UK subsidising North sea oil and gas exploration to tune of £750m

The UK government is providing £750 million a year in tax breaks to North Sea oil and gas, despite a pledge five years ago to end fossil fuel subsidies, campaigners said.

A further £414m in public money is going into fossil fuel exploration overseas from Siberia to Nigeria, a report by the Overseas Development Institute and Oil Change International said. The organisations accused the Government of providing a total of £1.2bn in subsidies a year despite signing up to a pledge by G20 countries in 2009 to phase out fossil fuel subsidies.

Since then, generous tax breaks have been provided to international energy giants to explore in riskier, deep-water fields in the North Sea, they said.

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Investment in foreign fossil fuel exploration comes from the Royal Bank of Scotland, 80 per cent owned by the Government, and through loans and guarantees through the Government’s UK Export Finance department, the report said.

Across the G20 as a whole, governments are spending £55bn a year to find new oil, gas and coal reserves, despite their pledge and evidence that the majority of reserves that have already been found need to stay in the ground to stop climate change.

The figure is double what the top 20 private oil and gas companies are investing globally in exploration, which the organisations said showed how dependent the fossil fuel industry had become on public subsidies.

Further exploration for new reserves is not only environmentally unsustainable, it was “bad economics” in the face of rising costs for exploiting hard-to-reach reserves and falling coal and oil prices, the groups argued.

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The Overseas Development Institute’s Shelagh Whitley said: “Despite the widespread perception that renewables are costly, our findings reveal finding new fossil fuel reserves in the North Sea and elsewhere is costing UK taxpayers nearly £1.2bn a year.”