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UK tax raid on oil industry also breaks historic climate pledge

UK tax raid on oil industry also breaks historic climate pledge

The fact that the UK government is launching a tax assault on the oil and gas industry while also breaching a vow not to grant fossil fuel producers incentives to drill more demonstrates how the invasion of Ukraine has turned the energy world upside down.

When it hosted the COP26 climate summit in December, a government that officially spurned the oil business has spent the last few months encouraging it to invest more. The current cost-of-living issue has necessitated yet another policy shift.

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The UK Chancellor of the Exchequer announced a 25% windfall tax on oil and gas earnings, projected to bring in £5 billion ($6.3 billion) for the government to help the poor cope with rising energy costs.

Companies will be able to escape some of the tax by increasing their investments in oil and gas extraction, which may offset up to 80% of new spending. This goes against the COP26 accord, which stated that wasteful fossil fuel subsidies would be phased out.

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“Giving these companies even bigger tax incentives to extract more oil and gas will lock in further reliance on fossil fuels,” Luke Murphy, associate director for energy and climate policy at the Institute for Public Policy Research, a left-leaning think tank, said. “This will have a negative impact on future energy bills, energy security, and the environment.”

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