Untapped Rosebank oil and gas field north of Scotland approved for development amid row over climate damage
The UK’s largest untapped oil and gas field has been given the green light by the regulator, amid warnings about the climate damage of new fossil fuel projects.
Norwegian state oil giant Equinor expects to pump 325 million barrels of oil from Rosebank, 80 miles west of Shetland, from 2027.
The UK government says more oil will add to energy security, although the majority will likely be exported.
It is the UK’s last major undeveloped oil site, three times the size of the controversial Cambo oil field, which was the subject of huge, high-profile protests in 2021 before being paused last year.
The contentious decision is one part of a broader row over whether the UK should continue to develop new oil and gas fields, with Labour pledging to end North Sea exploration.
Energy Security Secretary Claire Coutinho said although the government is investing in renewable power, “we will need oil and gas as part of that mix on the path to net zero and so it makes sense to use our own supplies”.
Green Party MP Caroline Lucas called the decision “morally obscene”.
She said energy security and cheaper bills would be better achieved by “upscaling abundant and affordable renewables, and properly insulating the nation – ensuring clean air and water, thriving nature and wildlife, and high-quality skilled and stable jobs in the process.”
Tessa Khan, executive director of campaign group Uplift, said: “We are teetering on the edge of surpassing 1.5Cof warming – a limit agreed on by world leaders and essential to ensuring a habitable planet.
Yet the government allows companies like Equinor to “blow through” pollution targets “for the sake of profit.”
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Labour: ‘We don’t support Rosebank’
Rosebank’s “immense size, its location relative to marine protected areas, and the threat it poses to the climate have made it a lightning rod for criticism”, she told Sky News.
Project owners Equinor and Ithaca Energy expect Rosebank to bring £8.1bn in direct investment to the UK economy.
A spokesperson for the regulator, the North Sea Transition Authority (NSTA), said its decision had been made “in accordance with our published guidance and taking net zero considerations into account throughout the project’s lifecycle”.
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Does the world need more oil?
The government recently doubled down on its commitment to hand out further oil and gas licenses for the North Sea, insisting they are compatible with climate targets and could provide greener, local sources of fuel.
A Labour government would stop issuing new licences – a radical move that has drawn fury from unions.
The leading global climate science authority the IPCC, and the world’s foremost energy agency, the IEA, say no new oil and gas projects can go ahead if the world is to limit warming to internationally agreed safer limits.
However, the IEA also forecasts global demand for oil to keep growing until at least 2028, and some fear cutting supply before supply falls could push up prices.
The UK’s climate advisers, the CCC, expect the country to need some oil until at least 2050. However, around 80% of oil produced in the UK is exported.
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Campaigners estimate that burning through that amount of oil would generate more CO2 emissions than 28 low-income countries produce in a year.
Emissions just from getting the oil out of the ground at Rosebank, before it has even been burned, would be enough to blow the rest of the emissions the UK has budgeted for from oil and gas production, according to analysis by Uplift.
The NSTA says it makes a holistic assessment of the impact of any project and the government argues that local production is greener.
The CCC says the impact on global emissions of new UK oil and gas extraction is “not clear-cut”.
Equinor says the oil will be much greener than the average for the North Sea, at 12kg CO2 a barrel vs approximately 20kg CO2 a barrel, which could fall to 3kg if it successfully electrifies operations later on.
Its spokesperson Ola Morten Aanestad said: “Equinor has a net zero plan that is in line with the Paris Agreement. There’s no scenario that anybody has produced that says in 2050 there would be absolutely no need for oil and gas.”
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Rachel Reeves has been urged by a think tank to cut national insurance and increase income tax to create a “level playing field” and protect workers’ pay.
The Resolution Foundation said the chancellor should send a “decisive signal” that she will make “tough decisions” on tax.
Ms Reeves is expected to outline significant tax rises in the upcoming budget in November.
The Resolution Foundation has suggested these changes should include a 2p cut to national insurance as well as a 2p rise in income tax, which Adam Corlett, its principal economist, said “should form part of wider efforts to level the playing field on tax”.
The think tank, which used to be headed by Torsten Bell, a Labour MP who is now a key aide to Ms Reeves and a pensions minister, said the move would help to address “unfairness” in the tax system.
As more people pay income tax than national insurance, including pensioners and landlords, the think tank estimates the switch would go some way in raising the £20bn in tax it thinks would be needed by 2029/2030 to offset increased borrowing costs, flat growth and new spending commitments. Other estimates go as high as £51bn.
Torsten Bell appearing on Sky News
‘Significant tax rises needed’
Another proposal by the think tank would see a gradual lowering of the threshold at which businesses pay VAT from £90,000 to £30,000, as this would help “promote fair competition” and raise £2bn by the end of the decade.
The Resolution Foundation also recommends increasing the tax on dividends, addressing a “worrying” growth in unpaid corporation tax from small businesses, applying a carbon charge to long-haul flights and shipping, and expanding taxation of sugar and salt.
“Policy U-turns, higher borrowing costs and lower productivity growth mean that the chancellor will need to act to avoid borrowing costs rising even further this autumn,” Mr Corlett said.
“Significant tax rises will be needed for the chancellor to send a clear signal that the UK’s public finances are under control.”
He added that while any tax rises are “likely to be painful”, Ms Reeves should do “all she can to avoid loading further pain onto workers’ pay packets”.
The government has repeatedly insisted it will keep its manifesto promise not to raise income tax, national insurance or VAT.
A Treasury spokesperson said in response to the think tank report it does “not comment on speculation around future changes to tax policy”.
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Chancellor urged to freeze alcohol duty
Meanwhile, Ms Reeves has been urged to freeze alcohol duty in the upcoming budget and not increase the rate of excise tax on alcohol until the end of the current parliament.
The Scotch Whisky Association (SWA), UK Spirits Alliance, Welsh Whisky Association, English Whisky Guild and Drinks Ireland said in an open letter that the current regime was “unfair” and has put a “strain” on members who are “struggling”.
The bodies are also urging Ms Reeves “to ensure there will be no further widening of the tax differential between spirits and other alcohol categories”.
A Treasury spokesperson said there will be no export duty, lower licensing fees, reduced tariffs, and a cap on corporation tax to make it easier for British distilleries to thrive.
Leave retailers alone, Reeves told
This comes as the British Retail Consortium (BRC) warned that food inflation will rise and remain above 5% into next year if the retail industry is hit by further tax rises in the November budget.
The BRC voiced concerns that around 4,000 large shops could experience a rise in their business rates if they are included in the government’s new surtax for properties with a rateable value – an estimation of how much it would cost to rent a property for a year – over £500,000, and this could lead to price rises for consumers.
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Latest ONS figures put food inflation at 4.9%, the highest level since 2022/2023.
The Bank of England left the interest rate unchanged last week amid fears that rising food prices were putting mounting pressure on headline inflation.
“The biggest risk to food prices would be to include large shops – including supermarkets – in the new surtax on large properties,” BRC chief executive Helen Dickinson said.
She added: “Removing all shops from the surtax can be done without any cost to the taxpayer, and would demonstrate the chancellor’s commitment to bring down inflation.”
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