The North Sea has been Britain’s oil powerhouse for 50 years. But what is its future now?

In September 1969, a Norwich petroleum engineer named Brendan McKewon arrived at Aramco’s Great Yarmouth office holding a pickle jar.

McKewon dumped the jar’s contents – dredged up from the bottom of the North Sea – into an ash tray and threw in a lit match. The liquid burned. “That’s it,” his boss reportedly said. “That’s oil.”

McKewon had brought the oil from the Sea Quest drilling rig. It marked the first time a drilling rig had struck oil in the North Sea – and kickstarted one of Britain’s most lucrative industries. But 50 years (and 45 billion barrels of oil) later, and oil is not the black gold it once was. Not only are North Sea reserves declining, but we also know that continued oil and gas production is incompatible with a liveable climate.

• Labour wants to ‘unleash the North Sea’s clean energy future’. What does that mean for oil and gas?
• How lucrative North Sea oil became the front line of battle for the climate
• We need to end the fossil fuel era to secure a liveable future – before it’s too late. Here’s how

As the planet heats, the government has announced an eight-week consultation into the future of the North Sea, with energy secretary Ed Miliband pledging to “unleash the UK’s green energy future in the region.”

So what needs to happen to make that a reality? Big Issue spoke to experts about three crucial aspects.

Taxing fossil fuel producers

The windfall tax on North Sea oil producers – known officially as the energy profits levy – will expire in 2030.

The duty on the profits of energy companies was introduced in 2022, after Russia’s invasion of Ukraine triggered an unprecedented surge in gas prices.

The toll was increased from 35% to 38% in the last budget, leaving industry paying a headline tax rate of 78%. Currently, the government is consulting on what should replace it. One option is a new tax regime pegging levies to oil prices.

Both environmentalists and the energy industry have welcomed the consultation – indicating that it’s all to play for. A permanent mechanism is crucial, said Heather Plumpton, head of research at Green Alliance. Otherwise, the Treasury will always be playing catch-up.

“The biggest issue with the windfall tax introduction was that it happened too slowly, allowing oil and gas companies to walk away with record profits before it was finally introduced,” she told Big Issue.

“A permanent windfall tax mechanism is needed, so that when prices are high, and people are struggling to pay their energy bills as a result, the oil and gas companies pay their fair share of tax.”
In 2022, companies paid only £1.8bn in windfall tax and walked away with over £32bn in post-tax profit.

The industry has lobbied vociferously against tax increases – but lobbyists neglect to mention energy companies’ historic reliance on massive public subsidy.

“The tax regime has been pretty lucrative for oil and gas companies over the years,” said Jess Ralston from the Energy and Climate Intelligence Unit (ECIU), “with several tax breaks and loopholes that basically amount to public money flowing back to them, and less being paid to the UK public purse than comparable countries like Norway.”

In 2015, for example, then-chancellor George Osborne cut tax for the industry from 50% to 35%. He also committed £20m of public money to search for new oil reserves under the seabed.

But lucrative tax breaks only stave off the inevitable: oil and gas is running out in the North Sea. Oil production peaked in 1999, when the sector produced approximately six million barrels per day.
In the past decade, despite hundreds of licences being issued, new licences have delivered just 16 days’ worth of gas.

Building renewable energy capacity in the North Sea

The UK government has pledged to not issue any new oil and gas licenses, a commitment described by environmental charity Greenpeace as “world leading”.

Questions remain over how this will be implemented and whether it will apply to mega-polluting projects like Rosebank. Initially approved before Labour was elected the project is currently being reassessed under stricter environmental rules necessitated by a 2024 Supreme Court ruling on how emissions are measured. Regardless, renewables provide more energy security than Rosebank, experts urge.

“With the North Sea declining, unless we reduce demand for it then we’ll just have to import more from abroad and that makes us even more vulnerable to price spikes on international gas markets controlled by people like Putin,” Ralson said.

