Sunak’s handout to oil and gas could have insulated 2m homes

The UK government’s new tax relief for companies that invest in oil and gas production could have insulated two million homes, according to new research from independent climate change think tank E3G.

The new measures, announced last week, commit the government to a subsidy of up to £5.7bn for investment in oil and gas in the next three years. This “lost revenue”, said E3G, could have instead supercharged an energy efficiency drive, insulating two million British homes over the same period, with an average bill saving of £342 per household every year.

Writing in a blog on E3G’s website, senior researcher Euan Graham said that introducing additional tax relief limited to oil and gas investment will do long-term harm to the energy transition and pushes companies to allocate profits towards new oil and gas developments instead of renewables.

“If this revenue had instead been spent on supporting energy efficiency measures,” said Graham, “it would have the potential to lift households out of energy poverty for good.”

E3G points out that energy efficiency was absent from the Chancellor’s emergency support package announcement, meaning UK households’ long-term reliance on gas will continue, and household bills will remain high for the foreseeable future

“New tax relief on oil and gas investment gives companies handouts for undermining our climate safety,” added Euan Graham. “The government could have used this lost revenue to supercharge an energy efficiency drive that brings household bills down once and for all. Instead, it pushes for profits to be spent on new oil and gas projects. This is the opposite of what’s needed if we want to end our reliance on expensive gas.”

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, commented: “The only long-term solution to fuel poverty is improving the energy efficiency of our homes and a move towards a renewable led secure energy supply. Sadly, recent government announcements have been neutral on energy efficiency and this research shows they are now in reverse gear on a just transition away from fossil fuels.”