A cabinet split has emerged over whether to approve drilling at the Rosebank oilfield, with the chancellor, John Healey, in favour of the controversial North Sea project.
The energy secretary, Miatta Fahnbulleh, is ultimately in charge of the decision and the Guardian reported last week that she was leaning towards rejecting it after granting permission for the smaller Jackdaw gasfield.
It is understood, however, that Healey backs approving the licence, which is on hold over concerns about the project’s environmental impact.
The chancellor hinted at his support last week when he told ITV he expected oil and gas revenues to contribute to a new energy wealth fund, suggesting he was anticipating income from Rosebank. The prime minister would be expected to make the final call if there is conflict on the decision.
No 10 declined to comment on Sunday after the Mail on Sunday reported that both Andy Burnham and Healey had agreed to try to push the project through, saying it was a matter for the energy secretary.
Fahnbulleh is responsible, but the views of Burnham and Healey will hold weight in the choice over whether or not to go ahead.
She told the Guardian that the rationale behind Jackdaw did not apply to Rosebank, saying the UK would rely on gas as it made the transition to net zero and that it would be better to take it from relatively low-carbon sources in the North Sea than importing it.
“One is a gasfield that caters for the domestic market, while the other is an oilfield that is mainly for export,” she said. “It is right that we judge each application in its own right, and it is absolutely critical that the decision is consistent with our climate obligations, our carbon budgets and the end destination we need to get to with the energy transition.”
If the Rosebank field is rejected, it would be a blow for the North Sea energy industry and a major victory for climate campaigners. A final decision is expected before the end of the year.
Labour MPs said on Wednesday that there would be a major pushback in the party if Rosebank was approved, though most are prepared to accept the arguments that Jackdaw was a necessary part of the transition to net zero.
MPs are understood to have discussed ways of forcing or encouraging a parliamentary vote on Rosebank should it be approved as a way of expressing dissent.
Officials say Fahnbulleh has not yet made her decision. Rosebank would produce emissions about seven times greater than Jackdaw, and Fahnbulleh is understood to believe that it would do less for UK energy security, given that most of the oil would be exported.
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A spokesperson for the Department for Energy Security and Net Zero said: “We do not comment on speculation. The North Sea remains a vital national asset, and oil and gas will continue to play an important role in our energy system for decades to come – alongside transitioning to clean power to protect jobs and tackle the climate crisis.
“Any decision will take into account all relevant evidence, including environmental assessments and public representations received during the consultation process.”
Fahnbulleh has promised that future revenues from the North Sea will be spent on green energy projects through an energy wealth fund. She said last week that the fund would be given £2bn in the budget.
“When we have tax revenues that are coming from the oil and gas industry, it is right that we invest that in the transition we need to make in energy,” she said, adding that the money would be spent on renewables, nuclear and other clean energy schemes.
She could not, however, say exactly which tax revenues would be given to the fund, or how much that might generate. “The chancellor will make those details clear in the budget,” she said.
