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New legislation mandating annual licensing rounds for oil and gas in the North Sea will be at the heart of the King’s speech on Tuesday, as Rishi Sunak looks to exploit a policy divide with Labor ahead of Britain’s next general election.
The Prime Minister says the bill, which would allow companies to bid annually for new permits to drill for fossil fuels in the North Sea, would protect jobs and strengthen Britain’s energy security by reducing exposure to volatile international markets.
Energy Minister Claire Coutinho added on Monday that some of the revenue from the permits could help finance the clean energy transition and other government priorities.
“If you were to forego that domestic production, you wouldn’t get the tax revenue to fund public services,” she told BBC Radio 4. Today program.
The legislation, which comes in the wake of the energy shock caused by Russia’s large-scale invasion of Ukraine, will allow Sunak to highlight how his “pragmatic, proportionate and realistic” approach to achieving net zero by 2050 contrasts with Labour’s policies.
The main opposition party has an average lead of 20 points over the Conservatives in polls ahead of elections expected next year and has said it plans to make Britain a “clean energy superpower”.
Britain currently relies on oil and gas for the majority of its energy needs, which are expected to remain part of the country’s energy mix beyond 2050.
However, the North Sea Transition Authority, the regulator, has acknowledged that new permits will do little to reduce Britain’s dependence on imports, or have a significant impact on oil or gas prices, as reserves in the basin and the raw materials are traded on international markets. markets.
Sir Keir Starmer has said that if Labor comes to power it will respect existing permits, but has ruled out granting new ones. Instead, the party will prioritize significant investments in nuclear and renewable energy sources.
In September, Sunak reversed the ban on the sale of new petrol and diesel cars from 2030 to 2035 and relaxed the target for phasing out the installation of new gas boilers.
The Prime Minister is trying to regain political momentum after damaging revelations about Britain’s response to the pandemic in the public inquiry into Covid-19, and lurid claims about unnamed Tory MPs in a new book by former culture secretary Nadine Dorries.
The King’s Speech is expected to include new bills on crime and sentencing, leasehold reform and the creation of an independent football regulator in England.
The plans to ramp up oil and gas licensing, which covers the area of the North Sea over which Britain has jurisdiction, comes after the NSTA last month offered the first batch of 27 new licenses as part of a round which launched in October 2022.
Previously, the process had been at a standstill since 2020 as the government investigated the climate impact of oil and gas exploration.
The legislation will come with key net zero tests that must be met before a new round is launched each year.
Ed Miliband, Labour’s shadow energy minister, described the bill as “a stunt that does nothing to reduce bills or provide energy security”.
“We already have regular North Sea oil and gas licenses in Britain, and it is precisely our dependence on fossil fuels that has led to the worst cost of living crisis in generations,” he added.
David Whitehouse, chief executive of trade body Offshore Energies UK, welcomed the prospect of a “predictable licensing process with transparent controls” every year. “The UK needs the flow of new licenses to meet the decline in production in line with our maturing basin,” he said.
But Tessa Khan, executive director and founder of campaign group Uplift, said the government was selling a “pipe dream”, adding: “More North Sea permits will do next to nothing for Britain’s energy security and nothing for our unaffordable energy bills .”