The North Sea has been a tremendous asset for the UK since the first modern oil and gas extractions more than 50 years ago. The industry has supported tens of thousands of well-paid and highly skilled jobs, underpinned economic activity across the country and provided more than £400 billion of production taxes for the public purse.
It is now a mature oil and gas basin but a new future is within reach, one in which the North Sea is a major resource to power a net-zero economy, sustaining good jobs and economic activity for the long term.
Managing the transition to a new North Sea that exploits its potential for commercially viable renewable energy is of vital strategic importance for the UK. Done well, it will hasten the journey towards net zero. It will also support economic growth, underpin the government’s industrial strategy and help guarantee energy security. Done badly, it risks a rapid erosion of North Sea infrastructure to the detriment of communities across the UK.
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In November last year, the British Chambers of Commerce helped to launch an independent North Sea Transition Taskforce to map an orderly transition that will safeguard the North Sea’s future as a critical national asset. After listening to dozens of stakeholders, the taskforce today publishes its recommendations to the UK and Scottish governments.
They need to act swiftly to restore confidence in the future of the North Sea. The government must not wait until 2030 to reform the Energy Profits Levy, and should replace it as soon as it is practicable with a tax regime proportionate and adjustable to changes in the price of oil and gas. As the government considers the impact of the Finch, Jackdaw and Rosebank rulings, businesses and investors also want to see a more certain regulatory environment, alongside the removal of obstacles to the deployment of renewable technologies.
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Above all, everyone with an interest in the North Sea needs to know that there is a comprehensive plan for the transition that will be driven by the government and sustained. That requires both governments to treat the transition as an urgent national mission.
The UK wants to set an example to the world of how to transition from oil and gas to a balanced, renewable energy system. This is within reach. With rapid and decisive action, the government can resolve the uncertainties that are holding back investment and give all involved the confidence they need to remain committed to the North Sea. But time is running out. Government needs to act, and act now.
Philip Rycroft is chair of the North Sea Transition Taskforce
