Insight: The Rosebank oilfield, net zero targets and what it all means for households and family finances

Campaigners have protested against the potential development of the Rosebank oilfield in the North Sea. Picture: Peter Summers/Getty Images

Eighty miles west of Shetland and more than a kilometre beneath the ocean waves lies the largest undeveloped oil field in the North Sea.

Rosebank is thought to have the potential to produce 500 million barrels of oil – almost three times as much as the second-largest North Sea field, Cambo.

Norwegian operator Equinor says the field will create hundreds of jobs and generate £24.1 billion over the course of its lifetime. If the UK government grants the project a licence, production is expected to start in 2027.

The UK Labour Party, led by Sir Keir Starmer has said it will honour pre-approved drilling licences in the North Sea. Picture: Andy Buchanan/Getty Images

A decision had been expected before MPs broke for the summer recess but has now been put back until September at the earliest.

Prime Minister Rishi Sunak has indicated he is in favour, despite fears the field would undermine the UK’s ambition to hit net zero carbon emissions by 2050.

Sunak has said it would be “economically illiterate” not to invest in UK oil and gas as we will need fossil fuels “for the next few decades”.

But Sir Keir Starmer is more likely to be resident in Downing Street after a general election next year, and Labour’s position on fossil fuels has been causing concern for thousands of workers in the sector.

Ed Miliband, the former Labour leader and now shadow minister for climate change, is thought to have been behind a “kite-flying” exercise earlier this summer, when it emerged Labour planned to invest in a £28bn a year “green prosperity fund”, along with a ban on North Sea licences.

There followed what special advisers and policy wonks term “pushback”. Shadow chancellor Rachel Reeves watered down the spending pledge, saying the proposed investment would ramp up over time, reaching £28bn a year after 2027.

Labour has also now pledged to honour existing oil and gas licences, and Starmer has said "I hate tree huggers" in an outburst that shocked his shadow cabinet following an animated presentation on energy policy by Miliband.

The row over Rosebank has highlighted cross-party dividing lines over policy driven by the imperative to reach net zero.

Going green has undoubtedly got tougher. Between 1990 and 2021, UK greenhouse gas emissions fell by almost 48 per cent yet the impact on people’s everyday lives was minimal.

The reduction was largely achieved through switching from coal to gas for electricity generation, and by “offshoring” emissions through moving manufacturing operations overseas.

For most people, caring for the environment could mean as much or as little as they chose, even if it was only ensuring the right rubbish went in the right bin.

Net zero was more of an abstract concept in June 2019 when MPs committed the UK to the target of 2050. The date was distant enough to seem unthreatening – surely, many may have thought, there would be some clean energy magic bullet by then.

But we are now faced with the difficult realities of gradually cutting emissions to the point where the UK is no longer adding to greenhouse gases in the Earth’s atmosphere.

Politicians naturally do not want to present voters with policies that will adversely affect their finances. This could at least partly explain why there was so little debate when the legally-binding 2050 date was set, in line with the Paris Agreement to limit global temperature rises to 1.5°C above pre-industrial levels.

The legislation was nodded through without even a vote in the dying days of Theresa May’s government. Scotland’s first minister at the time, Nicola Sturgeon, then set a Scottish ambition of 2045.

Around 140 countries have signed up to reach net zero but some of the biggest contributors to global CO2 levels – such as China, Russia and India – have set dates well beyond 2050.

Leaders in these countries have been accused of dragging their feet compared with “developed” nations in Europe, North America and Australasia.

The UK’s ambitious pledges include: generating all electricity from clean sources such as wind, solar or nuclear by 2035; a ban on new petrol and diesel cars from 2030; the installation of 600,000 heat pumps a year by 2028 to replace gas boilers; and the use of carbon capture to remove between 20 and 30m tonnes of CO2 a year by 2030.

In Scotland, the SNP-Green government is opposed to nuclear energy and has recently announced a ban on gas boilers in all new buildings from next spring.

We are nowhere near meeting any of our ambitions. We have far less nuclear, solar and offshore wind capacity than we need to hit the 2035 emissions target. Scotland has now missed its emissions targets for the fourth time in five years.

Dame Meg Hillier, chair of the House of Commons Public Accounts Committee, recently told MPs: “There are just 12 years left for the government to meet its low carbon energy target, and much still to do if this is to be achieved – and at a cost the taxpayers and bill payers can bear while ensuring the lights stay on.”

All the indications now are that this cost will be very difficult to bear indeed.

Those arguing for governments to ease off on the drive to net zero claim green policies are already taking a heavy economic toll.

For months, economists and politicians have been trying to account for why UK inflation remains “stubbornly” high.

The Consumer Prices Index (CPI) was below the government’s 2 per cent target in May 2021 but projected in the Bank of England’s Monetary Policy Report to rise to 2 per cent by the end of that year, where it would remain for the next two years. There was a worst case scenario of it rising to 5 per cent.

There was some light at the end of the tunnel this week with a significant fall in CPI, but it still sits at 7.9 per cent despite successive hikes in interest rates, which some economists now predict will hit a 25-year high of 6.5 per cent in March 2024 with disastrous consequences for the housing market.

