18 August 2026 - 10:00am
Andy Burnham is facing the first serious test of whether he will take a more pragmatic approach to energy policy than the previous Labour government. Ministers were expected to decide imminently whether to approve the Rosebank oil field and Jackdaw gas field in the North Sea, but new reports suggest that the Prime Minister will delay the decision.
This is a bad sign. Together, developers claim the projects would support £10.8 billion of investment and as many as 3,500 jobs, but any delay could leave plans in limbo. Predictably, climate campaigners have already argued that this summer’s heatwaves and wildfires demonstrate why Burnham should reject plans to tap into North Sea oil. Indeed, more than 50 climate scientists have written to Energy Secretary Miatta Fahnbulleh making this case.
But the concept behind this line of reasoning rests on a false choice. The choice isn’t to develop new oil and gas fields in the North Sea or stop using oil and gas altogether. Rather, it is to develop new oil and gas fields in the North Sea or use imported oil and gas. In general, imported fossil fuels have higher emissions, so if Britain is to care about preventing climate change, the sensible near-term approach is to use its domestic resources where possible, avoiding dirtier imports. This is shown by the fact that the North Sea Transition Authority calculates that in 2024 the emissions associated with domestic gas were 28 kg CO2-equivalent per barrel of oil equivalent, compared with 85 kg for imported liquefied natural gas (LNG).
In the face of this, some climate campaigners argue that Britain should lead the way in leaving its hydrocarbons in the ground. This makes little sense. Not only does it smack of hubris — why should anyone do what we say or follow where we lead? — but it’s a meaningless ambition.
The other big reason for maintaining North Sea production is tax. For decades the basin has been a source of tax revenues, but that supply is dwindling. Once the basin enters net decommissioning — when the industry is spending more on closing down oil fields than it is generating from new production — instead of receiving billions of pounds in tax receipts, the Treasury will pay out billions of pounds in rebates to close down the fields.
Before anyone suggests this would be equivalent to the Government offering a subsidy, it wouldn’t. The decommissioning tax regime allows operators to offset those costs against previously earned profits on which they paid taxes.
In short: the earlier the North Sea enters net decommissioning, the earlier it will become a tax burden rather than an asset. Deactivating these oil fields is extremely expensive, and trying to retrospectively renege on those arrangements would increase the risk that costs ultimately fall on the taxpayer. This could be delayed — before the introduction of the windfall tax and drilling bans, it was not expected to happen until the late 2030s or early 2040s. Now it’s expected to be around 2030.
So the choice for Burnham is clear. He can allow new oil and gas production which would protect UK jobs, the economy and the tax base while minimising the emissions associated with the country’s oil and gas consumption. Or he can cave in to the hysterics, harming the economy and the planet in the process. Which will he choose?
