UK Government Weakens Oil and Gas Windfall Tax Stance, but Dependence on Fossil Fuel Price Drop May Not Materialize

However, the change is dependent on fossil fuel prices falling for two consecutive quarters, which the Office for Budget Responsibility predicts will not happen.

This move may serve a political purpose, but it could also create a backlash from the renewables industry, which is pushing for better incentives and investment.

The renewables industry argues that without more investment, companies will shift to the US and EU where it is easier and cheaper to do business.

The UK must not return to its previous practice of offering one of the most generous tax environments for large oil and gas projects, as even profitable firms were receiving net payments from UK taxpayers.