Making the UK’s windfall tax on oil and gas companies permanent could generate enough revenue to fund a full transition for North Sea workers into green jobs, a new report has found.
The research, from the campaign group Oil Change International, estimates that £1.9 billion a year would be required to support a “just transition” away from fossil fuels, including retraining and job creation in the renewable energy sector.
Around £1.1 billion would go towards expanding the wind industry and developing green employment opportunities, while £440 million would be needed to upgrade port infrastructure to support the offshore wind sector.
A further £355 million would fund reskilling and training programmes for oil and gas workers, many of whom face uncertainty as the UK accelerates efforts to reach net-zero emissions.
The report argues that redirecting existing fossil fuel subsidies and maintaining the windfall tax introduced during the energy crisis would provide the necessary funding, without the need for new taxes or borrowing.
Campaigners say the money could help build a more equitable and resilient energy workforce, while reducing dependency on volatile oil and gas markets.
“The resources are already there – it’s about political will,” said Laurie van der Burg, co-author of the report. “A fair, managed transition is both achievable and affordable.”
The UK’s windfall tax on energy firms was introduced in 2022 as profits soared amid the global energy crisis. It is currently set to expire in 2028.
Making the UK’s windfall tax on oil and gas firms permanent could generate at least £2 billion annually, according to new analysis.
The levy, introduced in response to Russia’s invasion of Ukraine which triggered a surge in global energy prices, targeted the massive profits reaped by North Sea producers.
Rosemary Harris, senior campaigner at Oil Change International (OCI), said the shift to a renewable economy offered a major opportunity to create stable, high-quality jobs and a more equitable future. However, she warned that current government policy was falling short.
“As jobs vanish and the cost of living rises, the lack of action is leaving communities behind. This opens the door for those exploiting government inaction under the pretence of caring about workers,” Harris said.
Labour has pledged to stop issuing new North Sea oil and gas licences, a move criticised by the Conservatives and Reform UK, who support continued extraction.
Yet experts point out that North Sea reserves are rapidly declining, meaning job losses are inevitable regardless of policy.
“We need decisive, funded plans to support workers through this transition,” Harris added. “It’s evident by now that relying on market forces or industry leaders will not deliver a just outcome.”
OCI also recommends closing tax loopholes like the “carried interest” provision, which allows private equity managers to pay lower capital gains tax rates instead of higher income tax. Ending this could raise around £490 million per year, the group said.
Meanwhile, fossil fuel producers continue to receive significant government support. According to Global Justice Now (GJN), subsidies total around £17.5 billion annually — the highest in nearly 10 years and expected to rise further during this parliamentary term.
Tax relief for activities such as oil and gas extraction and decommissioning in the North Sea is estimated to be worth £2.7 billion a year.
In addition, nearly £900 million earmarked for carbon capture and storage — a key component of the UK’s net-zero strategy — is also categorised by GJN as support for the fossil fuel.
The UK joined the Coalition on Phasing Out Fossil Fuel Incentives during last year’s UN Cop29 climate summit in Azerbaijan, committing to end “inefficient” fossil fuel subsidies.
However, some of the measures labeled as subsidies in the GJN report are designed to ease the impact of high energy prices and the rising cost of living, particularly on low-income households.
These include a reduced VAT rate on gas and other fuels—estimated to cost £6 billion annually—and £4.7 billion in fuel duty relief intended to support rural drivers facing higher transport costs.
The report’s authors stressed that any changes to these subsidies must be approached cautiously to avoid disproportionately affecting vulnerable households.
A government spokesperson said: “We are working to make the UK a clean energy superpower, helping to safeguard both family budgets and public finances.
The UK does not provide fossil fuel subsidies and backs global reform efforts. We’ve also fulfilled our pledge to eliminate overly generous investment allowances under the energy profits levy, which has been extended to 31 March 2030.”
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