered

Not addressed: The questioner asked if the windfall tax loophole was providing an unfair subsidy to oil and gas companies; the answer focused more on the revenue generated from taxes rather than addressing whether this constitutes a subsidy or not.

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Q2 Jeff Smith Lab Manchester Withington
Climate Energy
Context

The approval of the Rosebank oilfield has been criticized for potentially undermining climate commitments and not providing significant benefits.

Question

I think the Minister needs to look at the dictionary definition of “subsidy”. The approval of the Rosebank oilfield would be an astronomical waste of public money, handing £3.75 billion in subsidy to a Norwegian company in tax breaks and incentives without making any difference to British people's bills. Does he accept that it will not create jobs or solve our energy security needs, and that it will be a backward step for climate targets as it pumps out carbon dioxide equivalent to running 56 coal-fired power stations a year?

Answer from Graham Stuart

Of course, we are a net importer of oil and gas and, if we do not produce domestic gas, for example, we will have more tankers with higher emissions coming into this country. We will undermine a sector—Oil, gas and renewables is effectively one sector—it is very hard to get through my answer with all this enthusiastic barracking. It will undermine the energy security of this country if we do not produce oil and gas here while we are burning that.

Partly answered

Not addressed: The questioner asked about the wastefulness of approving Rosebank, but the Minister's response focused on net imports and emissions rather than addressing whether approval is wasteful or counterproductive to climate goals.

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Q3 Kerry McCarthy Lab Bristol East
Climate Energy
Context

The Government's own net zero tsar and leading scientists have expressed concerns over the approval of the Rosebank oilfield.

Question

Rosebank is an oilfield and 80% of the fossil fuels produced will be exported. If what the Minister says is true, why has the Government's own net zero tsar said that approving Rosebank would undermine our climate leadership on the world stage and “trash” our net zero pledge? Why are leading scientists warning that we already have more than enough coal, oil and gas to overshoot what is deemed our best hope of maintaining a liveable climate?

Answer from Graham Stuart

It is quite simple. We are reducing demand for fossil fuels, but we are net importers of them. Producing them here and destruction of demand have to be our focus and that is what the Government are doing. We are getting rid of the power stations burning coal.

Partly answered

Not addressed: The questioner asked why the Minister disagrees with scientists; the answer focused on reducing fossil fuel demand rather than addressing the specific concerns raised by the net zero tsar and leading scientists.

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