The Labour Party’s promise to ban new oil and gas exploration in the North Sea raises questions about a just transition for workers and energy security. Chris Seekings reports
"An age of national renewal” was declared by PM Sir Keir Starmer after Labour stormed to victory at the UK general election and ended 14 years of Conservative rule. Many environmental campaigners could not contain their excitement, with the new government having promised to make Britain a “clean energy superpower” by doubling onshore wind, tripling solar power and quadrupling offshore wind by 2030.
It will also create the publicly-owned company Great British Energy, “ban fracking for good”, and bring an end to new oil and gas exploration licences in the North Sea – although it stopped short of revoking existing licences.
However, while these policies are a major triumph for the environment, some are fearful that they could lead to tens of thousands of job losses and weaken the country’s energy security.
History repeating itself
One week before the election, nearly 200 local firms from Scottish towns signed an open letter from the union Unite calling for Labour to drop its policy of banning new North Sea oil and gas exploration until it produces a plan to replace jobs. The letter argues that the party has yet to offer a detailed explanation of how it will save 30,000 jobs from being lost to the transition; with fears mounting that history is set to repeat itself.
“They understand about climate change, but what our members are most worried about is that they don’t see a jobs plan in place,” Unite’s senior organiser, Joe Rollin, tells me.
“Being thrown on the scrap heap is what really scares people, because they’ve got mortgages and food to put on tables.”
More than 200,000 miners lost their jobs between 1980 and 1994 as a result of coal pit closures under the watch of Margaret Thatcher, leading to lasting unemployment and poverty.
“We’ve still not got those well-paid jobs back, which have been replaced by warehouses and call centres that pay minimum wage,” says Rollin, who himself comes from a mining background. “The miners and their grandchildren are worse off now than they were 40 years ago.”
A sunset industry
Some have warned of an even more damaging impact on jobs, with SNP Westminster leader Stephen Flynn claiming that another Labour proposal for a time-limited windfall tax on fossil fuel companies would result in 100,000 job losses. However, these figures do not consider any possible new jobs replacing those being lost, and have been accused of being derived from unrealistic production forecasts.
The truth is that North Sea oil and gas production has plummeted for a quarter of a century, despite hundreds of new exploration licences being issued. Indeed, production fell by around 67% between 1999 and 2022 – with more than 200,000 jobs lost in the past decade – largely because the UK’s reserves are smaller and more difficult and expensive to extract than they were in the 1990s.
“It’s a mature basin, and there’s been a massive amount of divestment by the large oil and gas companies,” says Mike Bradshaw, professor of global energy at Warwick Business School and co-director of the UK Energy Research Centre.
“Ultimately, we’re moving away from fossil fuels – the writing’s on the wall.”
Even Lord Browne, former CEO of BP, has called for an end to new drilling licences in the North Sea, writing in the FT in June that it’s “hard to believe that finding and developing the very limited oil and gas resources that remain will be economic”.
Energy independence
Unite’s letter also stated that a ban on new North Sea oil and gas exploration “could lead to us importing more oil and gas, when we have it on our doorstep”.
This claim has been made by several Conservative politicians, with Grant Shapps, a former energy security minister, last year saying that the government would “max out” the UK’s remaining reserves of North Sea oil and gas. Failure to do so, he argued, would leave the country dependent on costly imports and put the UK at the mercy of “Putin or anyone else who wants to hold us to ransom”.
However, analysis by the Energy & Climate Intelligence Unit (ECIU) has since revealed that North Sea oil and gas is “largely irrelevant” for energy security and would not protect consumers from volatile prices. Around 80% of the oil produced in the UK is exported, and prices are largely set internationally, with producers under no obligation to sell to companies at home.
In fact, the ECIU found that households could cut their dependence on energy imports by 80% by 2030 by ramping up renewables and other efficiency measures. Head of analysis Dr Simon Cran-McGreehin says: “If you’re not focused on renewables, you’re not focused on energy independence.”
Others, however, are less keen on the term ‘energy independence’, a term Bradshaw thinks should be banned.
“In a largely electrified economy, we have interconnectors with Norway and France, and there’s talk of interconnectors to Morocco and Iceland, plus there’s a whole set of interdependencies that come with access to low-carbon technologies.”
A just transition
In another letter sent to all political parties before the election, more than 60 climate organisations urged the new government to provide a “clear and funded” transition plan for workers in the oil and gas industry.
They also urged the incoming government to expand sectoral collective bargaining across the energy industry, and provide a jobs guarantee so every worker “can find equivalent, alternative employment or funded retraining”.
“The longer we wait to implement a worker-led just transition in the North Sea – and other high-carbon industries – the worse off communities that rely on these industries will be,” the letter states. However, it’s important to remember that oil and gas will remain an important component of the UK’s energy mix.
“If you look at Denmark, they’ve stopped new licences, but they’re continuing to invest in and produce oil and gas offshore, so this is not going to be an abrupt end,” Bradshaw says.
“The other part of the equation is that there’s still a lot of work to be done in decommissioning and repurposing existing infrastructure, which is going to provide employment.”
Rollin tells me that the skills of oil and gas workers are “very interchangeable” for green jobs, such as scaffolding and pipe fitting, with Unite estimating that a North Sea jobs plan would cost £1.1bn a year in investment that “will pay for itself”.
“Our campaigning ringfenced £3bn to save jobs for Tata Steel workers at Port Talbot, so why can’t Labour do this for the oil and gas sector?” he asks. “We’re not sure, but our campaign will continue until they do that.”
The party is already under pressure after slashing its ‘Green Prosperity Plan’ investment pledge from £28bn a year to under £15bn; climate activists will continue to call for increased ambition, workers will plead for job security, and fossil fuel companies will push for more drilling.
Labour has shown international climate leadership with its ban on new oil and gas licences, but it now needs to set out a viable North Sea transition plan.
