It’s refreshing to see a consultation on the North Sea that recognises and really tries to get to grips with the reality of the basin. There’s no point sticking our heads in the sand and pretending that oil and gas jobs in the North Sea aren’t already declining, with UK industry jobs more than halving over the past decade.
Having a grown up conversation about what that means for people, communities, workers and their families is the right response. That gives the UK the opportunity to make plans now for the future of the basin, get investment in the right places, ensure good jobs are created in the industries of the future and that places like Aberdeen are at the heart of it all.
This might seem like a basic ask but, over the past few years, the future of the North Sea has become a political football. For example, the last government chose to waste parliamentary time by introducing an entirely pointless Oil and Gas Bill to mandate annual licensing rounds, which the government could have done anyway without legislation.
This kind of performative politics is not how to make a long term plan for the future of a region in transition. So it’s really welcome that this government is setting out clear views on what should be done, and engaging in a meaningful period of dialogue about how to implement changes, not just with an online consultation but also through targeted engagement with groups like unions and affected communities.
What does the consultation say?
This is a consultation, not a newly announced strategy. The government is asking for views on its proposals and additional evidence or ideas on how to make them work well. There are three main areas to input on: how to support workers, how to implement the new licensing regime, and how to make regulation of activities in the North Sea fit for the future of the basin.
Does it mean an end to new licensing in the North Sea?
The government has set out its position: “The government has been clear that it would not issue new licences to explore new fields”. This means what is says: no new licences for oil and gas exploration in the North Sea will be granted. It is not asking for views on whether this is the right position with this consultation but stating it and asking for views on how it should be implemented.
This is the right call. The elephant in the room of course is that there is no safe climate with more oil and gas production. We already have enough planned to burn past the 1.5oC agreed as the limit, based on the science of what is safe, in the Paris climate agreement. The consultation rightly acknowledges this reality and makes it an explicit objective: “Supporting objective 2: to take a globally standard-setting, 1.5°C and climate science-aligned approach to future oil and gas production.”
The most immediate test of this objective will be whether the government chooses to approve the Rosebank oilfield, which has already been licensed and is going through later stages of approval. Rejecting Rosebank would be a strong sign of a credible 1.5oC aligned oil and gas policy.
What else is proposed?
The consultation recognises the importance of supporting workers through the transition, with the primary supporting objective being “to ensure our oil and gas workers and supply chain can take advantage of the opportunities of our clean energy transition, creating a global blueprint for a transition which supports prosperity, jobs, growth, communities and energy security.”
But there aren’t many new ideas in this section. The government lists the steps it is already taking, eg the Office for Clean Energy Jobs and the Energy Skills Passport, and then asks for views on what more the government should be doing. The answer here is ‘plenty’.
At a minimum we need to see workers, unions and communities given a voice and a seat at the table on transition planning. Plus, a proper skills passport that ensures workers can transfer their skills to new industries without having to retrain where possible and can access financial support for retraining where needed. Worker involvement and support for retraining have been central to past successful industrial transitions, such as the move away from coal in the Ruhr Valley, Germany.
How to maximise the chance of success
And for the real policy nerds there is a tasty section at the end on how to regulate the North Sea for the transition. There’s a history to this. Over a decade ago, oil and gas production was declining due to high costs in the basin. Government commissioned the Wood Review, to work out how to reverse this trend. One outcome was the creation of a new arm’s length regulator, called the Oil and Gas Authority, tasked with Maximising Economic Recovery (MER) of oil and gas from the basin.
In 2021, net zero was added to the Oil and Gas Authority’s mandate, and in 2022 the authority was renamed the North Sea Transition Authority. But its primary objective was still to maximise oil and gas recovery. Clearly this mandate is not fit for the future of a basin that will be primarily focused on decommissioning old oil and gas rigs and building renewables. The government, therefore, proposes to scrap MER and replace it with a mandate focused on delivering the transition. Again, this makes sense. MER was the regulatory equivalent to sticking your head in the sand. Its time has passed. Let’s get on with building the future.
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