KPMG's reaction to energy measures announced in the Budget

Commenting on the changes to the Energy Profits Levy, Claire Angell, Head of Energy Tax at KPMG in the UK, said:

“Uncertainty has weighed heavy on those operating in the UK oil and gas sector, with so many fiscal and regulatory changes over the past few years. Although the 3% increase and extension to 2030 was confirmed today, raising £2.3bn, there will be some relief that the Chancellor has listened to industry’s concerns about the impact of any further changes to tax reliefs for the Energy Profits Levy.

“Despite the positive progress made on renewables in recent years, 76% of our total energy use was sourced from oil and gas in 2023. We have already seen a number of companies announcing a suspension of activities or a total withdrawal from the UK given the risk of significant changes to the windfall tax.  If the Government is serious about a just and fair energy transition, it will need to work with the oil and gas sector to ensure we are not prematurely importing more energy to meet demand in the UK.”

Commenting on the changes to the fiscal rules and the impact on green investments, Simon Virley CB FEI, Vice Chair and Head of Energy & Natural Resources at KPMG in the UK, said:

“According to the Treasury, the UK needs around £1.4 trillion of investment¹ to get to Net Zero by 2050.  Most of this money will come from the private sector.  But the public sector has a key role to play, through new institutions like the National Wealth Fund and GB Energy, in de-risking investments in newer technologies, like hydrogen and carbon capture and storage (CCS), as well as attracting the supply chain investments needed to build all the new energy infrastructure we need.

“Today’s announcement by the Chancellor, allowing more borrowing for infrastructure investment is welcome. But the extra public investment must be targeted on ‘crowding in’ and catalysing private investment in things the private sector is not already doing, rather than investing in existing assets, or mature technologies that already attract plenty of private sector capital. The announcement that a number of hydrogen and CCS projects will now proceed is a positive sign that this funding is already delivering results.”

¹ Notes: Source of £1.4 trillion figure is the HMT ‘Net Zero Review’, October 2021

-ENDS-

For further information please contact:

KPMG Media Relations
Gerard Swinley
gerard.swinley@kpmg.co.uk
M: +44 7510 375540

About KPMG:

KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 18,000 partners and staff. The UK firm recorded a revenue of £2.96 billion in the year ended 30 September 2023.

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 273,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.