Invezz.com - Former US President Donald Trump has criticised Britain’s windfall tax on North Sea oil and gas producers, describing it as a “very big mistake.”
His remarks, shared on the social media platform Truth Social, have sparked debate over the country’s energy policies, as the North Sea becomes an increasingly contested space for both fossil fuel extraction and renewable energy development.
The Energy Profits Levy (EPL), initially introduced by the Conservative government in 2022, imposes a 35% tax on profits from oil and gas companies.
It was later extended by the Labour Party to 38%, with plans to continue through March 2030.
The policy aims to redirect funds toward renewable energy projects, but critics like Trump argue it disincentivises investment in the energy sector at a time when energy security is a pressing concern.
Trump’s critique
Trump’s assertion that the UK should “open up the North Sea” comes as American energy giant APA Corporation, through its subsidiary Apache, announced plans to cease operations in the region by the end of 2029.
APA cited the windfall tax as a key reason for its decision, describing North Sea production as economically unfeasible under current policies.
The UK’s reliance on energy imports has raised alarm bells among industry stakeholders.
Domestic energy production is at its lowest in decades, with nearly 40% of demand being met through imported oil, gas, and electricity.
Critics of the EPL argue that punitive taxation on fossil fuels jeopardises the country’s energy independence while discouraging foreign investment.
In contrast, Labour leaders defend the windfall tax as a crucial step in funding the transition to renewable energy.
Offshore wind farms, particularly in the North Sea, have been positioned as pivotal to the UK’s green energy future.
The sector has faced its own challenges, including rising costs, supply chain disruptions, and fluctuating interest rates.
The North Sea: A battleground for fossil fuels and renewables
The North Sea, historically a hub for oil and gas extraction, is increasingly being repurposed as a “green power plant” for Europe.
Alongside the UK, countries like Norway and Denmark are investing heavily in offshore wind projects in the region.
The goal is to make the North Sea a leader in renewable energy production, aligning with the UK’s broader aim of achieving net-zero emissions by 2050.
Balancing the transition to renewables with the immediate needs of energy security has proven contentious.
Industry experts argue that a diverse energy mix—including oil, gas, and offshore wind—is essential to maintaining the country’s energy stability.
Offshore Energies UK, a trade body for the sector, has emphasised the importance of incentivising investment across the entire energy spectrum.
While the windfall tax has succeeded in raising billions for renewable energy projects, the exodus of key players like Apache raises questions about its long-term viability.
Without significant domestic production, the UK risks over-reliance on imports, exposing the economy to global energy price volatility.