Tony Blair's think tank has accused the British government of “leading the UK in the wrong direction” with its energy policy, arguing it should reverse its ban on new licences for drilling oil and gas in the North Sea.
In a scathing report, the Tony Blair Institute described the Labour government's clean power plan as flawed "climate theatre" and argued that the Energy Profits Levy is deterring investment in the resource-rich area.
The former UK prime minister's think tank echoed criticism by US President Donald Trump, who has argued that Britain is “sitting on top of the North Sea, one of the greatest reserves anywhere in the world but they don’t use it”.
The institute called on the government to lift the ban on new oil and gas exploration licences and cut the 38 per cent tax rate imposed on the industry.
£165 billion bonus
It argued that that oil and gas will have to form a large part of Britain's power requirements for “many years to come”, adding that it could not treat domestic production as a “moral signal rather than a strategic asset”.
The report is likely to infuriate Energy Secretary Ed Miliband who has led the drive to curb Britain's fossil fuel emissions by cutting back North Sea oil licences despite objections from the unions, who argue that it will lead to job losses as well as lower tax revenue. Sources close to Mr Miliband are reported to have described the report as "nonsense".
But scrapping the policies would unlock 7.5 billion barrels of oil and gas worth £165 billion ($225bn) to the economy, the Tony Blair Institute said.
It also criticised the government's Clean Power 2030 plan as an exercise in “measuring the wrong achievements” by counting “capacity, contracts and milestones” but neglecting affordability and “political durability”.
“In a country responsible for less than 1 per cent of global emissions, that is not climate leadership – it is climate theatre,” it said.
“Clean Power 2030 is leading the UK in the wrong direction. Replacing it with a clear focus on cheaper, abundant power is the only way to sustain growth, enable electrification and maintain public consent for climate action.”
Crippling investment
The windfall tax was introduced under the previous, Conservative government in 2022 after profits soared due to a surge in energy prices following Russia’s invasion of Ukraine.
Industry figures have been lobbying for changes to the tax, which they say is crippling investment and leading to job losses.
While Labour has banned new licences, ministers have said oil and gas will remain part of the energy mix for years and extraction near existing fields will still be allowed.
But Tone Langengen, a policy adviser at the think tank and author of the paper, said Prime Minister Keir Starmer's government should rethink the ban on new exploration to “protect supply chains”.
The paper added the government "should reverse the ban on new exploration licences".
“A managed-decline strategy requires continued exploration to sustain economically viable production, protect supply chains and slow – rather than accelerate – the loss of domestic capacity,” it said.
A representative of the Department for Energy, Security and Net Zero said the clean power mission "is the only way to bring down bills for good".
“The alternatives leave Britain dependent on petrostates and dictators whose control of fossil fuel markets helped drive the cost-of-living crisis, and are not in the interest of the British people," the representative added.
The UK government has announced a consultation on replacing the levy, due to end in 2030.
