Beautiful Virgin Islands

Tuesday, Jul 22, 2025

Windfall tax 'damaging' for net zero plans and energy security, businesses say

Windfall tax 'damaging' for net zero plans and energy security, businesses say

The Confederation of British Industry says the chancellor's windfall tax will hurt the UK's net zero ambitions - but climate groups disagree.

The windfall tax announced by the chancellor will be "damaging" for the UK's net zero plans and energy security, the Confederation of British Industry (CBI) has said, while BP has signalled the measure is more harsh than it expected.

Rain Newton-Smith, CBI chief economist, said the tax "sends the wrong signal to the whole sector at the wrong time", pointing to a "backdrop of rising business taxation".

Chancellor Rishi Sunak said oil and gas firms will pay a 25% levy on profits, which will be phased out when energy prices return to normal - but companies will get tax breaks worth 91p for every £1 invested. The funding will be used to help families with soaring energy bills.

Oil and gas companies are being targeted because they have enjoyed bumper profits as a result of soaring energy prices.

However, such firms also suffered at the height of the COVID crisis as demand for oil, and therefore prices, slumped.

Ms Newton-Smith said the government needs to work with businesses on a "genuine" plan to increase investment and "get growth going again, particularly in areas like energy efficiency".

"Despite the investment incentive, the open-ended nature of the energy profits levy - and the potential to bring electricity generation into scope - will be damaging to investment needed for energy security and net zero ambitions," she said.

BP, which had announced earlier this month an £18bn investment over the next eight years to bolster domestic energy security, gave a guarded response to the measure.

A spokesperson said: "We know just how difficult things are for people across the UK right now and recognise the government's need to take action.

"As we have said before, we see many opportunities to invest in the UK, into energy security for today and into the energy transition for tomorrow.

"Today's announcement is not for a one-off tax - it is a multi-year proposal. Naturally we will now need to look at the impact of both the new levy and the tax relief on our North Sea investment plans."

Shell said the tax relief on investments is a "critical principle in the new levy".

"We have consistently emphasised the importance of a stable environment for long term investment," a spokesperson said.

"This is fundamental to our aim to invest between £20bn and £25bn in the UK in the next decade, mostly in low and zero-carbon products and services, with a significant amount also focused on ensuring security of energy supply for the UK."

Sam Alvis, head of economy at climate think tank Green Alliance, said the windfall tax is the "vital thing to do to help households".

"It isn't the tax that will hurt net zero, but potentially the investment allowance that comes with it," he told Sky News.

"There is nothing to prevent that investment going to volatile oil and gas that are largely responsible for driving up people's energy bills.

"The chancellor should be using tax reliefs and public investment to rapidly expand the cheap and secure renewables we need to solve this crisis."

'The chancellor has failed'


Green groups also said Mr Sunak needed to go further to address underlying issues fuelling growing energy bills.

Shaun Spiers, executive director at Green Alliance, said: "Unless the transition from expensive gas to cheap renewables and energy efficient homes is accelerated, the government will be continually forced into emergency fixes."

Ed Matthew, campaign director at independent climate change think tank E3G, agreed, saying: "The chancellor has failed to fix the underlying crisis."

He said the windfall tax should have been partly used to improve home insulation, which would make homes warmer and reduce energy bills by as much as 50%.

He said the UK has the worst insulated homes in western Europe but this cannot be fixed without more government funding, adding: "We will all pay the price for this missed opportunity."

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Defends Attorney General Pam Bondi Amid Epstein Memo Backlash
Renault Shares Drop as CEO Luca de Meo Announces Departure Amid Reports of Move to Kering
Senior Aides for King Charles and Prince Harry Hold Secret Peace Summit
Anti‑Semitism ‘Normalised’ in Middle‑Class Britain, Says Commission Co‑Chair
×