North Sea Energy

Statement

The following Statement was made in the House of Commons on Thursday 6 March.

“With permission, I would like to make a Statement about this Government’s plans to unleash the North Sea’s clean energy future.

For almost half a century, the workers, businesses and communities of the North Sea have powered our country and the world. We believe that they can and will continue to do so for the next half a century and beyond, which is why yesterday, we launched a consultation on the steps we are taking to seize the opportunities of the clean energy transition in the North Sea. This is about working with businesses, workers and communities to strengthen north-east Scotland’s status as the energy capital of the UK, and it is about showing global leadership as we deliver a well-managed, orderly and prosperous transition.

We know that the North Sea is a maturing basin. Oil and gas production has seen a natural decline of 72% between 1999 and 2023, and as a result, the industry has lost around a third of its direct workforce over the past decade. The truth is that sprinting to clean energy is the only way to deliver energy security and good, long-term jobs for the workforce and for communities. At the same time, we know that we need to listen to the science on what is required to keep global warming to 1.5 degrees. A science-aligned approach to future oil and gas production is the only way to deliver climate security for future generations, so we owe it to the North Sea’s workers and communities—who have done so much for our country—to come up with a proper plan for the future. That is what this Government are doing.

First, we are consulting on our manifesto commitment not to issue new licences to explore new fields. While we have always been clear that oil and gas will continue to play an important role for decades to come, the reality is that new licences for oil and gas awarded in the past decade have made only a marginal difference to overall production. To continue granting them would not help our energy security, would not be compatible with our climate commitments, and would not take one penny off bills. As such, we will not award new licences, but we will continue working with the sector to manage existing fields for the entirety of their lifespan. We will also provide the long-term certainty on its fiscal landscape that the sector needs. Yesterday, the Treasury set out plans for a new regime to respond to future spikes in oil and gas prices once the energy profits levy ends in 2030.

The second part of the consultation is about harnessing the North Sea’s unique strengths, including its offshore infrastructure, highly skilled engineers and deep supply chains, to make it a global clean energy powerhouse. In just eight months, we have already made significant progress. We have established Great British Energy in Aberdeen, so that it is in the perfect position to drive the rollout of clean energy projects. We have improved the offshore wind auction, so that later this year there will for the first time be a new clean industry bonus to reward investment in good manufacturing jobs and clean supply chains. We have overseen a record-breaking renewables auction. We have kick-started the UK’s carbon capture and hydrogen industries—the energy sectors of the future—with strong, early investments. Just yesterday, we awarded more than £55 million to the port of Cromarty Firth for upgrades that will support the development of floating offshore wind, creating hundreds of jobs as we ensure that Scotland and the UK remain world leaders in this next-generation technology. But that is just the start.

Our clean power action plan will drive £40 billion a year of investment to meet our goal of clean power by 2030. Research shows that jobs in offshore renewable sectors could increase by tens of thousands in that time. We will also make sure that workers have the tools they need to take up these new opportunities. Already, we have worked with the Scottish Government and trade bodies to launch a skills passport, making it easier and quicker for oil and gas workers to bring their skills and experience into clean energy jobs. That idea has been stuck in the mud for years. Thankfully, we have made more progress in the past eight months than was made in the previous 14 years combined. At the same time, we are putting clean energy at the heart of our upcoming modern industrial strategy.

We are incredibly fortunate to have the North Sea on our doorstep. For decades, the oil and gas buried there have fuelled development and charged our economy, but the North Sea’s long-term future lies in its incredible clean energy potential. We know that its stable winds and shallow shelves make it one of the best locations in the world for offshore wind farms. We know that the UK continental shelf alone has enough capacity to store up to 78 billion tonnes of carbon, which is roughly the amount this country has produced since the Industrial Revolution. With our skilled offshore industry and workforce, we are perfectly placed to seize this natural advantage and get ahead in the global race for new jobs in new industries.

Instead of sticking our head in the sand and avoiding the big decisions, we have set out a plan to deliver the future that the North Sea’s workers and communities deserve. It is a plan to co-ordinate the scale-up of clean energy industries, from offshore wind and hydrogen to carbon capture and storage; a plan to give the oil and gas sector the support and clarity it needs to continue operating for decades to come; a plan for energy security and sustainable economic growth; and a plan to keep working with the people who matter most—the North Sea’s businesses, workers, communities and trade unions—to take advantage of the tremendous opportunities of the years ahead together. I commend this Statement to the House”.

