Climate and Energy
2026 has seen the UK experience a sustained increase in the cost of energy, driven by oil and gas supply constraints because of the US-Iran conflict. At the same time, the UK has experienced a dry spring followed by rolling summer heatwaves with little rain, resulting in drought conditions across much of the country.
Energy costs are high, affecting households and businesses. People are experiencing the day-to-day health and lifestyle impacts of sustained heatwave conditions, with England “on track to record its highest number of heat-related deaths this summer, with an estimated 2,877 people dying in the May and June heatwaves.” Farmers are forecasting poor harvests as a result of the weather, with food costs likely to increase as a result.
At the heart of these fundamental societal challenges lie questions about energy and climate change.
Affordable and reliable energy – energy security – is crucial for economic growth and for ensuring households can keep up with the cost of living. A stable climate and functioning ecosystems remain crucial for the economy, as well as for societal resilience, underpinning critical resources like food production, water security, and biodiversity.
However, policies which aim to guarantee energy security by protecting or promoting the use of fossil fuels often clash with those geared towards protecting the climate.
Despite this tension, successive British governments have sought to both maintain the UK’s energy security and take action to mitigate climate change, arguing that these dual goals can be complementary.
The UK has had emissions reduction legislation in place since 2008, with a 2050 net zero target introduced in 2019. In 2026, Parliament approved a UK-wide emissions reduction target of 87 percent by 2042, compared with a 1990 baseline.
Successive UK governments have also taken action and dedicated substantial spending to stimulate the growth of renewable energy generation. This has included introducing the Feed-in-Tariffs (FiT) scheme in 2010, the Contracts for Difference (CfD) scheme in 2014, and promising substantial state investment in nuclear energy and home decarbonisation measures. Following its general election victory in 2024, the Labour Government introduced a Clean Power 2030 mission, which stated that by 2030 the ambition would be for “clean sources [to] produce at least 95 percent of Great Britain’s generation.”
The core argument for these policies has been that an increase in domestic renewable energy generation will reduce fossil fuel use, reducing the UK’s reliance on cost-volatile gas imports. By moving away from fossil fuels and supporting domestic renewable generation, reduced price volatility and import reliance would then both improve the UK’s energy security and reduce the UK’s emissions.
Due to these policies, among others, renewables have started to produce a greater share of electricity in the UK, with the National Energy System Operator (NESO) finding that in 2025, renewables produced 44 percent of British electricity “up from just 3 [percent] in the year 2000.” In 2025, wind was the greatest source of electricity, accounting for 29.7 percent of all electricity generated, behind natural gas at 26.8 percent.
However, while renewables have grown as part of the electricity mix, the UK has remained reliant on fossil fuels for a substantial part of its wider energy mix: primarily natural gas for household and industrial use, and liquid fuels for transport.
Coal, once dominant in the UK’s energy mix, now accounts for no electricity generation, and is a negligible part of the energy mix.
The North Sea
Both the UK Government and the Climate Change Committee (CCC) have acknowledged that the UK will require fossil fuels as part of its energy mix through to 2050 – the target date for net zero – and potentially beyond (with appropriate abatements).
At the same time, the UK has a legal obligation to cut emissions, including by reducing reliance on unabated fossil fuels.
This has resulted in a growing political challenge around the future of oil and gas extraction from the UK Continental Shelf, and particularly the North Sea, which contains the majority of the UK’s remaining oil and gas reserves.
On the one hand, the Government wants to see economic growth, investment, and the presence of a skilled workforce in the North Sea – all of which the industry argues can be provided by allowing for the capital-intensive oil and gas industry to continue exploring for and extracting fossil fuels.
On the other hand, allowing for further extraction and use of emissions-producing fossil fuels would have an adverse impact on the climate, and could undermine the UK’s wider net zero goals.
Compounding this basic economic vs climate debate, it has been argued that remaining North Sea reserves are too small to make a difference to overall UK energy security. Known reserves have declined significantly, and even with licensing up to 2024, production was in decline. The UK has been a net importer of energy since the early 2000’s, which ended a period of low-imports or energy exports across the 1980’s and 90’s, when North Sea oil and gas extraction was at its peak.
Consequently, critics of further North Sea oil and gas extraction – including former Energy Secretary Ed Miliband – argue that it would not contribute meaningfully to improving energy security or reducing consumer energy bills. Miliband said that “new licences will make no material difference to capacity and therefore security of supply. Nor will new drilling take a single penny off bills.”
