• Will the Rosebank Oil and Gas Field Project Proceed Amid Climate Concerns?

Fuel for Thought

Will the Rosebank Oil and Gas Field Project Proceed Amid Climate Concerns?

Apr 26 2023

Environmental organizations are urging the UK government to reject the Rosebank project, a significant undeveloped oil and gas field in the North Sea. Uplift, a campaign group, has warned that the emissions from the Rosebank oil production alone would surpass the UK's carbon budgets allocated for oil and gas production from 2028 onwards. Activists are concerned about the potential carbon emissions from the project and question whether it would help alleviate soaring household energy bills. 

Greenpeace UK's senior climate advisor, Charlie Kronick, expressed to City A.M. that approving the project would be a "massive blunder," as it would jeopardize the UK's carbon budget and its legal commitment to net-zero emissions. He also discussed the commercial aspects of the project, noting that around 80% of all North Sea oil, including the majority of Rosebank's production, would likely be exported and subsequently sold back to the UK, doing little to enhance energy security. Profits would then go to the oil and gas companies owning Rosebank's reserves, such as Equinor, which already enjoys a 78% overall tax rate in Norway. Kronick questions why they should pay a lower rate in the UK. 

Fiona Duggan, policy lead at climate charity Ashden, has called for the government to abandon investment relief in the windfall tax, making projects like Rosebank less attractive to oil and gas companies. Duggan argues that providing tax breaks to fossil fuel companies for new oil fields in the North Sea is a poor use of taxpayer funds, especially since oil and gas produced in UK waters are sold at international market prices, offering no relief to consumers' energy bills. 

These statements follow shadow climate secretary Ed Miliband's criticism of the Rosebank project, asserting that it would not help reduce energy costs. He confirmed that a Labour government would not issue any more licenses for fossil fuel projects, stating that they wouldn't lower bills and would require substantial investments to attract industry involvement. 

Greenpeace and Ashden have both recommended the government prioritize energy efficiency measures over projects like Rosebank. Kronick suggests that investing in insulating buildings, renewable energy, and upgrading the energy grid would address climate, cost of living, and energy crises more effectively, reducing the dependence on oil and gas. Duggan added that retrofitting the UK's 19 million homes would be a better use of funds, as it would help lower energy bills, create green jobs, and tackle the climate crisis. 

Although the UK has some of the least energy-efficient housing in Europe, the government has committed around £13 billion to energy efficiency packages, targeting a 15% reduction in energy usage and aiming for all homes to have an energy performance certificate rating of C or higher. However, much of this funding will not be available until the next parliament, and insulation installation rates have stagnated over the past decade. 

The Rosebank project, owned by Norwegian company Equinor and domestic operator Ithaca Energy, could produce up to 500 million barrels of oil, equivalent to 8% of the UK's total oil output between 2026 and 2030. The Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) is currently reviewing Rosebank's environmental statement, after which the North Sea Transition Authority will audit the project's field development plan. The final investment decision will be made by energy security secretary Grant Shapps. 

The project is expected to receive approval and has been endorsed by Offshore Energies UK. The government has held discussions with Ithaca about the project amid concerns that the lack of a price floor in the windfall tax could make it financially challenging. Oil and gas exploration is part of the government's energy security plans, with the UK aiming to increase domestic fossil fuel production to decrease dependence on foreign suppliers and achieve its energy security targets. 

The Climate Change Committee, an independent advisory group to Westminster, estimates that between now and 2050, oil and gas will still need to meet half of the UK's energy requirements, and as much as 64% between 2022 and 2037. Currently, gas heats 85% of the UK's housing stock, and the North Sea presents the least carbon-intensive option, producing approximately 10kg of COâ‚‚ per barrel of oil equivalent, compared to over 70kg for fracked gas from the US. 

The Rosebank project's fate hinges on the UK government's decision, which must weigh the potential benefits of increased domestic energy production against the environmental impact and climate commitments. With pressure from environmental groups and the opposition party, it remains uncertain whether the project will proceed as planned. The government has yet to comment on the issue, leaving the future of the Rosebank oil and gas field hanging in the balance. As the debate continues, the need for a comprehensive and sustainable energy strategy becomes increasingly apparent, one that addresses energy security, affordability, and climate goals. 

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