The United Kingdom is gearing up for a general election, predicated to take place in late 2024.
With current polling suggesting the Labour Party is favoured to win, one topic is taking center stage: the energy transition and the future of North Sea oil and natural gas development.
Labour sees clear scope to win political ground over the incumbent Conservatives, positioning themselves as the party who will drive the energy transition. Transforming North Sea operations will play a key role in the party’s plans for a net zero future.
As previously covered by EID, the North Sea – and in particular the Energy Profits Levy (windfall tax) – has already emerged as a highly contentious topic, and recent announcements from Labour suggest this debate will not be resolved soon.
But what is the cost of this political point scoring, and what might Labour’s bold plans mean for the energy transition and energy security in the UK?
What exactly are the plans for the North Sea?
On 19 June 2023, the Leader of the Opposition, Sir Keir Starmer, unveiled Labour’s ‘Green Prosperity Plan’. Aiming to make Britain a “clean energy superpower”, the plan proposes significant investment for the UK’s renewable energy sector, including wind and nuclear.
Crucially, the announcement confirmed that Labour would swiftly block all new domestic oil and gas developments if it defeats the Conservatives.
However, the party insisted it would honor any licenses in existence at the time of the next election, including Equinor’s Rosebank field development west of Shetland.
A strong reaction
The announcement was met with criticism from key industry players and political figures.
Offshore Energies UK warned that Labour’s proposal to ban new oil and gas licenses would lead to 45,000 job losses and an 60 percent drop in domestic production.
David Whitehouse, chief executive of the representative body cited concerns around the energy security implications of reducing domestic oil and gas production:
“If this policy is enacted, we will become increasingly reliant on imported energy. That would have a number of impacts. It would undermine the UK energy security, it would undermine those 200,000 jobs that we see across the country, it would make the country poorer.”
Starmer’s proposals also sparked backlash from trade unions, with the head of the GMB union, one of Labour’s biggest donors, calling on Keir Starmer to scrap the plans.
GMB boss Gary Smith said there was a “national security imperative” to keep Britain’s oil and gas industry alive, adding that “strangling” the North Sea oil industry would be “bad for jobs” and “bad for the environment”, as the UK would still need to import gas and oil from overseas.
The General Secretary of Unite Union, Sharon Graham adopted a similar position, saying:
“Of course, we need a government that is going to be really bold on investment in a net zero future and Keir Starmer is right that British wind turbines should be built in Britain. But that is also true of oil and gas. This will be part of the energy mix until at least 2050, whether we like it or not. We don’t want to end up losing UK jobs and then relying on supplies from other countries…”
On the other side of the debate, the UK’s most senior climate adviser strongly endorsed the plans and slammed the conservative government for failing to show leadership on the issue.
John Gummer, who as Lord Deben chairs the statutory Committee on Climate Change, told the Guardian:
“I don’t understand how the government can ask other people not to produce more oil [while supporting new oil and gas licences in the North Sea]. That’s exactly what they are doing now – asking other people not to do what they’re doing.”
Meanwhile, the Green Party accused Labour of not going far enough with climate commitments. In particular, the environment-focused party criticized the decision to allow new oil fields approved by the Conservatives to go ahead, in particular the Rosebank oil field.
“It is simply unforgivable that a Labour Party looking to build its green credentials is effectively giving its backing to the biggest undeveloped oil field in the North Sea, when it knows full well that we are in the middle of a climate emergency.”
The Bottom Line
The Labour Party’s Green Prosperity Plan is a radical blueprint for a net-zero future, seen as a crucial response to the U.S. Inflation Reduction Act.
We’ll be closely watching to see how Labour’s plans are received when Britain heads to the polls, but one thing is evident: the party has put the energy transition at the forefront of its agenda, a trend we could see play out in other regions.
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