My Lords, this Government have done the exact opposite of building the North Sea’s energy future. Instead, their attitude to our North Sea oil and gas industry, and the hundreds of thousands of people it employs, borders on contempt. For clarification, we should remind ourselves that the 2050 net-zero target, set in Glasgow at COP 26, still required 25% of our energy to come from hydrocarbons. In the North Sea, we have the cleanest and most environmentally advanced industry and the toughest regulatory regime in the world. This world-class industry is now under existential threat from this Government.

We should be clear that the energy profits levy is now at its highest level, as a result of the decisions made by this Government. This hike is uneconomic and will see the evaporation of investment in the sector. As my counterpart in the other place said last week, it may well be “Drill, baby, drill” in the US, but it is

“‘Dole, baby, dole’ under Labour in the United Kingdom”.—[Official Report, Commons, 6/3/25; col. 460.]

Let us look at where we are now. The investment allowance has almost been dismantled, and a windfall tax will now be in place for much longer, until 2030—directly because of the choices made by Ed Miliband. A leading US investor said to me recently that

“we now consider west Africa to be a more stable investment environment for hydrocarbons than the UK”.

During a period of global instability, it beggars belief that our Government are shutting down our domestic oil and gas industry at a pace that jeopardises both our energy supply and our energy security. We are already seeing the impact of the Government’s punitive tax measures: investment is vanishing, work is slowing up or being stopped entirely, and companies are leaving the UK for countries that do see a future in the oil and gas industry. But, even more worryingly, we are haemorrhaging the backbone of our highly skilled technical staff overseas.

My Lords, we welcome this important step towards developing a framework for future energy in the North Sea and, in particular, the clear intention to engage in a constructive dialogue with North Sea communities, business supply chains, trade unions, workers and environmental groups. We also welcome the clear recognition that the North Sea will remain at the heart of Britain’s energy future, supplying home-generated, clean, renewable energy, supporting jobs and our future energy security long into the future. We urgently need a coherent transition plan for the North Sea to support workers, supply chains, families and communities. We need much more thinking and planning on how we transition away from oil and gas after 50 years of drilling in what is now a rapidly declining basin and how we can all work to ensure a just transition for our oil and gas industry workers.

While we welcome the consultation and the Government’s vision for an internationally leading offshore clean energy industry, we believe that more decisive and accelerated action is required to ensure a truly speedy and just transition for the workers and communities who have powered this country for decades. The consultation period is very short. The closing date is 30 April. Is this really enough time, considering the complexity of the task at hand and the range of consultees? What reassessment of the urgency and support needed for a just transition are the Government making, considering the impact of the Supreme Court decision on new oil and gas fields? The implications of the Supreme Court judgment must mean that these matters are now more pressing and require a rethink and more resources than they did. We are seeing multilateral energy companies such as BP rowing back from their commitments to the energy transition. What impact is this having on planning to transition and what actions are the Government taking to work constructively with these companies?

At its heart, this is about rapidly teaching the skills and creating the job opportunities for the future during a period of exceptional social change. While the consultation outlines improvements in clean energy industries, more concrete commitments and funding mechanisms are needed to ensure a truly just transition for the existing oil and gas workforce. Although research suggests high skills transferability, bridging the gap between potential and actual job creation in the clean energy sector requires significant government intervention. We call for more proactive and adequate funding for retraining and upskilling programmes.

My Lords, I thank both noble Lords for their contributions to this crucial debate. I thank the noble Earl, Lord Russell, for his positive comments at the beginning of his contribution. I look back fondly on the time we worked together, when I was the Opposition Whip for this area, and we did some useful work together.

To go to the nub of the Statement, which came out in the Commons last week, the Secretary of State launched a consultation on the steps this Government have taken to seize the opportunities of the clean energy transition in the North Sea. That was the critical point that we are talking about tonight. It is about working with businesses, workers and communities to strengthen north-east Scotland’s status as the energy capital of the UK and, obviously, reaching beyond. It is important that all of us talk up the opportunities that we have got going forward.

