Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Tax relief for oil and gas firms ‘could have insulated two million homes’

Climate think tank E3G has said a tax break for investment in oil and gas production worth up to £5.7bn could have insulated two million homes (Andy Buchanan/PA)
Climate think tank E3G has said a tax break for investment in oil and gas production worth up to £5.7bn could have insulated two million homes (Andy Buchanan/PA)

A tax break for investment in oil and gas production worth up to £5.7 billion could have insulated two million homes, a think tank has said.

The support, part of the emergency cost-of-living package unveiled last week, could have been used instead to “supercharge” an energy efficiency drive that saved each of the homes £342 on their bills, climate think tank E3G said.

The Government performed a major U-turn last week when Chancellor Rishi Sunak announced he will bring in a windfall tax on the soaring profits of oil and gas companies that will raise an estimated £5 billion.

But companies can also avoid almost all their tax bill after Mr Sunak doubled the relief they can get for investing in new oil and gas extraction, raising it to 91p for every £1 they invest in the UK.

The relief for investment only applies to oil and gas production – not renewables – prompting criticism from environmental groups that more oil will flow from the North Sea as a result.

The International Energy Agency has previously warned that no new oil and gas projects can go ahead if the world is to limit temperature rises to 1.5C to avoid the worst impacts of climate change.

Climate and fuel poverty campaigners want to see investment in insulation and other energy-saving measures – missing from last week’s support package – to permanently cut the bills people face from living in heat-leaking homes as well as reduce the amount of greenhouse gas emissions produced.

Research by E3G warns that, by introducing additional tax relief limited to oil an gas investment, the Treasury is incentivising a slower transition away from fossil fuels and pushing companies to invest in new oil and gas instead of renewables – with new fields likely to go ahead.

The think tank says the measures amount to a subsidy of up to £5.7 billion over three years.

That “lost revenue” could have been used to insulate two million homes over the same period, saving households an average of £342 on their bills every year, E3G argues.

Euan Graham, senior researcher at E3G, said: “New tax relief on oil and gas investment gives companies handouts for undermining our climate safety.

“The Government could have used this ‘lost revenue’ to supercharge an energy efficiency drive that brings household bills down once and for all.

“Instead, it pushes for profits to be spent on new oil and gas projects. This is the opposite of what’s needed if we want to end our reliance on expensive gas.”

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: “The only long-term solution to fuel poverty is improving the energy efficiency of our homes and a move towards a renewable led secure energy supply.

“Sadly, recent government announcements have been neutral on energy efficiency and this research shows they are now in reverse gear on a just transition away from fossil fuels.”