BP’s ‘obscene’ profits spark call for ‘generational’ reform of tax on oil and gas drillers

Westminster must enact a “generational shift” in the way the UK taxes fossil fuel companies to tackle both the cost-of-living crisis and climate breakdown, according to Scottish Green politicians.

The call comes as international oil and gas firm BP reported higher-than-expected profits of nearly £4 billion for the first three months of this year. The latest figures come after the company reaped record annual profits of £23bn in 2022, more than double its total for the previous year.

Other energy giants have also been reporting historically high profits – a result of volatility in international oil and gas prices, largely caused by Russia’s invasion of Ukraine.

The UK Government introduced a ‘windfall tax’ – a levy on profits generated through circumstances beyond a company’s control – in a bid to address the issue.

The rate, only due on earnings for oil and gas extraction within the UK, is set at 35 per cent and, with other measures, takes the overall tax rate for petroleum firms in the sector to 75 per cent – among the highest anywhere.

However, the policy allows firms to claim back 91 per cent in return for investment in new oil and gas projects and decommissioning work.

Burning of fossil fuels – coal, oil and gas – has also been named as the main cause of human-induced climate change, responsible for more than 75 per cent of global greenhouse gas emissions.

Environmental campaigners and politicians have slammed the “obscene” income levels and “climate-wrecking activities”, calling for reform of taxation on fossil fuel firms.

The UK government is facing renewed criticism over taxation of oil and gas drillers as BP reports global profits of nearly £4bn for the first three months of this year, while households struggle to pay rocketing energy bills

Mark Ruskell, climate spokesperson for the Scottish Greens, said: “While shareholders in these companies will be laughing all the way to the bank, it is ordinary people and the environment who are suffering so they can line their pockets.

“We are in the grip of the biggest climate crisis we will ever know – seasonal temperatures all across Europe are smashing records as we enter summer, and we are witnessing horrendous scenes of famine and drought in Africa and storms elsewhere.

“Here in the UK we are not only bracing for whatever the next few months brings weather-wise, we are doing so against rising prices, brought about chiefly because of the soaring costs of energy, which are feeding these massive profits.

“Given the extraordinary values involved, the UK Government must change how we tax the fossil fuel companies.

“By imposing a significant, generational shift in those levels, we can not only begin to look at the kind of investments needed in people and planet, but to send a clear message that these firms have to pay a price for such obscene profits, made on the back of their climate-wrecking activities.”

BP recently rolled back its 2030 targets to cut oil and gas production and reduce emissions. In 2020 the firm pledged to lower oil and gas output by 40 per cent by 2030, to shrink its environmental impacts. This was recently scaled down to 25 per cent.

Charlie Kronick, senior climate advisor at Greenpeace UK, said: “BP’s profits are still surging – and we’re the ones picking up the tab.

“It's time for the Government to step in and force BP – and the rest of the oil industry – to start paying for the damage they’re causing to the climate and use the money to address the devastating climate impacts already being experienced around the world.”

Meanwhile, the SNP have accused the UK Government of “hoarding” profits made from drilling oil and gas in Scottish waters, demanding the income should be “handed back” to the country.

MP Stewart Hosie, economy spokesperson for the party, said: “Scotland is an energy-rich country and it's utterly shameful that, under the Tories, millions of Scottish families are being forced to pay through the nose for energy bills while the Westminster Treasury reaps the benefits of Scotland’s energy wealth.

He added: “The time for excuses is over. Westminster must reinvest Scotland’s energy wealth back into Scotland’s communities.”