Campaigners have warned that the UK could be heading towards an “out-of-control financial collapse” if an overvaluation of fossil fuel assets triggers a market crash, which could cost the taxpayer as much as £674 billion. Research by the One for One campaign group has likely sent alarm bells ringing for the Government as it could end up dishing out over £670billion in taxpayer’s cash – or £9,780 per taxpayer – to keep banks afloat if a fossil fuel asset crash unfolds. The group warned this could come as early as 2030. This could result in half a million job losses if action is not taken by the state, the report warns.
The group is urging the Government to enforce stronger financial regulations to safeguard against the risks fossil fuel financing poses. It argues that this will ensure investors consider fossil fuel energy sources to be one of the highest-risk classes of assets.
The campaigners claimed that for each pound used to finance or insure new fossil fuel projects, banks and insurers would need to hold one pound to account for potential losses.
Hilal Atici, strategy director of the Financial Regulation Program at the Sunrise Project, which is backing the campaign, said: “Banks continue to pour money into climate-destroying fossil fuels and when it all goes wrong we will be left to pick up the bill ,
She added that markets are heading for an “out-of-control financial collapse” which would then require multibillion pound taxpayer-funded bailouts.
Ms Atici continued: “The One for One rule will ensure that banks making high-risk fossil fuel investments shoulder that risk themselves. It will protect us from a financial crash and also put an emergency brake on fossil fuel financing.”
This comes after Chancellor Jeremy Hunt raised the windfall tax (a tax on excess profits) on North Sea oil and gas companies to cover the costs of state support for energy bills amid surging prices.
It came as energy giants like Shell and BP raked in record profits due to the surging costs of wholesale gas and oil amid Russia’s war in Ukraine, while millions of Britons got pushed into fuel poverty.
Mr Hunt later announced during the Autumn statement that the windfall tax would go from 25 percent to 35 percent until 2028 as the Treasury scrambled to plug the £55 billion fiscal black hole in Treasury finances.
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It came after Prime Minister Rishi Sunak introduced the energy profits levy on North Sea oil and gas firms, increasing their effective tax rate from 40 to 65 percent, when he was Chancellor back in May.
But despite that tax hike, Centrica – the owner of British Gas – is still set to rake in a record £1.7 billion profit, which is £400 million more than expected.
This has sparked calls for a beefed-up windfall tax. Fuel Poverty Action said: “This shows that if the will were there [for a tougher tax], there is enough money to ensure that everyone can heat their home. There is no need for anyone to be cold this winter.”
Express.co.uk has approached the Treasury for comment.