Fracking firms could be eligible for UK tax breaks worth billions
Fracking companies are likely to be eligible for tax breaks, potentially worth billions, that the government is extending to oil and gas companies to encourage new exploration of fossil fuel resources.
Combined with high gas prices, the extra funding – which amounts to a subsidy, according to campaigners – could provide a strong incentive to restart fracking operations if a moratorium in the UK is lifted, which could happen as early as this week.
Oil and gas companies will benefit, potentially to the tune of £4bn, from a loophole in the government’s windfall tax, which allows exemptions for companies that invest in the exploitation of new fossil fuel resources. Legal advice provided to the campaigning group Uplift suggests fracking companies would also be eligible for this incentive, as the windfall tax – officially known as the energy profits levy – is currently written.
Tessa Khan, director of the campaign group Uplift, said: “Despite a historic cost of living crisis, the government is trying to rush through yet another massive subsidy for oil and gas companies. The energy levy is supposed to ease the burden of rising energy bills for UK households, but this investment loophole allows companies to slash their tax bill if they build more polluting, unsustainable oil and gas projects.
“It is outrageous that fracking companies may be able to benefit from this subsidy, when fracking – like all oil and gas drilling – does nothing to ensure safe affordable energy for people in the UK.”
The Labour party said the loophole meant oil and gas companies would receive 20 times more in taxpayer incentives than renewable energy companies are eligible for. Analysis by Labour of government data shows that about £4bn could flow to oil and
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