Figures by Friends of the Earth (FOE) show over 495 million tonnes of carbon dioxide (CO2) are likely to be emitted as a direct result of tax breaks for oil and gas unveiled in the new Budget by UK Chancellor George Osborne.
Such amount equals an extra year’s worth of emissions and puts pressure on other sectors to cut harder and faster their CO2 production if the UK is to meet its mandatory carbon budgets.
According to industry body Oil & Gas UK (OGUK), tax break for decommissioning is expected to allow the extraction of 1.7 billion oil and gas barrels (over the next 20 to 40 years), representing over three years’ worth of consumption, assuming demand remains at the 2010 level of just under 519 million barrels.
Tax breaks for an amount of £3bn are also envisaged for exploration of difficult fields off the coast of Shetland, allowing to unlock another “hundreds of millions of barrels”.
David Powell, economics campaigner for FOE, claims that the Budget offers the green light for a year’s worth of CO2 that would otherwise not have happened, and that the tax breaks would have been better spent encouraging low-carbon alternatives to fossil fuels.
In Powell’s opinion, the oil and gas industry doesn’t need this level of support, whereas new industries like wind, wave, and hydro are the ones supposed to receive the highest amount of investments.
Overall, the UK is looking to shrink emissions on 1990 levels by 2050.The tax break is likely to put pressure on both the UK’s third carbon budget, for which almost 80 per cent of emissions are already locked in, and the fourth budget, which runs from 2023 to 2027
The Committee on Climate Change, which tracks progress towards the UK’s climate targets, would be producing an update in June.