2024 – 2026 Policy
In its 2024 general election manifesto, the Labour Party said it would “not issue new licences to explore new fields because they will not take a penny off bills, cannot make us energy secure, and will only accelerate the worsening climate crisis.”
Since the 2024 general election victory, the Labour Government has stood by this manifesto pledge.
Energy ministers have continually reiterated the negative implications of reliance on the “fossil fuel casino” for electricity generation, arguing that the Clean Power 2030 mission is the best way to reduce the cost of electricity, and therefore bills for households and businesses.
This has come alongside concerted action to support the electrification of the economy and to reduce wider reliance on fossil fuels – for example through the Warm Homes Plan.
Despite this, energy bills have continued to rise, driven largely by fossil fuel crises spiking the price of oil and gas, alongside the UK’s marginal cost pricing mechanism, which leaves gas prices setting the overall price of electricity most of the time. The UK continues to import much of its oil and gas as well.
In this context, the future of the North Sea has been a flashpoint for arguments about the UK’s energy policy.
The Labour Party in 2024 argued that betting on renewable energy would secure the future of the declining North Sea workforce, bring down bills, and improve energy security.
However, the promised “just transition” has not fully materialised.
The North Sea oil and gas workforce has declined – by approximately 75,000, from 190,700 in 2016 to 115,000 in 2024 and by around 5,000 between 2023 and 2024 – and oil and gas companies are reducing headcounts and forecasting further reductions in the immediate term, citing “reduction in project pipelines, impact of the EPL [Energy Profits Levy] on investment certainty and cost pressures.”
Jobs in clean energy industries have not grown comparably, with the Scottish Affairs Committee hearing that “the scale-up of clean energy projects is taking longer than expected and progressing slower than the decline of the oil and gas sector… [which] has a knock-on effect on jobs.”
Energy bills have not come down, despite the increase in planned and functioning renewable energy generation.
At the same time, the Government is struggling to generate the economic growth it promised; it is working against a difficult fiscal backdrop that would be substantially improved by reduced energy bills and increased tax revenue from industry; and, North Sea policy is becoming increasingly politically high profile, with historically Labour-allied unions representing the North Sea workforce expressing frustration at the existing licensing policy.
What Will Andy Burnham Do?
The short answer is that we do not know.
However, some form of change in policy appears, at the very least, to be on the table.
Burnham’s rapid progression to leader of the Labour Party and Prime Minister within a few short months has left lots of open questions.
Initially, Burnham appeared to contradict his historically consistent support for fossil fuel phase-out. When asked about the North Sea during the Makerfield by-election campaign, he said he had “something of an open mind” on permitting new extraction.
However, speaking in July 2026 as presumptive leader of the Labour Party, Burnham then stated that as PM, he would “stick by the [2024] manifesto and the promises that it made”, interpreted to mean he would not alter the policy on oil and gas licensing.
This aligned with the Starmer Government, which had reinforced its commitment to prohibit new licensing in the 2026 King’s Speech. In trailing the Energy Independence Bill, the Government stated that it would “show climate leadership by meeting the manifesto commitment not to issue new licences to explore new [oil and gas] fields.”
However, subsequent comments from Burnham ally and Deputy Leader of the Labour Party, Lucy Powell, then opened up further speculation. In a BBC interview, she stated that while Burnham stood by the 2024 manifesto:
“North Sea gas and oil is an important part of that transition [to clean power], an important part of the mix, and I think what Andy’s talking about is taking a more pragmatic approach and working with the industry to make sure it can contribute to that transition… and to the mix that is needed over the long term.”
She said there would not be a change in policy, but “a change in emphasis”, and that “we’ve been clear… we want to see North Sea gas and oil continue to thrive, continue to contribute to that energy mix.”
The suggestion of a change in emphasis did little to dampen speculation on policy change, and on 19 July, anticipating Burnham’s appointment as PM, US President Trump claimed “the new Prime Minister, Andy Burnham, has stated that he will be opening up, all the way, the invaluable North Sea Oil!”
On 20 July 2026, following his confirmation as Prime Minister, Burnham spoke to US President Donald Trump. While the UK Government readout made no mention of comments on energy policy, Trump subsequently posted to Truth Social that “we discussed North Sea Oil”, suggesting Burnham had not confirmed Trump’s previous statement.
Burnham then clarified to the BBC that he had told Trump he would take a “pragmatic approach” to the issue of North Sea oil and gas.
This mirrors language used by the newly appointed Energy Secretary, Miatta Fahnbulleh, who also said that she would take a pragmatic approach to the North Sea when speaking to the Aberdeen and Grampian Chamber of Commerce.
