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Grant Shapps, the energy minister, strongly believes that the UK should fully utilize its remaining reserves of North Sea oil and gas. He argues that this approach is consistent with the country’s commitment to achieve net zero carbon emissions by 2050.
Keir Starmer, the leader of the Labour Party, has stated that his party will not grant any new North Sea licenses if they win the next general election. However, they would not revoke existing contracts.
In an interview with the Financial Times, Shapps criticized Labour’s policy as “madness” and advocated for granting licenses for all viable oil and gasfields, as long as it aligns with the net zero ambitions.
He stated, “What Labour foolishly and irresponsibly want to do is deliberately pursue a policy of self-harm by not taking that [North Sea] oil and gas but buying it from abroad.”
Shapps acknowledged that even if the industry maximized its North Sea contracts, there would still be a decline in production due to the basin running out of hydrocarbons.
He highlighted the findings of the Intergovernmental Panel on Climate Change (IPCC), stating that to achieve net zero by 2050, the world needs to reduce reliance on oil and gas by 4% annually. Shapps noted that even with all conceivable North Sea licenses granted, the UK’s oil production would decline at twice that rate.
Shapps argues that relying on foreign fossil fuel imports, with potentially higher carbon emissions, is not a viable alternative for the UK’s transition to a greener economy. He warns of the risks associated with being dependent on other nations, such as Russia, who can manipulate prices due to geopolitical tensions.
The UK has already phased out Russian oil and gas imports but continues to import from other suppliers. Shapps questions why it is acceptable to buy oil and gas from other nations while denying the ability to fulfill its own energy needs.
Ed Miliband, the shadow energy secretary, criticizes the Tory government for leaving the country vulnerable to the global energy crisis sparked by the Ukraine war. He argues that Shapps’ approach will not reduce bills or improve energy security and undermines the country’s climate commitments.
The Office for Budget Responsibility has also highlighted the potential fiscal risks of continuing dependence on gas. They suggest that it could be as costly as completing the transition to net zero.
Academic Rachel Kyte expresses concern over the government’s stance on fossil fuels, emphasizing the missed opportunities for investment and job creation in the clean energy transition.
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