The North Sea oil and gas sector could be forced to pay for the transition to net zero after a UK review has recommended using fossil fuels tax revenues to finance green projects.

The review by Tory MP Chris Skidmore, commissioned by the UK Government, has called for the windfall tax to be replaced by a “net zero fund” that would “clearly ringfence revenue for investment into clear offshore technologies and energy efficiency improvements”.

The UK Government’s windfall tax, known as the energy profits levy, has been criticised by opponents after a measure was included which allowed energy companies to apply for tax savings worth 91p of every £1 invested in UK fossil fuel extraction.

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In his review, Mr Skidmore praised the windfall tax which was “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”.

But he added that “the levy model can be improved” in order to “better develop clean offshore industries as growth opportunities for the UK economy”.

The UK Government will launch a consultation this year as part of reviewing the long-term tax set-up for the North Sea for what will replace the windfall tax.

Mr Skidmore has demanded that the consultation “must include an option to create a hypothecated net zero fund”.

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He added: “Dependent on the response to the consultation, by the end of 2026, HMT (The Treasury) 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.”

SNP MP Alan Brown claimed that “we cannot trust Westminster to support Scotland’s transition to net zero”.

He added: “Scotland’s vast resources in oil and gas have been squandered by decades of Westminster governments of all colours and so the only way to protect our oil and gas sector for the future is with independence.”

Francesca Bell, fiscal and investor relations manager for Offshore Energies UK, said: “Chris Skidmore’s net zero review has a number of important principles including promoting energy integration and scaling investment in decarbonisation that we support. “We need to scale investment across the whole energy system to continue to support energy security and accelerate transition towards net-zero.

“However, any policy introduced must be done in a fit-for-purpose way. It should be acknowledged that two windfall taxes on the oil and gas sector raising the tax to 75% in one year, alongside the windfall tax placed on electricity generators, risks driving capital out of the UK.”

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She added: “The offshore industry is proud to pay their taxes and accelerating the transition, however the role of decarbonising the UK cannot lie solely on this sector.

“We need to see a significant ramp up in investment across the whole economy to support our drive to net-zero that will be underpinned by investor confidence and look forward to working with the UK government as they consider measures to support this.”

The UK Government has been approached for comment.