The UK’s debate over North Sea oil and gas has taken another turn this August.
New analysis suggests that the potential climate-related economic damage associated with developing two major North Sea fields, Rosebank and Jackdaw, could substantially outweigh the economic benefits claimed for the projects.
The analysis estimates that climate-related economic damages from the carbon pollution associated with the fields could reach between £119 billion and £336 billion, compared with an estimated economic value of £28.7 billion attributed to the developments.
The figures have reignited a debate that sits at the heart of the UK’s energy transition:
Can continued investment in fossil fuel extraction genuinely support long-term economic security?
Energy security versus climate security
Supporters of North Sea development argue that domestic oil and gas production can strengthen energy security, protect jobs and reduce Britain’s dependence on international energy markets.
Opponents argue that oil and gas are globally traded commodities and that continued investment risks locking the UK into an increasingly expensive and carbon-intensive energy system.
The debate is particularly significant as renewable energy becomes an increasingly important part of the UK’s energy mix.
The UK’s own Renewable Energy Planning Database continues to track a large pipeline of renewable electricity projects progressing through planning, construction and operation.
The challenge is therefore not simply whether the UK can produce energy.
It is what kind of energy system it wants to build for the next 20 to 30 years.
The transition is also a jobs challenge
There is another important dimension to this debate: people.
Recent government figures obtained through freedom of information requests suggest that more than 110,000 jobs linked to North Sea oil and gas could disappear by 2050, with employment in the sector projected to fall dramatically as production declines.
That makes the just transition critical.
It is not enough to say that workers should simply move from fossil fuels into renewables.
The UK needs investment in skills, retraining, infrastructure and regional economies so that communities currently dependent on the oil and gas industry can participate in the next phase of the energy economy.
Offshore engineering expertise, project management, marine skills and technical capabilities could all have a role to play in the expansion of offshore wind and other clean technologies.
Sustainability is an economic question
Perhaps the biggest lesson from this debate is that sustainability cannot be separated from economics.
Businesses make investment decisions based on what they believe will create value over the long term.
Governments should be thinking in much the same way.
If climate-related costs, stranded assets, changing consumer expectations, regulation and the declining cost of renewable technologies are all considered, the economic case for different energy investments can look very different.
The UK’s transition to net zero therefore isn’t simply about turning off fossil fuels.
It is about deciding where the country’s capital, skills and infrastructure should be directed next.
The North Sea has powered Britain for decades.
The question now is whether it will also play a meaningful role in powering Britain’s transition.
And perhaps the most important question for policymakers and businesses alike is this:
Are we investing in the energy system of yesterday, or building the one we will need tomorrow?