A novel report from the Institute of Economic Affairs (IEA) is challenging the Labour government’s net zero strategy, arguing that halting new oil and gas exploration in the North Sea will likely increase carbon emissions, not reduce them. The report, authored by energy expert Kathryn Porter, asserts that relying on imported energy sources generates 50% more carbon emissions than domestic production, according to the Climate Change Committee.
The IEA analysis predicts the UK will still require approximately 168 million barrels of oil annually by 2050, despite Labour’s commitment to achieve net zero by that year. This continued demand, the report states, will be driven by the need for oil in the production of essential materials like plastics, medicines and fertilizers.
The findings have been swiftly endorsed by the Conservative party. Shadow Energy Secretary Claire Coutinho stated that maintaining a domestic oil and gas supply is crucial, warning that Labour’s policies risk jeopardizing tens of thousands of jobs and increasing reliance on foreign energy imports with a larger carbon footprint. “We are going to need oil and gas for decades and as much of it as possible should come from Britain. It makes no sense that Labour is choosing to shut down the North Sea and position tens of thousands of jobs at risk just to develop us more dependent on foreign imports with higher emissions,” Coutinho said.
The criticism of Labour’s energy policy extends beyond the Conservative opposition. Former Prime Minister Sir Tony Blair’s think tank, the Tony Blair Institute for Global Change, has also urged Energy Secretary Ed Miliband to reverse the ban on new North Sea oil and gas licenses. The TBI report frames the North Sea basin as a “home-grown strategic national asset” potentially worth up to £165 billion, advocating for the removal of the windfall tax on oil and gas companies to stimulate investment.
However, Labour figures have dismissed the TBI report as unrealistic. Sources close to Ed Miliband described the proposals as “nonsense,” asserting they would not translate into lower energy bills for consumers. The Labour government has maintained a position of managed decline for fossil fuels, permitting only projects tied to existing infrastructure while prioritizing investment in renewable energy sources.
The debate comes as geopolitical considerations increasingly influence energy policy. The TBI report highlights the growing emphasis on energy production as a core component of “hard power” by nations like China and the United States, suggesting the UK’s increasing reliance on imports could compromise its strategic position. The report argues that a broader strategy prioritizing affordability and security of supply alongside decarbonization is necessary.
Despite the calls for a policy reset, Labour sources insist their approach remains “mainstream” and focused on transitioning the UK to domestically generated, clean power. The government’s current framework is hastening the sector’s decline “beyond what is economically or strategically necessary”, despite the North Sea still holding an estimated 7.5 billion barrels of recoverable oil and gas, according to the TBI analysis.
