Energy News Beat
The North Sea: A Vital Economic Engine
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Loss of Tax Revenue: The oil and gas industry has paid £375 billion in production taxes to date. A complete halt to exploration would choke off future revenues, leaving a gaping hole in public finances. The North Sea Transition Deal, signed in 2021, projected that the sector could support 40,000 jobs and generate significant tax income through 2030 with proper management. Without exploration, these benefits vanish, forcing the government to raise taxes elsewhere or cut public services.
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Stranded Assets and Decommissioning Costs: Shutting down exploration would likely lead to stranded assets—fields and infrastructure rendered unusable due to policy shifts. The CCC warns that oil and gas projects risk becoming stranded by 2050 under 1.5°C pathways. Decommissioning existing infrastructure could cost taxpayers billions, as tax reliefs for cleanup are a standard part of the UK’s tax regime. Green Alliance estimates that continued exploration without a transition plan could leave the public on the hook for uneconomic assets.
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Increased Import Dependency: The UK already imports over half its gas and a significant portion of its oil. A total shutdown would make the country wholly reliant on foreign supplies, exposing it to volatile global markets. In 2022, rocketing international gas prices drove the UK’s energy price cap up by £2,800 for a typical household, despite domestic production. Without North Sea output, the UK would face even greater exposure to price spikes, particularly from suppliers like Norway, the US, or Qatar.
Energy Cost Increases: A Painful Reality
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Gas Price Volatility: Gas sets the marginal price for electricity 97% of the time under the UK’s pricing rules, meaning higher gas import costs directly inflate electricity bills. Uplift’s analysis shows that new North Sea fields would supply only a few weeks of gas per year, but existing fields still provide 38% of domestic gas consumption. Losing this buffer would leave the UK at the mercy of international price swings. For context, the 2021–24 gas price spike saw fossil fuel-based electricity costs soar, while renewables like onshore wind were 39% cheaper than the cheapest fossil fuel generators.
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Household Bill Impact: If exploration halts and production declines faster than renewable capacity grows, energy bills could rise significantly. The New Economics Foundation estimates that investing in renewables and energy efficiency could save households £342–£400 annually, but current policies prioritize fossil fuel subsidies over these measures. A complete shutdown could add £900 or more to household bills, as claimed by some analysts, due to increased import costs and reduced domestic supply.
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Economic Ripple Effects: Higher energy costs would hit businesses, particularly energy-intensive industries, driving up prices for goods and services. The Office for Budget Responsibility notes that the UK’s economy is less energy-intensive than in the 1970s, but reliance on global supply chains amplifies the impact of fuel price shocks. A shutdown could exacerbate inflation, reduce competitiveness, and slow economic growth.
The Counterargument: Renewables and Climate Goals
A Balanced Path Forward?
I, for one, would prefer to invest in the U.S. Energy markets.
The UK could lose more than half of its offshore oil and gas jobs by the early 2030s unless urgent and coordinated action is taken immediately, a new report claims.
A new report from Robert Gordon University, named Striking the Balance, outlines three offshore energy workforce scenarios (low, mid, and high cases) and a need for up to £350bn ($473.4bn) of future investment in the UK’s offshore energy sector between 2025 and 2035.
The report suggests a 2030 UK offshore energy workforce requirement for oil, gas, and renewables of between 125,000 and 163,000 jobs, compared to today’s figure of approximately 154,000.
However, the specific UK oil and gas workforce is forecast to fall from 115,000 in 2024 to between 57,000 and 71,000 by the early 2030s. That’s equal to losing approximately 400 jobs every two weeks for the next five years.
On the other hand, the UK offshore renewables workforce is forecast to increase from approximately 39,000 in 2024 to between 84,000 and 153,000 by 2035.
But, there is likely to be limited capacity for the UK offshore renewables sector to host and accommodate the quantity of oil and gas workers becoming available on the job market due to the decline in the oil and gas industry before 2027.
Under a high-case scenario, workforce demand levels across the UK could hit over 210,000, but this will require the delivery of an additional 35GW of offshore wind or 6GW per year, and sustaining UK oil and gas activities for an extended period, like policies applied in Norway, Denmark, and the Netherlands.
This also must include up to 40% UK content in capital expenditure work, and around 600,000 barrels of oil equivalent per day by 2030. The current level of UK content in renewables is typically around 25% for capital activities and up to 85% for operating activities.
“With nearly 1 in 30 of Scotland’s working population currently employed in or supporting the offshore energy industry, compared to a UK-wide figure of approximately 1 in 220, the potential risks for Scotland’s supply chain and workforce are substantial,” the report said.
If Scotland fails to capture the full range of offshore energy opportunities and the oil and gas decline continues to accelerate, the Scottish-based offshore energy workforce could decrease from approximately 75,000 in 2024 to between 45,000 and 63,000 by the early 2030s.
“The UK’s lack of joined-up action means that the window of opportunity for delivering a just transition is closing. Inaction or simply slow progress will mean that UK offshore energy job numbers overall could drop by almost 20% to 125,000 by 2030, making the path towards net zero even harder to negotiate,” said Professor Paul de Leeuw, director of the Energy Transition Institute at Robert Gordon University.
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