Technical note: Energy Profits Levy Energy Security Investment Mechanism
This document sets out the technical detail and practical application of the Energy Security Investment Mechanism (ESIM).
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In June 2023 the government announced the Energy Profits Levy (EPL) Energy Security Investment Mechanism (ESIM) to give the oil and gas sector certainty to raise capital and invest in new and existing projects. The government confirmed that the EPL will permanently end if average oil and gas prices are at or below the ESIM price thresholds for 2 consecutive quarters. The government has used a 20-year historic average to the end of 2022 to calculate the ESIM price thresholds, which are set at $71.40 per barrel of oil and £0.54 per therm of gas.
Following the announcement in June, the government published a discussion note inviting views on the technical aspects of the ESIM and how the mechanism could be implemented. This includes the data source and parameters to calculate the ESIM reference price, the frequency with which government should check whether the ESIM has been triggered and the approach to ending the EPL under ESIM, including transitional arrangements and the necessary legislation.
This document outlines the technical detail and practical application of the ESIM.