An independent task force is needed to examine the plans for North Sea energy transition and safeguard about 200,000 jobs, experts say.
The British Chambers of Commerce (BCC) warned that current plans for the oil and gas industry risk reducing investment and hitting UK energy security.
An independent task force would help manage potential “catastrophic harm” to the economy and workforce by bringing expertise of all sectors impacted by North Sea operations, including companies, unions, environmentalists and economists.
Task force recommendations could help ministers accelerate North Sea transition away from fossil fuels to the UK’s net zero goals while maintaining jobs, skills and employment.
It follows a separate warning that increased windfall taxes on the UK North Sea’s offshore oil and gas producers would cost the UK economy about £13bn over the next five years and lead to a big fall in UK tax receipts, according to trade body Offshore Energies UK (OEUK).
Norwegian oil firm Neo Energy announced it is to “slow down” its North Sea operations. The independent oil company will scale back investment in the area, blaming recent tax rises. It said government “measures” had materially increased its uncertainty in the UK oil and gas sector, citing the prospect of higher taxes and tougher environmental rules.
Neo’s projects include the Buchan Horst oilfield, situated 70 miles north-east of the Aberdeenshire coast in the North Sea. The field had been due to start production by the end of 2027, producing an estimated 162m barrels of oil equivalent.
The government came to power pledging to raise taxes on North Sea oil and gas producers to help fund the UK’s transition to fossil-fuel free green energy. Last week it announced it would not intervene on cases challenging legal challenges brought against two major North Sea oil field developments known as Rosebank and Jackdaw.
Shevaun Haviland, BCC director general, said: “The imperative for net zero is ratcheting up daily as fresh evidence of the damage caused by climate change emerges. But it’s equally important we manage this process to avoid catastrophic harm to our economy and workforce.
“We need an effective energy transition which does not cut adrift the tens of thousands of highly skilled people across the UK who rely on the sector for their livelihoods.
“It must also balance the diversity of our power supplies, so that the UK’s energy security is not put at risk, and we do not become over-reliant on imported fuels.”
She added: “Politicians cannot keep kicking the can down the road. It is in everyone’s interests to get round the table and find solutions. There [is] also a need [for] honest conversations about how this can be financed.
“Plans to reduce capital and investment allowances will undermine business confidence in the sector and jeopardise a successful transition.”
Ms Haviland warned that if private investment in the energy sector was put at risk, “the re-purposing of infrastructure and the pathway forward are also put in doubt”.
The BCC believes that independent task force recommendations would help to create “certainty and confidence that businesses, the workforce, unions and environmental groups can all believe in.”