UK election: Labour sticks to commitment on North Sea licences after court ruling

Future Labour government could find itself caught between environmental lobbyists, oil and gas explorers and its own policies

Activists gather outside the Supreme Court in London before a landmark ruling that Surrey Council should have considered the climate impact of burning oil from new wells. Getty Images

Britain's opposition Labour Party will keep its commitment to already approved oil and gas exploration and drilling licences, despite the possible implications of a ruling at Britain's Supreme Court.

Speaking on the BBC, Labour's deputy leader, Angela Rayner, said that notwithstanding the court ruling, which has raised some concern in the industry, “licences that have already been approved will carry on”.

The Supreme Court found a local council in southern England should have considered the full climate impact of burning fossil fuels that are pumped from new oil wells.

The case surrounded a decision in 2019 by Surrey County Council to allow Horse Hill Developments, which is part-owned by British energy company UK Oil & Gas, to retain and maintain two oil wells and drill four more over a 20-year period near the town of Horley, close to Gatwick airport.

The environmental impact assessment study that was carried out at the time looked at the effect of the construction, production and decommissioning of the site, but did not calculate the impact the emissions of oil pumped from the well after it had been refined and burnt.

“It is not disputed that these emissions, which can easily be quantified, will have a significant impact on climate,” said George Leggatt, one of the three Supreme Court justices.

“The only issue is whether the combustion emissions are effects of the project at all. It seems to me plain that they are.”

The ruling could be a game-changer for the UK's oil and gas industry, particularly for projects in the North Sea.

The Conservative government under Rishi Sunak approved drilling in the Rosebank oil field last year, which is predicted to be one of the last untapped areas of the North Sea.

Labour has said it won’t approve any new drilling projects in the North Sea, but Ms Rayner, told the BBC that any new Labour government would be “committed to the licences that have already been approved”.

She declined to say whether a Labour government would re-approve the Rosebank oilfield if the Supreme Court decided the original decision was unlawful, saying she's "not going to do hypotheticals".

“Oil and gas is part of the mix for the next three decades,” she said.

“But we can't rely on oil and gas into the future, we have to have a transition to renewables for our energy security because we're at the mercy of people like [Russian president Vladimir] Putin and that's why energy prices have gone through the roof.”

Britain's oil and gas companies are already subject to windfall taxes, which would rise under a Labour government.

In addition, analysts said the court ruling will have raised investor concerns over its potential implications for future oil and gas licences in the UK.

“Major explorers and producers are already running for cover thanks to the tax hit, and the legal decision will be a further deterrent to investment,” Russ Mould, investment director at AJ Bell, told The National.

“Environmental campaigners will be delighted [and] oil executives disappointed by that high court ruling on the Surrey case and consumers will probably only make up their minds based on what oil and gas prices do, how much we have to import and at what price, especially if we cannot manage the transition to more renewable sources more quickly than we are right now,” Mr Mould added.

Great British Energy

Ms Rayner reiterated that the energy transition under a Labour government would happen under the auspices of a publicly-owned entity called Great British Energy, which the party describes as being “owned by the British people and deliver power back to the British people”.

The Labour Party has pledged to plough £8 billion into Great British Energy over the next five years, should they win the UK general election on July 4. Much of the money is planned to come from a 78 per cent windfall tax to be levied on the major oil and gas companies.

“We have to transition to renewables and Great British Energy is the vehicle to do that and create the thousands of jobs we need as well as that energy security, so we're not at the mercy of dictators like Putin into the future,” Ms Rayner said.

“We will not be issuing new licences. We will be moving to renewables under Great British Energy to support the thousands of jobs we need and energy security into the future.”

Great British Energy is a central pillar of Labour's green policies, which are in themselves a major part of the party's election manifesto.

On a couple of occasions in the past six months, Labour leader Keir Starmer has addressed workers in Aberdeen, the Scottish city at the centre of the North Sea oil and gas industry, emphasising that under a future Labour government, oil and gas would be part of the UK's energy mix for decades to come, and jobs would evolve into greener energy industry such as wind and carbon capture and storage.