The future of the North Sea

The UK government is undertaking to transition the North Sea from oil and gas production to clean energy generation to ensure that it provides the future jobs, investment and energy that this country needs, and respects safe climate limits. 

To support the delivery of its commitment not to issue new oil and gas licences to explore new fields, the government has just announced a consultation on the future of the North Sea, designed to develop a plan to drive the development of the UK’s offshore clean energy industries, create good, long-term jobs, as well as growth and investment in communities across the North Sea.

‍This briefing outlines the changing nature of the North Sea, the new policy landscape for oil and gas in the UK, and next steps for this government to ensure that the benefits of the transition to clean energy are maximised and shared.

Commenting on the government’s announcement, Tessa Khan, executive director of Uplift said: 

“There has long been a need for serious planning for the future of the North Sea. We welcome the UK government embarking on that plan and putting the interests of the public before profiteering oil and gas companies.

“After 50 years of drilling, the North Sea is an ageing, expensive basin – that is a geological reality, not a political choice. Our energy security now relies on the renewable resources we’re lucky to have in abundance.

“The government is right to draw a line under new licensing, which won’t slow the decline in oil and gas jobs or boost our energy supply. Claims to the contrary are false and a pipe dream. In the past decade, despite hundreds of licences being issued, new licences have delivered just 16 days’ worth of gas, while the number of jobs supported by the sector has more than halved.

"The UK’s national interest is now in harnessing our clean energy, not clinging to an industry on its way out. This government is showing that it is serious about securing the massive economic benefits from transitioning away from fossil fuels, and signalling as such to investors, while reassuring the public that it is equally serious about tackling the climate crisis.

“The transition to clean energy now needs to deliver for workers and communities that are currently tied to the declining oil and gas industry. That means the creation of more good, secure jobs and new industries like wind manufacturing and decommissioning in the places that need them.

“Unions, workers and communities all need to be involved in helping to come up with a coherent plan that means the benefits are shared, our planet is protected and the public interest comes first.

“The existing plan for the North Sea, which absurdly put the oil and gas industry in the driving seat of its transition, should be scrapped. Always a sham, it is now in tatters, given the very public trashing of renewables by one major oil firm after another.”‍

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The decline of the North Sea basin

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The North Sea is an inexorably ageing basin with declining reserves that are now expensive to extract. After fifty years of drilling, the UK has burned most of its gas and much of what’s left is oil, around 80% of which the UK exports.  

The fall in production has already led to a steep decline in the workforce. Even with new oil and gas projects being approved, UK jobs supported by the industry have more than halved in the past decade as North Sea reserves decline. According to industry data, some 441,000 jobs were supported by the oil and gas sector in 2013, falling to just 213,000 jobs in 2023. 

New oil and gas will do little to boost production and stem the decline in jobs. In the past decade, despite hundreds of licences being issued across five licensing rounds, new licences have delivered just 16 days’ worth of gas. Between now and 2050, new licences are expected to provide just 103 days of gas at today’s demand – that's four days worth of gas a year on average. The regulator projects that almost 90% of oil and gas production between now and 2050 will come from existing developments, with little to be gained from new projects. As a result, new oil and gas will do little to stem the decline in the workforce. It is worth noting too that increasing domestic supply would make no material difference to energy bills, as prices are set by international markets.
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The changing policy landscape for the North Sea‍

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The policy landscape for UK oil and gas industry is changing in a number of key ways:

The changing tax regime: The previous government introduced the Energy Profits Levy – or windfall tax – to help offset spiralling household energy bills, following Russia’s invasion of Ukraine in 2022. The Treasury is now consulting on how windfall profits will be taxed after the Energy Profits Levy expires in 2030. 

An end to new licensing: The 2024 Labour Party manifesto committed the government to ending new oil and gas licensing. The new consultation on ‘Building the North Sea’s Energy Future’ reiterates this commitment and works to build a broader plan for transitioning the North Sea alongside it.

New climate rules for UK oil and gas projects: Thanks to a ruling by the Supreme Court in June 2024, the rules governing how potential new UK oil and gas projects are assessed are changing to make sure that the true climate impact of new drilling is taken into account. The government has since consulted on new guidance for oil and gas firms on how they should factor these combustion, or ‘scope 3’ emissions into applications, with the new rules due this Spring.  

The proposed Rosebank oil field – consent for which was ruled unlawful in January –  must now pass through this new regulatory process, if its developers want to proceed with the field. Once the new rules are published, Rosebank’s owner Equinor can reapply to the UK government, this time including the field’s scope 3 emissions, as set out in the new rules. 

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Ensuring the North Sea’s transition benefits all

There is now an urgent need for a coherent transition plan for the North Sea to ensure that it benefits workers, supply chains and the communities they support. The new consultation, ‘Building the North Sea’s Energy Future’, with its emphasis on creating a dialogue with North Sea communities, is a welcome start. 

Despite the rapid decline of the North Sea in recent decades, the UK currently lacks an adequate plan for managing its future. The current plan, the 2021 North Sea Transition Deal – a  non-binding sector agreement between government and UK oil and gas industry – is not fit for purpose. It put oil and gas companies in the driving seat of the North Sea’s transition, the same companies that are now very publicly prioritising short-term shareholder interests and abandoning renewables commitments. Just seven out of 87 North Sea oil and gas operators plan to spend anything on renewable energy by 2030.

This government’s clean energy mission needs to work harder for the UK’s energy workers and communities. That means creating new industries like wind manufacturing and decommissioning, more good, secure jobs, and thriving supply chains, in the areas of the UK that are currently dependent on the declining oil and gas industry. 

At the same time, the government needs to ensure that UK oil and gas production is compatible with safe climate limits. There is now significant scientific evidence that the emissions from burning the reserves in existing oil and gas fields globally would push us past 1.5°C of warming.

For an overview of what a coherent and fair plan for transitioning the oil and gas sector could look like, read Uplift’s report: a New Deal for the North Sea. To explore how specific policies, such as a Jobs Bonus, could build UK wind manufacturing and deliver good quality, permanent jobs for workers in industrial heartlands, read Uplift’s report: Clean Energy Made in the UK.

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