Government to unleash the North Sea’s clean energy future
The government is consulting on plans to put the North Sea at the heart of Britain's clean energy future and drive economic growth.
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UK government consults on plan to unleash the North Sea’s clean energy future and ensure prosperous and sustainable transition for oil and gas
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this plan backs industry to make North Sea a world-leader in offshore industries, such as hydrogen, carbon capture and wind, as part of the government’s clean energy superpower mission
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it also offers oil and gas industry long-term certainty on the fiscal landscape by ending the Energy Profits Levy and consulting on a new regime to boost investment in jobs and growth
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consultation gives certainty to industry about the lifespan of oil and gas projects by committing to maintain existing fields for their lifetime and work with business and communities on a managed transition, while implementing the commitment not to issue new licences to explore new fields
The government has today (Wednesday 5 March) launched a consultation that will put the North Sea – its communities, workers, businesses and supply chains – at the heart of Britain’s clean energy future to drive economic growth and deliver the Plan for Change.
This will support private investment into the technologies that will deliver the next generation of good jobs for North Sea workers, invest in local communities, cut carbon emissions and help the UK become energy secure.
The consultation sets out the next steps in the government’s overarching objective for the North Sea to make it a world leading example of an offshore clean energy industry, building on the UK’s world-class oil and gas heritage. In addition to maintaining existing oil and gas fields, and continuing ongoing domestic production, which have been critical to the UK’s energy system and will continue to play an important role for decades to come, the government wants to boost the economy through the expansion of clean technologies, protecting the country’s energy security in the process. To achieve this, the government needs to ensure the oil and gas industry and its workers can take advantage of a clean energy future.
Separately, HM Treasury and HM Revenue and Customs are confirming that the Energy Profits Levy will end in 2030. They are consulting on what a new regime could look like, to respond to any future shocks in oil and gas prices. The government will work closely with the sector and other stakeholders to develop an approach that protects jobs in existing and future industries and delivers a fair return for the nation, during times of unusually high prices. The government will ensure that the oil and gas industry has the long-term certainty it needs on the future fiscal landscape, helping to support investment and protect businesses and jobs now and for the future.
The government is committed to working with industry, communities, trade unions and wider organisations to develop a plan that will ensure a phased transition for the North Sea – creating tens of thousands more jobs in offshore renewables estimated by 2030.
The government recognises the call of workers and trade unions for a coordinated plan to protect good jobs, pay terms and conditions in the North Sea, and commits to shaping this plan with workers and unions.
The consultation also includes delivering the government’s commitment not to issue new licences to explore new oil and gas fields in the UK, in line with the science of what is required to keep global warming to 1.5 degrees. The consultation also engages with industry on how to manage existing fields, which will continue to make an important contribution during the clean energy transition, for the entirety of their lifespan.
This comes after the government has backed new investment into Scotland’s clean energy future, awarding £55.7 million to the Port of Cromarty Firth, securing critical facilities needed for the rapid development of new floating offshore wind farms and ensuring that they are built from the UK.
By sprinting to achieve this mission, the UK can take back control of its energy and protect both family and national finances from fossil fuel price spikes - with cleaner, affordable, homegrown power. As part of this, Britain must also reduce its dependency on oil and gas, which leaves consumers exposed to unstable global energy markets, as its price is set on international markets.
Energy Secretary Ed Miliband said:
The North Sea will be at the heart of Britain’s energy future. For decades, its workers, businesses and communities have helped power our country and our world.
Oil and gas production will continue to play an important role and, as the world embraces the drive to clean energy, the North Sea can power our Plan for Change and clean energy future in the decades ahead.
This consultation is about a dialogue with North Sea communities – businesses, trade unions, workers, environmental groups and communities – to develop a plan that enables us to take advantage of the tremendous opportunities of the years ahead.
Diversifying the North Sea industries while domestic production is managed for decades to come is key to protecting its jobs and investment in the long-term. Today’s consultation explores how to harness the North Sea’s existing infrastructure, natural assets and world-leading expertise to deploy new technologies – like hydrogen, carbon capture and storage, and renewables – to create skilled jobs, meet the UK’s climate obligations, and make the UK a clean energy superpower.
It is estimated that the offshore renewables workforce, including offshore wind, CCUS and hydrogen, could increase to between 70,000 and 138,000 in 2030, Meanwhile, an up-and-running carbon capture industry alone is expected to add around £5 billion per year of gross value to the UK economy by 2050.
New proposals could also see changes to the role of North Sea Transition Authority, as the regulator of UK oil and gas, offshore hydrogen, and carbon storage industries. This includes ensuring the authority has the regulatory framework it needs to support the government’s vision for the long-term future of the North Sea and enable an orderly and prosperous transition to clean energy.
The government has already taken rapid steps in accelerating clean energy industries – with the biggest ever investment in offshore wind and up to £21.7 billion in funding over the next 25 years for carbon capture and storage and hydrogen projects. This comes alongside the launch of Great British Energy, headquartered in Aberdeen, and the creation of a National Wealth Fund, both of which will unlock significant investment in clean power projects across the UK and help create thousands of skilled jobs.
The government has also consulted on revised environmental guidance offshore oil and gas projects and will respond to give certainty to the industry and enable developers to resume applying for consents for already-licensed projects. This follows a Supreme Court ruling last year that requires regulators to consider the impact of burning oil and gas – known as scope 3 emissions - in the Environmental Impact Assessment for new projects.
Exchequer Secretary to the Treasury, James Murray, said:
We are committed to working together with the sector on the future of the North Sea by providing the stability they need to keep investing and supporting jobs across the country while ensuring they make a fair contribution at times of unusually high prices.
