On Wednesday 8 November 2023, the UK government introduced the Offshore Petroleum Licensing Bill to Parliament.
This new legislation, which was announced as part of King Charles III's "King's Speech", will allow companies to bid yearly for new licences to drill for fossil fuels in the North Sea. Licences will be issued by the North Sea Transition Authority, the independent regulator for oil and gas, who will be legally required to invite applications for new licences each year. To support the UK’s existing energy transition policies, licences will be issued subject to stringent new emissions and imports tests.
Currently the oil and gas industry is estimated to support around 200,000 UK jobs and adds £16bn annually to the economy with fossil fuel producers expected to pay around £50 billion in tax over the next 5 years. Prime Minister Rishi Sunak has said that the bill would help boost the economy, protect jobs and strengthen Britain's energy security by reducing dependence on imports from overseas and its exposure to volatile international markets.
This new legislation also forms part of the Prime Minister's "pragmatic, proportionate and realistic" approach to achieving net zero by 2050. Indeed, the Secretary of State for Energy Security and Net Zero, Claire Coutinho, stated that "as energy markets become more unstable it’s just common sense to make the most of our own homegrown advantages and use the oil, gas, wind and hydrogen on our doorstep in the North Sea. Rather than importing dirtier fuels from abroad, we want to give the industry the certainty to invest in jobs here and unlock billions of pounds for our own transition to clean energy".
The licensing bill highlights a clear policy divide between Labour and Conservative with Sir Keir Starmer stating that, if Labour wins power, although existing licences will be honoured, no new licences would be granted. Moreover, many critics of the government's plans have claimed that the focus should be on investing in renewable energy in line with the UK's goal of transitioning to net zero by 2050, rather than allowing more fossil fuels to be extracted from the North Sea.