North Sea Energy

Lord Offord of Garvel Excerpts

Wednesday 12th March 2025 Lords Chamber

[Lord Offord of Garvel (Con)]

My Lords, this Government have done the exact opposite of building the North Sea’s energy future. Instead, their attitude to our North Sea oil and gas industry, and the hundreds of thousands of people it employs, borders on contempt. For clarification, we should remind ourselves that the 2050 net-zero target, set in Glasgow at COP 26, still required 25% of our energy to come from hydrocarbons. In the North Sea, we have the cleanest and most environmentally advanced industry and the toughest regulatory regime in the world. This world-class industry is now under existential threat from this Government.

We should be clear that the energy profits levy is now at its highest level, as a result of the decisions made by this Government. This hike is uneconomic and will see the evaporation of investment in the sector. As my counterpart in the other place said last week, it may well be “Drill, baby, drill” in the US, but it is

“‘Dole, baby, dole’ under Labour in the United Kingdom”.—[Official Report, Commons, 6/3/25; col. 460.]

Let us look at where we are now. The investment allowance has almost been dismantled, and a windfall tax will now be in place for much longer, until 2030—directly because of the choices made by Ed Miliband. A leading US investor said to me recently that

“we now consider west Africa to be a more stable investment environment for hydrocarbons than the UK”.

During a period of global instability, it beggars belief that our Government are shutting down our domestic oil and gas industry at a pace that jeopardises both our energy supply and our energy security. We are already seeing the impact of the Government’s punitive tax measures: investment is vanishing, work is slowing up or being stopped entirely, and companies are leaving the UK for countries that do see a future in the oil and gas industry. But, even more worryingly, we are haemorrhaging the backbone of our highly skilled technical staff overseas.

The Government’s race for 100% clean electricity by 2030 is driven solely by ideology. They have placed politics above the North Sea’s industry, workers and community, which will all be devastated by their decisions. Despite the fact that they claim that economic growth is their number one mission, their decisions will lead to a £12 billion loss in tax revenue, in addition to another £12 billion in lost capital investment. Instead of making Aberdeen great again by ramping up production, the Government’s approach is to use GB Energy to dabble in renewable projects that the private sector has already decided are dud—a Potemkin village strategy if ever there was one.

All this damage will only see the UK increase its dependence on expensive imports, which will also offshore emissions abroad. The Government’s approach to our energy future simply does not make sense, particularly as the UK accounts for less than 1% of global emissions. Let us not be mistaken: this is simply a case of virtue signalling, and the British people will pay the price. Will the Minister confirm that the Secretary of State has consulted those employed in the oil and gas sector and understands how his policies will impact them directly? Will she explain exactly how much will be needed to support the 200,000 workers in the oil and gas industry, given the recent £200 million of Treasury support for the 2,000 workers impacted by the closure of Grangemouth? Finally, will she inform the House whether DESNZ and HM Treasury have factored these calculations into the spending review later this month? There is no one else to blame and nowhere else for this Government to hide. I look forward to a comprehensive reply from the Minister.

[Earl Russell (LD)]

My Lords, we welcome this important step towards developing a framework for future energy in the North Sea and, in particular, the clear intention to engage in a constructive dialogue with North Sea communities, business supply chains, trade unions, workers and environmental groups. We also welcome the clear recognition that the North Sea will remain at the heart of Britain’s energy future, supplying home-generated, clean, renewable energy, supporting jobs and our future energy security long into the future. We urgently need a coherent transition plan for the North Sea to support workers, supply chains, families and communities. We need much more thinking and planning on how we transition away from oil and gas after 50 years of drilling in what is now a rapidly declining basin and how we can all work to ensure a just transition for our oil and gas industry workers.

While we welcome the consultation and the Government’s vision for an internationally leading offshore clean energy industry, we believe that more decisive and accelerated action is required to ensure a truly speedy and just transition for the workers and communities who have powered this country for decades. The consultation period is very short. The closing date is 30 April. Is this really enough time, considering the complexity of the task at hand and the range of consultees? What reassessment of the urgency and support needed for a just transition are the Government making, considering the impact of the Supreme Court decision on new oil and gas fields? The implications of the Supreme Court judgment must mean that these matters are now more pressing and require a rethink and more resources than they did. We are seeing multilateral energy companies such as BP rowing back from their commitments to the energy transition. What impact is this having on planning to transition and what actions are the Government taking to work constructively with these companies?

At its heart, this is about rapidly teaching the skills and creating the job opportunities for the future during a period of exceptional social change. While the consultation outlines improvements in clean energy industries, more concrete commitments and funding mechanisms are needed to ensure a truly just transition for the existing oil and gas workforce. Although research suggests high skills transferability, bridging the gap between potential and actual job creation in the clean energy sector requires significant government intervention. We call for more proactive and adequate funding for retraining and upskilling programmes.

There has been talk of GB Energy cuts. We believe that these are counterproductive. The green economy grew by 10.3% last year and, since the war in Ukraine started, we have spent £40 billion importing foreign energy. Cutting GB Energy will simply lead to higher energy bills and more money for the Russian war economy. Policy certainty is of paramount importance and I call on the Government to maintain clear lines to ensure the investment we need to transition. The Government must provide a clear and unwavering long-term vision and must do more than just simply phasing out oil and gas. This will clearly need business plans and investment to ensure that we can transition. Will the Minister say what comes next after the consultation has closed? How will the results be published? What role will Parliament have in making future recommendations?