Now the UK’s General Election is over, with a new Labour Government headed by Sir Keir Starmer taking the reins, the time has come for the party to put its oil and gas manifesto commitments into practice.
Offshore Technology looks at those election promises to help you understand what a new Labour Government will mean for the UK’s offshore sector, as the party returns to power after 14 years in opposition.
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Labour’s stated aims for oil and gas
Citing Russia’s invasion of Ukraine, the “cost of fossil fuel energy on the international market rocketed”, the party argued, while the “Conservatives’ ban on new onshore wind, failure to build new nuclear power stations and the decision to scrap investment in home insulation landed British families with among the highest energy bills in Europe”.
Labour claimed Britain has “tremendous untapped advantages: our long coastline, high winds, shallow waters, universities, and skilled offshore workforce combined with our extensive technological and engineering capabilities”.
Responsible transition
At the heart of Labour’s thinking is the so-called Green Prosperity Plan, which will, in partnership with business through the National Wealth Fund, invest in the industries of the future, with the party planning to create “650,000 jobs across the country by 2030”.
Labour said during the campaign it will maintain a strategic reserve of gas power stations to guarantee security of supply, ensuring a “phased and responsible transition in the North Sea that recognises the proud history of our offshore industry”.
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By GlobalDataThe party has no plans for a phase-down of gas-fired power plants, but does intend to stop the construction of any new ones.
In fact, the manifesto outlines plans to spend £7.3bn ($9.33bn) on scaling low-carbon industries over the course of the parliament, coupled with the introduction of a ten-year infrastructure strategy to better integrate various sources of energy.
Financing the move
According to recent analysis by advocacy organisation Oil Change International, the climate policies in Labour’s manifesto, if fully implemented, would see the UK replace Denmark as the frontrunner for a green transition out of Europe’s North Sea countries.
The report questioned, however, how a Labour government would fund its green energy agenda without tax rises.
Law firm Osborne Clarke, in a late June online assessment of Labour’s position, said the “party’s optimistic promises on energy will be tested against the constraints imposed by its own budgetary guidelines and the myriad challenges that accompany government”.
It added: “In the first hundred days of the new administration we may expect to see the new government seeking easy headline wins around key manifesto policies, including energy.”
Labour is likely to get a honeymoon period, with 44.4% of Offshore Technology’s readers thinking it will eventually push through improvements for the UK’s power sector, compared with 22.2% for the Conservatives.
The survey, carried out in the weeks leading up to Thursday’s vote, also revealed that nuclear, hydrogen and fossils fuels will cause the most conflict and divided opinions within the new parliament.
(No more) licence to drill
Labour has been quite clear on licensing: it will not revoke existing North Sea production licences, with “oil and gas production in the North Sea with us for decades to come”. However, it will not issue new licences as they “will not take a penny off bills, cannot make us energy secure, and will only accelerate the worsening climate crisis”.
The last Conservative Government’s decision in 2023 to approve 31 new licences for oil and gas exploration – extending oil drilling in the North Sea for at least a decade longer than the country’s net-zero deadline – was met with international condemnation.
Labour made a point of emphasising that it will close loopholes in the windfall tax on oil and gas companies, claiming that companies have “benefitted from enormous profits not because of their ingenuity or investment, but because of an energy shock which raised prices for British families”.
Labour will also extend the sunset clause in the Energy Profits Levy until the end of the next parliament, increasing the rate of the levy by three percentage points.
Doubts raised about green commitment
However, in February, Labour came under heavy fire for ditching its policy of £28bn of annual investment in green energy projects including offshore wind farms and electric vehicles.
Doubts also remain over Labour’s funding of its energy projects, according to Rosemary Harris, Oil Change International’s senior campaigner, who spoke to Offshore Technology in June.
“In addition to what has already been pledged as priorities, the Labour Party must prioritise a production end date in the early 2030s and provide the essential level of investment needed to ensure a just transition for workers and communities in the UK,” said Harris.
She added: “We risk an unjust transition unless Labour are able to leave behind their self-imposed fiscal rules and put the funding needed into building a clean energy industry and providing well paid, good-quality jobs across the UK.”
Meanwhile, David Whitehouse, head of Offshore Energies UK (OEUK), the UK’s main trade body representing oil and gas interests, during the election called “on all parties to choose a homegrown energy transition that safeguards jobs, energy security, and accelerates economic growth”.
The group has been calling for more investment in the UK North Sea to help maintain a steady level of production while hydrocarbons are gradually phased out – and technologies such as carbon capture and storage and offshore wind are fully developed.
Here comes Great British Energy
Labour has promised to create Great British Energy, to be “owned by the British people and deliver power back to the British people”.
The body will partner with industry and trade unions to deliver clean power by co-investing in leading technologies, providing more than £8bn over the next parliament.
Local power generation “is an essential part of the energy mix”, said Labour, and it will deploy more distributed production capacity through its Local Power Plan, installing thousands of clean power projects across the country.
The establishment of GB Energy is a move “in line with global trends towards industrial policy and state involvement”, according to Paul Hasselbrinck, senior upstream analyst at GlobalData, Offshore Technology’s parent company.
“Labour is seemingly focused on the prospect of governing rather than appealing to certain voter groups,” Hasselbrinck told Offshore Technology in June, with the next government “facing conflicting political and social priorities, limited fiscal space and reluctance to raise taxes”.
Looks like a ‘no’ for coal
As for Britain’s now tiny coal mining sector, during the campaign Labour and the Conservatives clashed over the future of a £165m coal mine in Whitehaven, Cumbria, north-west England.
Labour said it would stop the opening of the new coal mine, the first new deep coal mine in the UK in 30 years, if it came to power. The facility received planning consent from Cumbria County Council in late 2020 and was given full approval in December 2022.
The proposed project is a coking coal mine, with the excavated coal used mainly for steel production, reducing reliance on imported coal, said a representative of West Cumbria Mining, the owners.
The UK currently has eight active coal mines, both surface and underground, with a annual production of 93,243 tonnes.
