Ahead of SPE Offshore Europe, BIG Partnership’s Head of Energy, Richard Crighton, analyses the state of play in the UK’s energy sector.
When Labour swept to power last year, it did so on a platform of transformative ambition. This included the promise to turn the UK into a clean energy superpower while navigating the economic and social complexities of a just transition. There was a commitment to end new oil and gas licences in the North Sea and accelerate investment in renewables through the launch of Great British Energy, a publicly owned energy company.
Twelve months on and off the back of several damaging U-turns in other policy areas, energy has been one domain where the strategy has largely remained on course. But has Labour successfully delivered on its green agenda without undermining the vital role of the oil & gas industry – an industry still critical to the UK’s economy, energy security and global competitiveness?
Ambitious green reform
Labour has taken significant strides toward decarbonisation. Central to its programme has been the establishment of GB Energy, headquartered in Aberdeen, with a remit to invest in homegrown renewable energy projects.
Backed by an initial £8.3 billion, it has begun funding large-scale solar, offshore wind and grid-scale battery projects. However, questions remain about the full scope of GB Energy as budget pressures bite across the board.
The government has pushed on energy efficiency, planning reforms and community energy schemes for funding and support. New strategies on solar and onshore wind have also been published during the summer.
Renewable generation reached record highs over the past year, and new investment commitments in clean energy technologies are underway. Labour’s green jobs plan has also started to take shape, with training and skills programmes announced in regions historically dependent on oil & gas.
However, the window of opportunity for delivering a just transition is closing.
Backing the backbone of energy: a stronger case for oil & gas
For all its green progress, Labour has faced criticism for its position on the oil & gas sector. The continuation of the Energy Profits Levy and the pledge to halt new exploration licences has created uncertainty, particularly in the north east of Scotland, where oil & gas supports approximately one in six jobs and provides a critical engine for economic activity, export earnings and technical innovation.
The UK’s oil & gas industry stands as a world-class sector that underpins the very success of the country’s net zero ambition. It provides revenues that support green investments as well as supplying the engineering, infrastructure and workforce capability required to scale up carbon capture and hydrogen production. The sector must be seen as a partner, not a problem.
While Labour has reiterated that existing licences will continue and that production decline will be managed, it must now go further. Approving projects like Rosebank and Jackdaw is a positive signal, but the UK must resist policies that prematurely shrink the basin or drive away investment to other regions.
The government has made welcome moves in supporting carbon capture, utilisation and storage (CCUS), with backing for projects like the Acorn scheme in Peterhead. These kinds of investments will only succeed if they are supported by a confident and capable oil & gas supply chain – one that is not eroded by mixed signals on taxation and licensing.
Countries such as Norway and the Netherlands have shown that it is possible to champion both renewables and responsible fossil fuel production. The UK should do the same, or risk ceding economic advantage and global influence in energy transition leadership.
A recent report from Robert Gordon University warned that the UK could lose tens of thousands of offshore energy jobs by 2030 unless it acts swiftly. In the report’s low-case scenario, the North Sea oil & gas workforce could shrink by as much as 400 jobs every fortnight over the next five years. This isn’t just a warning, it’s an urgent call to action.
Collaboration over conflict
Labour’s first year in government has aimed to bridge the divide between climate urgency and economic continuity.
A more pragmatic path recognises the co-dependence of these sectors and the opportunity to build an integrated energy system that draws on the UK’s full industrial strengths. This means reforming fiscal policies that discourage long-term investment in hydrocarbons, providing clear timelines for energy transition infrastructure and accelerating planning approvals for both oil & gas and renewables.
As Ed Miliband outlined in his keynote speech at the Global Offshore Wind conference, clean energy development should be a “mission-led partnership” between government, industry and workers. This mission must also include those currently delivering the UK’s energy needs as well as those who will be key to delivering its future ones.
What comes next
The weeks in the lead-up to the Autumn Budget will be pivotal. Labour must now cement its commitment to an inclusive energy strategy that doesn’t pit one sector against another but instead harnesses the strengths of both.
At SPE Offshore Europe, industry leaders, policymakers and the energy workforce will gather in Aberdeen to discuss how to unlock the investment and collaboration needed for a resilient transition.
The UK has the potential to lead the world not just in clean energy but in showing how mature oil & gas sectors can evolve, adapt and enable a low-carbon future.
BIG will be at the heart of these debates, supporting the event as well as numerous clients. Get in touch to see how we can help you shape your role in the future of energy.
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