What Does Pragmatism Look Like?
Taking a “pragmatic” approach introduces ambiguity for the sector.
The vague and subjective nature of pragmatism, and the unwillingness from either Burnham or Fahnbulleh to categorically rule out, or rule in, a change of direction, suggests policy change is being actively considered.
In late July, Burnham spoke further about his intentions for the North Sea. He said “there is a resource there. When people are struggling, we can’t ignore that.”
However, granting new licenses would explicitly break the 2024 manifesto. To get around this challenge, if Burnham were to change the Government’s current stance – or make a change in emphasis – he could take a number of courses.
One of the most widely reported options is that he could seek to grant consent for extraction from the Jackdaw and Rosebank fields. These oil and gas fields had been approved by the Conservative Government in 2022 and 2023 respectively, before a 2025 court decision found they had been approved unlawfully, as the Government had not fully considered the climate impact of burning fossil fuels from the sites.
Following this decision, the publication of new plans for the sites by the would-be developers, and public consultation, a new ministerial decision on whether to grant consent for the sites is necessary and imminent.
The technical distinction between licensing for new sites and consenting for already licensed sites would allow Burnham to grant consent for Jackdaw and Rosebank without breaching the 2024 manifesto commitment.
The distinction between licensing and consenting is one that has been acknowledged by the Labour Government, with former energy minister Lord Hunt of King’s Heath stating in January 2025 that:
“we need to draw a distinction between licensing and consenting. Licensing gives rights to search and bore for petroleum in the UK continental shelf… Blocks of the North Sea are allocated to operators in that way. The operators can then explore for oil and gas under the licence. At that point, there is often a five-year gap between licensing and consenting.”
With the consultations on both Jackdaw and Rosebank closing in August 2026, a decision could be expected on these sites as early as September.
Burnham could also support further extraction without new licensing by altering the current approach to tiebacks.
As reported by the Financial Times, Burnham’s Government is expected to emphasise its support for greater use of “tiebacks”, which connect offshore oil and gas fields to existing infrastructure via pipelines, allowing further drilling and extraction next to existing fields.
This reporting was reinforced when Lucy Powell stated “we’ve been clear with tiebacks and other measures that we want to see North Sea gas and oil continue to thrive.”
The Labour Government has already endorsed tiebacks. In the North Sea Future Plan, published in November 2025 under Energy Secretary Ed Miliband, the Government committed to introduce Transitional Energy Certificates (TECs). The purpose of TEC’s is to “ensure existing fields can be managed for their full lifespan, whilst ensuring there is no new exploration on currently-unlicensed areas for oil and gas in the basin.” Essentially, this would allow already explored seabed, adjacent to licensed areas, to be exploited, so long as a tieback is used to connect the new area to an existing platform.
However, as reported by the FT, “industry leaders feel a different administration could allow more flexibility on tiebacks”, potentially giving further allowance for existing operators to maximise exploration or extraction without granting new licenses.
Finally, and the least likely option in relation to policy change for the oil and gas industry – especially given the Government’s tight fiscal conditions and the reported desire for room for extra spending – would be to accede to the oil and gas sector’s long-time calls to repeal or reform the Energy Profits Levy (EPL) – often referred to as the “windfall tax” – which is due to expire in 2030.
Conclusion
Burnham and newly inaugurated Energy Secretary Miatta Fahnbulleh face tough choices and trade offs on the Government’s energy policy.
They have promised a relentless focus on the cost of living, and have taken action to cut energy bills through a temporary elimination of VAT on energy bills.
However, the Government has previously promised policy stability, describing “clarity and certainty” in the energy sector as key to supporting continued investment.
Citizens are also seeing the ever-growing impacts of climate change in their day-to-day lives, highlighting the impacts of fossil fuel extraction and use on the planet.
Caught between high bills, wider economic challenges, industry and workforce pressure, and the increasingly clear impacts of climate change, any change on North Sea policy brings risk.
If policy change is seen to be too little or merely performative, it risks further alienating the industry, unions, and workforce, while also potentially missing the opportunity for economic gains.
If policy change is perceived to be too generous to oil and gas companies, the Government could be seen to weaken its climate credibility at a time of visible crisis, as well as being perceived to be on the side of big business rather than consumers, potentially undermining voter support.
Energy and climate policy continues to require a delicate balance.
Now he has indicated the possibility of direction change, it remains to be seen how Burnham will navigate the tough choices ahead.