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  1. Energy & Climate Tech
28 September 2021

North Sea oil companies receive more money from the government than they pay in taxes

The UK has given firms including Exxon and Shell hundreds of millions of pounds in rebates.

By Nick Ferris

With COP26 approaching, the UK government is intent on framing itself as a climate leader. Boris Johnson recently told the UN General Assembly that it is “time for humanity to grow up” and protect our “precious blue sphere”. 

But 500 miles north of Westminster, off the coast of Aberdeen, a seemingly parallel universe exists. Because of tax breaks and payments to cover platform decommissioning costs, oil companies are receiving more money from the government than they pay in tax. 

Analysis of HMRC data from campaigning group Uplift finds that ExxonMobil – a company that is being called to testify before the US Congress on 28 October over its reported campaign to discredit climate science – received the highest payment in 2020, at £117 million. 

Other companies on the list include Shell (£110m) and BP (£39m). As oil output continues to diminish, the government estimates it will provide a total of £9.4bn in tax rebates for oil and gas firms to aid decommissioning between 2020 and 2065.

“An enormous amount of money has gone into the PR that the extractive sector is an economic contributor, which has allowed companies to sustain massive tax avoidance,” says Alex Cobham, chief executive of the Tax Justice Network. “But actually these companies are fundamentally damaging.

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“They should instead be dealt with like tobacco companies, whose products face specific high taxes to make amends for the damage that they do to society – and with the ultimate intention of ending it entirely.”

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[See also: The power trap: Why the energy crisis is a crisis of politics]