Energy tycoon Dale Vince calls for North Sea operators to be hit with a windfall tax after enjoying a £20bn boost from surging gas prices
Energy tycoon Dale Vince has called for North Sea operators to be hit with a windfall tax after enjoying a £20billion boost from surging gas prices.
The millionaire founder of green energy supplier Ecotricity said a levy on gas generators should be used to ease the burden of rising energy bills, which are expected to soar this year.
Companies extracting gas have seen revenues spike as global wholesale prices have rocketed almost tenfold over the last year.
Green and pleasant land: Dale Vince said a levy on gas generators should be used to ease the burden of rising energy bills
The crisis has forced 26 suppliers to go bust since August as the UK’s energy price cap has left them unable to pass on the rises to consumers. Households are braced for annual energy bills to hit £2,000 after the cap rises in April.
Vince told The Mail on Sunday: ‘It’s our North Sea. It’s happening in our territory. To use Brexit language, let’s take control of that. Let’s have a windfall tax. It will help spread the cost of bill price shock over the next few years.
‘Around 40 per cent of our gas this winter came from the North Sea. The cost of getting it out of the North Sea didn’t go up, but we paid up to ten times more for that gas than we used to because it’s tied to global prices.’
Business Secretary Kwasi Kwarteng last year said a one-off windfall tax was one of the options for handling the energy crisis. Windfall taxes are sometimes seen as a Left-wing means of tackling corporations benefiting from crises. The former Labour leader Jeremy Corbyn called for a North Sea tax in 2019 and Lib Dem leader Ed Davey last week demanded the introduction of such a levy.
However, Margaret Thatcher’s government imposed windfall taxes on North Sea oil and gas companies as well as banks in the early 1980s.
Detractors say such a tax could slow investment into renewables. Oil and gas titans such as BP and Shell have been retreating from the North Sea in recent years. A growing number of companies operating there are now backed by private equity firms, overseas governments and smaller listed players.
In a spin: Vince, a former New Age traveller, set up Ecotricity from a single wind turbine in 1995
However, Shell retains significant operations and last week it announced that its profits would be ‘significantly higher’ due to the market conditions.
Vince said: ‘Those guys weren’t expecting that money and they won’t be doing anything good with it. We shouldn’t allow the siphoning of £20 billion out of our economy into the hands of North Sea operators.’
He added: ‘Price rises are coming. All the Government has done is delay them and bankrupted half the energy sector in the process.’
The former New Age traveller set up Ecotricity from a single wind turbine in 1995. The business now serves 200,000 customers. Ecotricity’s losses widened to £6.5 million last year, but Vince said it would return to the black this year, aided by the sale of Electric Highway – a charging network for electric cars.
An attempt to buy rival Good Energy, in which it has a 25 per cent stake, failed last autumn, and Vince admits he got cold feet on the deal as the energy crisis emerged. ‘It was a blessing for us that we failed’, he said.
Vince said the government’s plan to switch households from gas boilers to heat pumps is ‘half baked’ and will cost £300 billion. ‘Our alternative is to make gases from grass and put that into the gas grid, rather than ripping everybody’s boilers out.’
Ecotricity will next year begin a trial of a new system in Reading which mimics a cow’s stomach, converting grass into gas which will power 4000 homes. The venture can be scaled up to create 100,000 jobs in the rural economy, he says.
Levies: Vince said Chancellor Rishi Sunak should scrap the collection of green taxes on suppliers
Vince said Chancellor Rishi Sunak should scrap the collection of green taxes on suppliers – which include the renewables obligation charge to the feed-in tariff designed to accelerate investment into renewables. He believes these levies are being passed on in the form of an extra £9 billion, or £300 a household, to bills each year. Instead, the energy industry should be subsidised from a central pot of government funds not reliant on industry levies, he said.
He added: ‘That would be a decent contribution from government to just take that away. Why are the government taxing our energy bills like this? We put billions into trains, but we don’t have that cost to a train ticket. We subsidise farming to make food cheaper but don’t tax people at the supermarket checkout.’
The businessman believes Westminster’s understanding of the energy market has been sharpened by the collapse of Bulb, which has been propped up by government loan as administrators hunt for a buyer or a new home for its customers. He blasts Bulb and others who he claimed have given the green energy industry a bad name. ‘They used the illusion of super low prices to attract customers who had benefited with super low prices, but they were loss making and went bankrupt.’
Vince’s collection of business ventures have included designing an electric supercar, running football club Forest Green Rovers and selling ‘carbon negative’ diamonds. He launched the Skydiamond brand selling laboratory grown diamonds online and will soon unveil a tie up with a London designer jeweller.