UK launches consultation on clean energy transition in the North Sea

In a statement, the Department for Energy Security and Net Zero said the consultation “will support private investment in technology that will deliver jobs, investment, 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,” said the government, “it 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 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 said it 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. It also wants to ensure 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 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 1.5C, and 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.

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. This consultation explores how to harness the North Sea’s existing infrastructure, natural assets and world-leading expertise to deploy new technologies – such as 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.”

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 needed to keep investing and supporting jobs across the country while ensuring they make a fair contribution at times of unusually high prices.

Confederation of British Industry net-zero director Tania Kumar 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 and the North Sea is vital to achieving it.”

OEUK chief executive David Whitehouse 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.

“Consultations on 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 right across the UK.”

RenewableUK chief executive Dan McGrail said, “The biggest offshore windfarms 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.”

The government estimates the offshore renewables workforce – including offshore wind, CCUS and hydrogen – could increase to between 70,000 and 138,000 in 2030. An up-and-running carbon capture industry alone is expected to add around £5.0Bn (US$6.4Bn) 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 Department for Energy Security and Net Zero noted the government has already taken steps to accelerate clean energy industries, including the largest ever investment in offshore wind and up to £21.7Bn 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.