Rishi Sunak gives go-ahead for 100 North Sea oil and gas licences

Pictured: The Shearwater platform operated in the North Sea by Shell. Image: Stuart Conway for Shell.

Sunak flew to Scotland on Sunday (30 July), along with Energy Security and Net-Zero Secretary Grant Shapps. The trip is being laid on to announce new interventions designed to improve energy security, with a focus on the North Sea.

While a press release from the Government talked up billions of pounds’ of investment in renewable energy, this was in reference to existing funding, industry sources told the media ahead of Sunak’s speech.

Giving the speech this afternoon (31 July), Sunak gave the go-ahead for a new licencing round for oil and gas projects. This will open this Autumn and award around 100 licences for new or expanded fields.

The North Sea Transition Authority will go-run the licencing round with the Government.

Under Liz Truss, a licencing round of a similar size opened last Autumn and will shortly close.

Sunak is framing the additional licencing round as a way to limit Britain’s dependence on imported fossil fuels, which his Party argue come at increased cost and with a higher embodied carbon footprint. Critics have pointed out that gas is an internationally traded commodity – the UK would not get to ring-fence its own production. Instead, fuels are sent to the highest bidders first.

Shapps has called the UK’s oil and gas industry “invaluable” and has touted its £17bn contribution to the UK’s economy. He has vocally opposed Labour’s plans to stop issuing new North Sea licences if they win the next General Election. Like Sunak, his arguments rest on energy security and economic impact.

Uplift’s director Tessa Khan challenged this narrative, calling it “smoke and mirrors”.

She said: “New oil and gas licences won’t make any difference either to UK energy security or our bills. Hundreds of licences have been issued in the past decade, but it has only led to a handful of oil and gas fields. The truth is that we have burned most of the UK’s gas. Even the head of the regulator issuing these permits admits that new licences will only make a difference ‘around the edges’. And what little gas is produced won’t lower energy costs, a fact the government admits, as it will be sold back to us at market price.”

Offshore Energies UK has stated that, of the 283 active oil and gas fields in British North Sea Waters, 180 will have ceased production due to natural decline by 2030. The body is using this to argue that without replacement, production declines cannot be offset with clean energy alternatives.

As for the economic impact, the Scottish Green Party has stated that a larger opportunity lies in a just transition to clean energy, compounded with enhanced energy efficiency measures.

Scottish Greens energy and climate spokesperson, Mark Ruskell MP, said: “Green energy is the safest, cheapest and cleanest energy available.  We have a huge renewable potential and an abundance of natural resources that any country would envy.

“That is exactly where we should be investing rather than relying on a fossil fuel-based economy that means sky-high bills for households and families across the country, and where global prices are at the mercy of autocrats and dictators.”

Climate impact

If the UK is not one of the world’s biggest fossil fuel exporters, and if its reserves are being depleted, what will be the true climate impact of North Sea development?

The International Energy Agency (IEA) stated in 2021 that the global transition to net-zero by 2050 would require no new oil and gas capacity development, beyond what had already been agreed.

Subsequently, the UK Government’s Climate Change Committee (CCC) cautioned it against launching major licencing rounds without setting far stricter climate ‘stress tests’ covering the whole life-cycle of projects and the use of extracted fuels. It recommended that Ministers adopted a general position against exploration and expansion as a rule of thumb.

Stress tests have not been materially changed since then and CCC chair Lord Deben has reiterated his position.

The CCC’s recommendations were made with the UK’s own net-zero transition in mind, but also considering its position on the world stage and the precedent this would set for other nations.

In its most recent progress report to Parliament, the Committee said other nations no longer regard the UK as a first-mover on climate issues, due to mixed messages since it hosted COP26 in late 2021.

Sunak has done little to change this perception since that report last month. He is currently set to bow to calls from within his party to weaken key green policies, to avoid making businesses and homes pay any extra costs at present.

Most MPs, however, want the policies kept, as strong signals to the private sector and global community have already been sent. Instead, interventions could be made to limit or avoid costs paid by the most-impacted businesses and homes. Recommendations for this approach were detailed by Chris Skidmore MP in his Net-Zero Review earlier this year.

Parliament is currently on summer recess, so any amendments to legislation in progress will need to wait until September.

Friends of the Earth’s head of policy Mike Childs said Rishi Sunak’s international climate credibility is “on the line”.

Childs said: “His recent announcements on energy and transport look as though he is reneging on the UK’s commitments. The Prime Minister should stop playing politics with young people’s futures and build the safe, clean economy we urgently need.”