Declining Energy Profit Levy revenues raise questions over GB Grid funding
Today’s government revenues from oil and gas production for October 2026 showed Energy Profits Levy (EPL) receipts decreased by £0.3bn (10%) from £2.9bn in 2024 to 2025 to £2.6bn in 2025 to 2026.
Commenting on the latest data, Sheena McGuinness, Co-head of Energy and Natural Resources at RSM UK said: “Despite a global rise in oil prices increasing operator profits, Energy Profit Levy (EPL) revenues continue to track downward, contradicting predictions made in July 2024 that an increase in EPL rate would raise an additional £6bn in tax revenues over a five-year parliament to fund the majority of GB Energy. This raises significant questions around how the newly announced GB Grid initiative will be funded, if funding is to be allocated from GB Energy’s capital allocation which has not materialised. We would therefore welcome greater clarity around how the GB Grid will be funded in next week’s Autumn Budget.
“With the government ruling out new exploration licences, decisions on developments such as Rosebank and investment linked to existing North Sea infrastructure become increasingly important. Operators continue to reassess investment decisions while restrictions on future licensing have increased uncertainty across the basin, as highlighted by Ithaca Energy saying it ‘probably wouldn’t’ invest in the North Sea if Rosebank did not receive government approval, which has been sitting in limbo for almost two years.
“While Jackdaw looks like it will get the go ahead, a decision on Rosebank is still to come so investment issues remain. As the UK looks to reduce its reliance on imported energy to meet our energy needs, it will be interesting to see if the approval of the Jackdaw gas field paves the way for Rosebank. The announcement of a new Energy Wealth Fund, which will see tax revenues from the North Sea oil and gas regime used to fund renewable and low carbon projects, creates further incentive for the approval of Rosebank. Notably, these announcements come ahead of the Budget, which the Government says will set out its wider growth plan.
“If North Sea tax revenues are now intended to finance the Energy Wealth Fund, maintaining investment and production in the basin becomes relevant not only to energy security and jobs, but also to funding the Government's own transition strategy.”