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Grant Shapps, energy minister, has insisted that the government will “max out” the UK’s remaining reserves of North Sea oil and gas, arguing this is compatible with Britain’s pledge to reach net zero carbon emissions by 2050.
Labour leader Keir Starmer has said the UK will grant no new North Sea licences if his party wins the next general election, but would not revoke existing contracts.
In an interview with the Financial Times, Shapps described the Labour policy as “madness”, and said licences should be granted for all viable oil and gasfields so long as this was consistent with the net zero ambitions.
“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,” he said.
Even if the industry “maxed out” all potential North Sea contracts, he said, there would still be a rapid slowdown in production because it was a mature basin that was running out of hydrocarbons.
“The IPCC [Intergovernmental Panel on Climate Change], who is the global authority on this, says that to meet net zero by 2050 the world needs to reduce its reliance on oil and gas by 4 per cent a year,” he said.
“Even if we granted every single conceivable licence to the North Sea . . . the [UK’s oil production] would decline at 7 per cent a year, twice the rate of the IPCC [recommendations].”
Shapps argued that the alternative to using British hydrocarbons as the UK transitioned to a greener economy was to import fossil fuels from abroad, which typically involved more carbon emissions.
This would leave Britain at the mercy of “Putin or anyone else who wants to hold us to ransom”, he said, referring to the Russian president whose invasion of Ukraine caused global oil and gas prices to surge.
The UK has phased out Russian oil and gas imports, continuing to import from suppliers including the Netherlands, Saudi Arabia and the US.
“There is no option but to carry on buying this stuff, I don’t understand why it’s acceptable to buy oil and gas and LNG [liquefied natural gas] . . . from all these other nations while denying ourselves the ability to service our own people and economy,” he said.
“And even worse, do it at a higher expense and twice the carbon emissions. It simply doesn’t make sense.”
Ed Miliband, shadow energy secretary, said the Tory government had left Britain vulnerable to the recent global energy crisis triggered by the Ukraine war.
The Labour MP argued that Shapps’ pro-extraction approach would not reduce bills nor improve energy security, while “driving a coach and horses” through Britain’s climate commitments.
“Every respected expert, from the International Energy Agency to the Climate Change Committee has warned the government of the dangers of this policy,” he said.
The Office for Budget Responsibility, the fiscal watchdog, said in its risks report this month that “continuing our dependence on gas at the current level could, in an adverse scenario, be as expensive fiscally as completing the transition to net zero”.
British academic Rachel Kyte, dean emerita of the Fletcher School at Tufts University, criticised the “bizarre” statements coming from ministers on fossil fuels, warning the UK was at risk of missing an opportunity to attract investment and create jobs through the energy transition.
“The government seems unable to grasp that future prosperity lies on staying at the leading edge of the clean energy transition, which is well under way,” she said.
Philip Evans, Greenpeace UK climate campaigner, called Shapps’ plan “scaremongering nonsense” given Labour was not proposing an “immediate shutdown” of the industry.
But David Whitehouse, chief executive of Offshore Energies UK, the oil and gas trade group, said that 200,000 high-value jobs were at risk from shutting down the North Sea industry.
“The figures are clear: the UK has 283 active oil and gasfields but 180 will shut down by 2030. If we don’t replace them with new ones, then production will decline much faster than we can build low-carbon replacements,” he said.
“There is no simple choice between oil and gas on the one hand and renewables on the other. The reality is that to keep the lights on and grow our economy, we need both.”
