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Ministers will consider the economic benefits of North Sea oil and gas projects along with carbon “removal” activities when deciding whether to grant consents, under guidance designed to avoid courts overturning approvals.
The fresh guidance issued on Thursday comes after a landmark court judgment last year that faulted UK authorities for failing to weigh the climate effects of burning fossil fuels when issuing development consents in the North Sea.
The energy secretary would assess such effects, known as downstream emissions, by considering the government’s “overall energy and environmental objectives, and the potential economic and other advantages of the project”, according to the guidance.
The document added that proposals by companies to lessen their carbon impact such as by investing in carbon dioxide “removal” projects would also be considered when the government rules on development consents.
The language could be helpful to two vast oil and gasfields being developed by Shell and Equinor whose consents were quashed last year because downstream emissions had not been considered.
The decision rested on a test created in a Supreme Court case known as Finch, which said authorities needed to take into account carbon dioxide emitted when consumers burn the oil and gas produced.
Shell and Equinor are now expected to reapply for consents for their respective Jackdaw and Rosebank projects in the wake of the fresh guidance, which sets out how oil and gas companies should write environmental impact assessments when submitting applications.
The projects set up Sir Keir Starmer’s government for a clash with climate campaigners, and threaten to jeopardise his tightrope approach to North Sea oil and gas.
The prime minister wants to move away from fossil fuels and plans not to issue licences for new oil and gas exploration in the North Sea, but has said his government would not interfere with existing licences.
Jackdaw and Rosebank were both awarded licences and consents before Labour was elected in July 2024, but some campaigners believe the government should deny any reapplication for consent given the projects’ carbon emissions.
Starmer and chancellor Rachel Reeves have both signalled support for the projects. Reeves told the Sun on Sunday newspaper in March: “We said in our manifesto that they would go ahead, that we would honour existing licences, and we’re committed to doing that, and go ahead they will.”
Rosebank is the UK’s largest undeveloped oil reserve and is thought to contain 500mn barrels of oil. Ed Miliband, energy secretary, in 2023 — when Labour was in opposition — described the licence issued to Rosebank as “a colossal waste of taxpayer money and climate vandalism”.
Mel Evans, head of climate at Greenpeace UK, said the projects should still be blocked even under the new guidance, though she warned that factoring in carbon removal measures risked creating a “dangerous loophole”.
“Since Rosebank and other drilling sites will pump out a lot of carbon while providing little benefit to the economy and no help to bill payers, they should fail the criteria ministers have just set out,” she said.
Evans added: “Ed Miliband was right to say approving Rosebank would be climate vandalism — he should remain true to his word.”
Rosebank said it was reviewing the guidance and was committed to advancing the project. Shell said it had spent £800mn developing Jackdaw so far and it was also committed to seeing it through. The project “supports the government’s growth agenda”, it added.
Under the new guidance, developers will need to set out how the emissions from burning their product would affect global carbon budgets, including the potential cumulative effect when considered alongside other developments.
The guidance does not recommend specific measures to mitigate emissions but says the regulator’s current view is that “emissions removals currently appear to be most appropriate”.
Carbon can be removed from the atmosphere by direct air capture or tree-planting. The guidance did not specify which removal measures would be best, saying only they need to be “high integrity”.
The guidance adds it is “unlikely” that drillers could offer carbon reduction credits they have bought from others in mitigation for their own emissions.
Energy minister Michael Shanks said the guidance would “ensure a managed, prosperous, and orderly transition to the North Sea’s clean energy future, in line with the science”.
