Establish a Net Zero Fund

378.  The Review welcomes the Energy Profits Levy curbing excessive profits from oil and gas companies over the past year in light of the high prices caused by Russia's invasion of Ukraine.

The revenue from the levy supports British households to heat their homes, which in the current cost of living crisis, helps maintain the social license of oil and gas companies to operate. However, the Levy model can be improved, likely with stakeholder support, to better develop clean offshore industries as growth opportunities for the UK economy.

"When carbon revenues go towards the general government budget, some studies have found that public acceptability is lower. If instead carbon revenues are earmarked for a specific purpose-notably as targeted green investments or transfers to particularly affected groups-citizens report greater acceptability of carbon pricing."287

379.  The Government is set to consult stakeholders in 2023 as part of a review of the UK's long-term tax treatment of the North Sea after the Energy Profits Levy ceases.

380.  This Review therefore recommends that the 2023 consultation on the long-term tax treatment of the North Sea must include an option to create a hypothecated 'Net Zero Fund'.

381.  Dependent on the response to the consultation, by the end of 2026, HMT should set out a long-term plan for replacing the Energy Profits Levy with a 'Net Zero Fund' that clearly ringfences revenue for investment into clean offshore technologies and/or energy efficiency improvements.

382.  Doing this well in advance of 2028 is important for providing long term certainty and stability to investors in the UKCS. 288 289