Central bankers such as Christine Lagarde of the European Central Bank and former Bank of England Governor Mark Carney argue net zero policies will lead to rising prices for about a decade but will ultimately help keep inflation low and stable.

But some analysts believe piling levies on consumer bills and promoting greener forms of energy will help push up prices for decades to come.

Proponents of renewable energy blame the energy crisis on the high price of gas, as higher costs are passed on to consumers and drive prices up.

Some calling for less ambitious net zero targets claim that government restrictions to or limitations on exploration and production are driving higher gas prices, as well as increasing reliance on imports from countries such as Qatar and Russia, before the introduction of sanctions following Vladimir Putin’s invasion of Ukraine.

Despite the move towards renewables and the purported low cost of renewables, wind and solar provided less than a third of electricity used in the UK last year, with electricity representing around a fifth of total energy use.

Scientists have yet to find an economically viable way of storing energy generated from renewables. When there is a lack of wind and sun, the National Grid relies on fossil fuels, including coal-fired power stations, for back-up to avoid blackouts.

The renewables industry is heavily subsidised, and wind farm operators receive “constraint payments” to switch off turbines during windy periods when the Grid is at risk of becoming overloaded.

The UK’s nuclear power capacity has been allowed to run down. In 2010, former deputy prime minister Nick Clegg argued that building more nuclear power plants was not a good option because they would not come on stream “until about 2021 or 2022”.

The UK government has agreed on just one major nuclear project that has entered construction in the past two decades – Hinkley Point C, in Somerset.

But whatever the arguments over the nation's energy mix, there is no doubt that household finances here and across in Europe are under severe strain from inflation, high energy costs and rising interest rates.

Households also face having to pay thousands of pounds to switch from gas boilers to heat pumps, while electric cars still cost significantly more than internal combustion engine (ICE) equivalents and have low resale value.

Air travel is set to become more expensive as climate compliance laws become stricter over the next few years. And the airline industry will have to transform itself radically in order to meet Destination 2050, the European sector’s plan to reduce emissions.

Heavy industry and agriculture will also have to decarbonise over the next 27 years.

As the costs continue to mount, governments will inevitably face resentment towards policies people may feel they did not vote for but which are starting to cause them hardship.

In Europe, there is growing evidence of a backlash against climate legislation. Germany and Italy secured concessions from the EU earlier this year over the sale of “e-fuels” technology beyond 2035 amid concerns over a complete eurozone ICE ban.

French President Emmanuel Macron, perhaps mindful of the 2018 gilets jaunes protests sparked by high fuel prices, recently called for a “pause” on more climate regulations. European Commission President Ursula von der Leyen conceded the need to consider the “absorptive capacity” of EU states faced with increasing climate regulations.

Finland, Sweden and Italy all have parties in government opposed to green climate policies.

And in the Netherlands, farmers are celebrating after Mark Rutte, the longest-serving prime minister in the country’s history, announced he will not stand in the next general election following the collapse of his government. The Farmers-Citizen Movement (BBB) vociferously opposed Rutte’s plans for compulsory farm buyouts to reduce nitrogen emissions and hit EU climate targets.

The extent of growing divisions in Europe over environmental policies was laid bare last week when, following a bitter debate, MEPs voted only narrowly in favour of a key element of the bloc’s Green Deal, aimed at the restoration of natural environments.

In the UK, many believe a public conversation is long overdue on whether net zero targets are realistic while fully viable alternatives to fossil fuels are not yet available.

At the heart of the debate are diametrically opposed views: between those who believe that without radical action to reduce carbon emissions we are destined for oblivion; and those who believe that human progress is the solution to problems posed by rising temperatures.

In the green corner is the Malthusian argument, advanced for many decades by environmentalists such as Paul Ehrlich and Bill McKibben, that there are simply too many people consuming too much of the Earth’s resources for the planet to sustain us.

Their case would seem to be bolstered by record temperatures reported this summer in places such as Phoenix, Rome, Sicily and Beijing. Following last week’s tight Green Deal vote, one European Commission official was quoted as saying: “The thing with climate change is that we’re constantly confronted with the consequences. Whatever the politics may be, reality has a way of ensuring the decisions get taken.”

In the other corner is the case, put forward by the likes of Danish economist Bjorn Lomborg, that humans are able to adapt and thrive with the aid of cheap and reliable energy. Wealthier countries are more likely to have widespread air conditioning, for example.

Despite the extreme heat we are seeing across much of the northern hemisphere, temperatures are not rising at the rate many had feared, at least not yet. A rise of less than 1.5ºC by the end of the century may still seem unlikely. We are at 1.1ºC, but 2ºC seems more within reach now than it did even just a couple of years ago.

Asked last week about the future of the Rosebank field, former Conservative environment minister and Climate Change Committee chairman Lord Deben said: “We should not be extending our oil production in the North Sea.”

Writing later in The Scotsman, he said “dark forces” were at work to slow the rate of decarbonisation. He wrote: “When we see what an increase in temperature of only 1.1ºC has done to our weather, the fact the world is on course for an increase of between two and three degrees is terrifying.”

The debate over net zero targets will intensify as the journey towards 2050 becomes more arduous. Governments will have to chart routes their citizens are willing to take. And the impending decision over Rosebank will be a hugely significant milestone on the UK’s journey.