“Confirming the end of new licensing is the responsible approach for a mature basin,” Plumpton added. It’s also an environmental imperative: “There can be no safe future while we continue to extract oil and gas.”

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According to the International Energy Agency (IEA), any new oil, gas, and coal activity is incompatible with the legally binding goal to keep global heating to 1.5°C over pre-industrial averages.

The good news is, the region boasts “incredible potential”, said Daniel Jones, head of research at Uplift UK.

“The rollout of renewables, including in the North Sea, will power a Britain that will have a securer, cheaper, climate-compatible fuel supply,” he told Big Issue.

North Sea already boasts more than 80% of Europe’s offshore wind capacity connected to the grid – with 25 gigawatts of clean energy generation.

The UK government has ambitions to scale this up massively, enabling 50 gigawatts of offshore wind power generation by 2030, which is enough to power nearly every home in the country. Combined with Norway and EU capacity, the North Sea could generate 120 gigawatts of offshore wind generation by the end of the decade – enough to power over 120 million homes.

In January, Labour announced that 13 major offshore wind projects had been approved (around the country) by easing infrastructure rules.

“Offshore wind around the UK including in the North Sea will form the backbone of our energy system in future, working alongside solar and onshore wind and other low carbon power like nuclear,” Ralston said.

“This means there’s a positive future for the North Sea, the people that work there and communities that rely on it.”

No ban without a plan? Ensuring workers don’t lose their jobs

However, not everyone is pleased with the transition plans. Unions have previously been critical of the plan, warning of mass job losses similar to those that happened after the closures of the mines.

“Until [we get more information], we need to resist any calls that amount to offshoring our carbon responsibilities for the sake of virtue signalling,” said Unite the union’s general secretary, Sharon Graham. “We must not let go of one rope before we have hold of another.”

But experts say that a well-thought through “just transition plan” could mean no jobs are lost.
“We are in favour of no new oil and gas licenses, but broadly speaking, I’m sympathetic to the union’s fears. They say ‘no ban without a plan,’” said Joshua Emden, from the Institute for Public Policy Research (IPPR).

“That plan needs to include things like a funded right to retrain, a right to interview, travel assistance, subsidised housing, and a seat for unions at the table.”

But with the right support, retraining will not be too difficult for most people in the sector. IPPR research found that 93% of gas sector workers share more than 50% of their existing work tasks – such as inspecting and repairing equipment – with climate compatible occupations.

“Green jobs may be more stable jobs too,” Emden added. “The oil and gas industry is notoriously volatile and moves with the oil and gas price; it’s not the bulwark of jobs that industry PR characterises it as.”
Fossil fuel giants use the threat of job losses as a campaign tool; but their numbers are enhanced, environmentalists claim.

The industry claims to support more than 200,000 jobs – but just 30,000 are ‘direct jobs’. An estimated 100,000 are indirect jobs – jobs in the broader supply chain providing goods and services to the oil and gas industry.

A further 84,000 roles are known as ‘induced jobs’, meaning those in the wider economy supported by oil and gas workers’ spending. For example, a person working in an Aberdeen café that oil and gas workers visit.

But if the rollout of renewables is successful, many of these indirect and induced jobs will be retained. Additionally, the Department for Energy Security and Net Zero says “tens of thousands” of more jobs could created in offshore renewables.

But this is not to say the concerns of those workers who do stand to lose employment are illegitimate.
To support direct job workers to retrain, IPPR have called on the government to reform the skills system by introducing an annual £1.1bn ‘Green Training Fund’.

The importance of a just transition is not just a political choice, added Plumpton – it’s a geological necessity. The basin is, after all, in decline.

“There is a huge opportunity here for the North Sea region to develop into a clean energy hub, with skilled, well-paid jobs that will create industries that last for generations,” Plumpton said. “Sticking our heads in the sand and pretending that oil and gas jobs aren’t already declining won’t help anyone.”

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