Sharma's call to tax excessive oil profits

The windfall tax on oil and gas profits must be changed urgently to raise billions more and to stop companies using loopholes to invest in further fossil fuel extraction, the outgoing president of global climate talks says.

- Fiona Harvey

“These are excessive profits, and they have to be treated in the appropriate way when it comes to taxation,” said Alok Sharma, the president of the Cop26 UN climate summit.

“We ought to be going further and seeing what more can be done in terms of raising additional finance [from the profits]. So far, at least, the level of money raised is obviously not significant.”

The UK is facing a cost of living crisis and the Treasury needs to fill an estimated £50bn hole in the country’s finances.

Shell said this week it had pa id no windfall tax despite having made a record $30bn (£26bn) in profits for the year so far. The oil company said it had taken advantage of a loophole exempting companies that invest their surplus in increasing oil and gas extraction . Yesterday the US fossil fuel firm ExxonMobil reported a quarterly profit of nearly $20bn, $4bn more than forecast.

Sharma said: “There really is an incentive for these companies to do more in terms of oil and gas. What we want them to do, if we are to meet our target of 100% clean energy by 2035, is to accelerate the renewables rollout.”  

Sharma was praised around the world for his role in directing the Cop26 UN climate talks last November in Glasgow , where he forged a global pact to limit temperature rises to 1.5C above pre-industrial levels . His role as president of the talks ends next week, when the Cop27 summit begins in Egypt .