Friends of the Earth claims chancellor handed out £2.7bn of incentives to North Sea oil and gas firms

This article is more than 6 years old

This article is more than 6 years old

Friends of the Earth has accused the chancellor George Osborne of exacerbating climate change by handing out £2.7bn of incentives to energy companies to fuel North Sea oil and gas production. FoE said he was too focused on propping up oil companies at the expense of making renewable energy cheaper.

David Powell, economics campaigner at FoE, said: "The chancellor falls over himself to claim renewable energy is expensive, while bending over backwards to offer oil barons massive tax breaks.

"Reducing the tax bill for rich oil companies will either bolster their already fat profits, or cause more climate changing fossil fuels to be extracted that would have been left in the ground, or both."

FoE said field allowances that were first introduced in 2009 by Alistair Darling have been significantly expanded by Osborne.

With huge subsidies planned to encourage fracking and further cuts to subsidies for wind farms and solar energy on the horizon, Osborne has come under intense pressure from environmental groups to change course.

FoE has calculated that if taken up in full, 32 new or existing North Sea oil and gas fields qualified for allowances awarded in 2013-14 worth a total of £2.7bn to the industry over five years. The £2.7bn is how much tax companies would otherwise have had to pay on their profits from oil and gas extraction. In 2012-13, 28 fields received tax breaks totalling £1.95bn, FoE said.

A spokeswoman for the Treasury said the government remained on course to meet the target of 15% of energy coming from renewable sources by 2020.