At the same time, we obviously have the backdrop of global warming to 1.5 degrees and all the evidence we have around that, but I reassure the noble Lord, Lord Offord, that making Britain a clean energy superpower is one of the five missions of this Government, as he quite rightly stated. We are committed to delivering clean power by 2030 and accelerating to net zero across the economy. As part of this mission, the Government remain committed to achieving the UK’s NDCs, carbon budget 6 and net zero by 2050.

We all know, and need to acknowledge, that the North Sea is a maturing basin. Oil and gas production has seen a natural decline of 72% between 1999 and 2023, and, as a result, the industry has already lost a third of its direct workforce over the last decade. We cannot ignore the situation that we are in and, as the noble Earl, Lord Russell, identified, we need a new plan to move forward. We cannot continue to exist as we are; this plan is urgent, as expressed last week in the Statement.

My Lords, while this Statement is about energy, all these various forms of energy in the North Sea will have to co-exist with other uses such as shipping and fisheries, with the towns and cities which abut the North Sea, and with the environment, which in general is pretty fragile and, in cases such as Dogger, pretty much in crisis. Can the Minister say how the Government intend to co-ordinate to make sure that moving forward on energy in this regard will not compromise some of these other activities? Almost a decade ago, I chaired a Select Committee of this House that called for a strategic North Sea plan that would seek to balance these things. As far as I know, it has never been developed, so I wonder whether the Minister can say how this co-ordination will take place.

I sincerely thank the noble Baroness for raising these important points. Let me acknowledge the awful tragedy that has just happened in the North Sea. I come from Yorkshire, and I know how congested the waters are there. Our thoughts are with the families of those involved. There will clearly be an inquiry into what happened there, but it serves as a very useful backdrop to the issues that the noble Baroness raises.

However, with another hat on, I was very pleased to be involved in the debates on the Crown Estate and ownership of the coastal areas and the various responsibilities in those areas—not only people looking after their own employment, but the environment. Those considerations are important, and I am confident that, by putting together these packages with key interested partners, we will be able to come up with a very positive plan that highlights the issues that the noble Baroness raises.

My Lords, I welcome the opportunity to debate these issues, and I echo what the noble Baroness and others have said about the tragedy in the North Sea. I cross the North Sea every year to visit my family in Denmark. When I was an MEP, we crossed the North Sea in a ferry after the “Estonia” tragedy to show solidarity.

On the issue before us this evening, does the Minister share my concern that we should have a more balanced source of energy rather than what could appear to be a rapid dash for clean energy? We have seen, as the noble Earl said earlier, that BP as a single company is moving away from renewables back to its more traditional oil and other energy uses. There are also environmental issues related to clean energy, such as decommissioning wind turbines and siting substations to bring renewable energy onshore, and the fact that our competitors—the USA, Norway and other countries—are still relying on their oil and gas reserves. Should we not be looking for a more balanced view?

I also echo what the noble Baroness said earlier. We had many debates during the passage of the clean energy Bill about the environmental issues. I particularly share her concern about fishermen and spatial squeeze—10% of fisheries grounds could be lost through clean energy. If the Minister could address these issues, I would be most grateful.

I thank the noble Baroness for raising these issues. It is a complex picture, but this Government are absolutely determined to get to grips with it. On alternative sources of energy, I have mentioned hydrogen, and we have had some very robust debates about its potential future use. The Government have also taken swift action to unlock the potential of onshore wind.

The issue that we probably need to discuss more than we do is how we reduce the consumption of energy at all, whether in our businesses or a domestic setting, and where the highest use of energy is.

The noble Earl has raised the issue of BP before. It is difficult for us to stand here and talk about commercial decisions made by companies, of whatever scale; it would not be appropriate to do so. But I emphasise that although the foot is on the accelerator in progressing to clean energy, we recognise, as we have repeatedly said, the contribution that oilfields and gas will continue to make as we make that transition. We have to make sure that the country is not exposed to any shocks, and that we do this in a measured and sensible way to ensure that we get to where we want to be.

There are, of course, competing challenges—I have heard the noble Baroness discuss on many occasions the impact of climate change on communities in rural areas in Yorkshire, for example, where we live—but there are many opportunities. We need to look at examples around the world, while focusing on making sure that Britain is the best and that we do all we can to reinvigorate our energy markets, provide the jobs we need and create an environment where we invest both within the country and on the international stage.