Tania Kumar, Net Zero Director, CBI said:
The North Sea has long been a cornerstone of the UK’s energy sector and will continue to play a vital role in securing energy independence and transitioning to a low-carbon economy. Today’s consultations highlight the government’s commitment to a managed transition. Success hinges on our collaboration with communities, workers, and businesses to develop a practical plan.
Robust regulation and the pivotal role of the North Sea Transition Authority will be essential. The UK’s net zero economy is growing faster than the rest of the economy - the future is green growth and managing the transition away from fossil fuels to a clean energy future for the North Sea is vital to achieving it.
Dhara Vyas, CEO, Energy UK said:
Today’s announcement offers a positive step toward a just transition for offshore workers. The North Sea has been an engine of economic growth and energy security for the UK, but it’s critical to ensure pathways are available for offshore workers to transition to the low carbon industries of the future. The government has a sent a strong signal about the UK’s clean energy future, and the role the North Sea will continue to play in fostering clean technologies such as offshore wind, hydrogen, and carbon capture and storage. The clean energy mission can help ensure the North Sea’s best days are ahead of it, powering economic growth and enabling the UK to lead the way in the global clean industrial revolution.
David Whitehouse, Chief Executive, OEUK said:
The UK offshore energy industry, including its oil and gas sector, is responsible for thousands of jobs across Scotland and the UK, and today the government has committed to meaningful consultation on the long-term future of our North Sea. That is important and welcomed. Energy policy underpins our national security – how we build a clean energy future and leverage our proud heritage matters.
Today’s consultations, on both the critical role of the North Sea in the energy transition and how the taxation regime will respond to unusually high oil and gas prices, will help to begin to give certainty to investors and create a stable investment environment for years to come. We will continue to work with government and wider stakeholders to ensure a future North Sea which delivers economic growth and supports the communities that rely on this sector and workers across right and the UK.
Rachel Solomon Williams, Executive Director, Aldersgate Group said:
The private sector recognises the growth opportunity of the clean energy transition alongside the risks associated with investments that are incompatible with the 1.5C target. This consultation is an important step on the path to building a prosperous and resilient economy, with wider benefits across all regions of the UK. Investing in assets that risk becoming stranded is sustainable for neither the UK economy nor the environment – the government’s recognition of this position will contribute to resolving uncertainty and building private sector confidence for clean energy investments in the region.
The skills and expertise built over recent decades in the North Sea are invaluable. They are highly transferable for clean energy and other growth sectors, both directly and with further upskilling. We welcome the government’s announcement that it is ensuring that the North Sea transition makes best use of the strengths in the region, creating opportunities and jobs. Capturing this growth opportunity for the UK must ensure that the local communities and workers can play a role in future energy sectors. The right policy framework and engagement with industry and local communities can enable a transition to net zero emissions without deindustrialisation.
Dan McGrail, Chief Executive, RenewableUK said:
The biggest offshore wind farms in the world are being built in the North Sea and even more ambitious projects are being planned. Offshore wind is at the very heart of the government’s mission to reach clean power by 2030 and net zero by 2050, and the industry also offers the UK one of its biggest opportunities for job creation, industrial regeneration and economic growth.
The North Sea is already playing a crucial role in powering the UK and this is set to grow in the years ahead. A future focused on offshore wind isn’t just cleaner - it provides a more stable energy system for billpayers as we will be less exposed to volatile international fossil fuel prices. Offshore wind also offers opportunities for skilled workers from other industries to transfer into this dynamic and innovative sector.
Notes to Editors
The Department for Energy Security and Net Zero’s consultation on Building the North Sea’s Energy Future will run for 8 weeks from 5 March to 30 April.
The government is consulting on how to deliver its commitment to end new licences to explore new fields, including all new seaward exploration and production licences to search for and extract new oil and gas resources in the UK. Licence extensions and transfers would not be affected, to facilitate existing fields to operate for the entirety of their lifetime and support the government’s commitments not to revoke existing licences. Licences for carbon storage, gas storage and methane drainage would also not be affected.
The consultation also sets out the government’s commitment to end new licences for onshore oil and gas exploration and production in England.
HM Treasury’s consultation on High Price Mechanism for Oil and Gas will run for 12 weeks from 5 March to 28 May.
Officials figures from the Department for Energy Security and Net Zero’s ‘Digest of UK Energy Statistics’ show a 72% reduction in UK oil and gas production occurring between 1999 and 2023. The North Sea Transition Authority also predicts an 89 per cent drop in UK oil and gas production by 2050.
Office for National Statistics’ analysis shows that direct jobs in oil and gas extraction fell by around a third between 2014 and 2023.
Meanwhile, findings from the Robert Gordon University study ‘Powering up the Workforce’ in 2023 estimated that the offshore renewables workforce - which includes offshore wind, carbon capture and storage, and hydrogen - could increase to between 70,000 and 138,000 in 2030. This study also found that over 90% of the UK’s oil and gas workforce have medium to high skills transferability and are well positioned to work in adjacent energy sector.
Today’s announcement also comes after the government confirmed Aberdeen, Cheshire, Lincolnshire and Pembrokeshire as key growth regions for clean energy and launched pilots to help workers in these areas access jobs in new clean energy industries.
Oil and gas workers will also get help to move into these sectors, thanks to a new energy ‘skills passport’ launched last month - led by Renewable UK and Offshore Energies UK, and backed by UK and Scottish Governments. This tool will support workers into careers in offshore wind initially, before being expanded to other renewables roles later this year.
Many of the skills required for the transition already exist, with research showing that 90% of oil and gas workers have transferable skills for offshore renewable jobs. The government is now exploring what further support is needed to help workers take full advantage of the UK’s clean energy transition, as part of its consultation on the future of the North Sea.