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(Bloomberg) – The UK government is drafting a new tax regime for oil and gas companies to replace a controversial windfall levy after 2030, with an aim to hit companies only when prices are unusually high.��

Equinor's Rosebank project has been forced to reapply for permitting. Image: Equinor

The new mechanism will be permanent, which the government says will give the industry more predictability, and will mean higher payments only if there’s a need to respond to oil and gas “price shocks,” according to a consultation��published on Wednesday. The industry is expected to contribute £19 billion ($24.5 billion) in tax receipts between now and 2030.

“We will ensure that it minimizes distortions on investment decisions when prices are not unusually high,” Treasury Secretary James Murray said in the statement.��

The previous Conservative government imposed a windfall tax on surging oil and gas profits during the energy crisis three years ago, and Labour will use some of the proceeds to help fund its state-owned company GB Energy. Maintaining a tough stance on oil and gas firms formed a prominent part of the Labour campaign during the last election.��

The government is seeking input from the industry as it tries to define two thresholds — one for oil and one for gas — to use in the new regime.

The UK also��confirmed plans��to end new North Sea exploration licenses for oil and gas, in line with the government’s manifesto commitment, but specified that project extensions — blocks where there “is a valid license” — will not be banned.��

The move to design a new tax regime comes after��persistent calls��from the nation’s top producers for more clarity on duties and drilling permits to allow investment decisions.��

While global energy prices have retreated from 2022 peaks, the Energy Profits Levy continued to rise, bringing the total tax rate��to 78%��late last year and prompting dramatic cuts in industry forecasts for investment and production. The sector was already in decline due to aging fields, with companies seeking projects elsewhere. A recent��court ruling��forcing two undeveloped fields — Rosebank and Jackdaw led by Equinor ASA and Shell Plc respectively — to reapply for environmental permits has added to uncertainty.��

Industry groups have been pushing for more support, pointing to the fact that the UK’s reliance on imports keeps increasing, which is risky both for energy security and the government’s clean energy goals.��

The country’s total energy production hit a record low late last year, with imports covering more than 40% of the needs. That number will jump to as much as 80% by 2030 without fresh investment into ongoing developments, trade group Offshore Energies UK said last month.

The government is collecting feedback until May 28 on policy options including taxes, and didn’t announce specific thresholds in the consultation. The new plan is a “step toward clarity and long-term certainty,” Stuart Payne, chief executive officer of North Sea Transition Authority, a regulator for the oil and gas industry, said in a statement.

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