Photo by Kilian Murphy

The UK Government published its North Sea Future Plan on 26 November 2025, confirming an end to new exploration licences whilst introducing Transitional Energy Certificates allowing limited drilling adjacent to existing fields.

The plan implements government manifesto commitments to manage existing fields for their lifespan and not issue new licences to explore new fields. Energy Secretary Ed Miliband described the plan as “world-leading” with workers, unions, businesses and communities at its heart.

The new Transitional Energy Certificates will enable limited oil and gas production on or near existing fields, provided no new exploration is required and additional production links back to existing fields and infrastructure. The government stated this is necessary for a “managed, orderly and prosperous transition”. Developers will not be permitted to explore for oil and gas at these new sites.

Windfall tax maintained despite industry warnings

Chancellor Rachel Reeves maintained the Energy Profits Levy at 38%, resulting in a 78% headline tax rate for the oil and gas sector, until March 2030 despite industry calls for reform. A new Oil and Gas Price Mechanism will act as a permanent windfall tax from 2030, applying an additional 35% tax rate above price thresholds of $90 per barrel for oil and 90p per therm for gas.

Offshore Energies UK Chief Executive David Whitehouse stated the government “turned down £50 billion of investment for the UK and the chance to protect the jobs and industries that keep this country running”.

Whitehouse warned: “the future of North Sea energy depends on investment, which won’t come without urgent reform of the windfall tax. If the levy stays in place beyond 2026, projects will stall and jobs will vanish, no matter how pragmatic licensing policy becomes.”

Offshore Energies UK stated the industry put forward “a pragmatic plan: a reformed, permanent windfall tax in exchange for billions in UK investment, more tax paid, and jobs sustained. Government said no.”

The organisation warned that delaying reform until 2030 will accelerate the decline of North Sea production, with output forecast to fall by 40% by 2030 unless action is taken, resulting in the loss of 1,000 jobs per month, increased reliance on imports and a shrinking national tax base from domestic oil and gas production.

Reeves defended maintaining the levy, stating it “continues to bring in substantial revenues” and whilst energy prices “are still elevated compared to a few years ago” the levy “taxes the excess profits”. She added: “while large profits are still being earned from the exploration of oil and gas, it is right that we ask the energy companies to contribute a little bit more.”

Environmental groups welcome ban

Environmental groups welcomed the exploration ban. Greenpeace UK co-executive director Areeba Hamid stated Britain had “made history” with the announcement, calling it “a major milestone” and stating the UK is now “the world’s largest economy to call time on new fossil fuel exploration”.

Tessa Khan, Executive Director of campaign group Uplift, stated: “this Government is right to end the fiction of endless drilling. The North Sea is an ageing basin, with most of the gas already burned, and new licensing will do nothing to stem the decline in jobs.”

High Court upholds existing licences with conditions

Two days after the plan’s publication, the High Court ruled that 28 licences for oil and gas exploration granted by the previous Conservative government in May 2024 are lawful, despite Oceana UK’s challenge. The judge emphasised that damage to marine wildlife and habitats caused by these developments must be assessed at every step and with increasing rigour at later stages of the process.

Twenty-one of the 28 licences are inside marine protected areas, home to wildlife including harbour porpoise, grey seals and puffins. Oceana UK had argued the decision to grant the licences was unlawful because the government at the time ignored advice from its own nature advisors and failed to account for severe impacts on marine life from accidental oil spills.

The judge ruled the appropriate assessments were fit for purpose to inform the decision on exploration, given the process for approving oil and gas developments has multiple stages. He highlighted the judgement is not a reflection on whether full production should be allowed to go ahead and emphasised subsequent decisions will need to be taken with full account for environmental impacts.

Hugo Tagholm, Executive Director of Oceana UK, stated: “legally, the government’s decision to grant these licences stands, but morally, it will never be right. Allowing Big Oil to plunder and pollute our seas while the climate crisis trashes our future is not the right course of action and it never will be.”

Oceana UK described the exploration ban as “a downright win for our ocean and climate” but cautioned that expansion of existing fields would allow the oil industry to continue to pollute and damage UK seas for a relatively small amount of oil.

Oceana UK’s analysis showed there were more than two oil or chemical spills every day from existing oil and gas developments in UK waters last year, resulting in over 82,000kg of oil spilling into the sea. The 82 licences in the 33rd licensing round could result in the extraction of 600 million barrels of oil equivalent, according to government data.

Transition support and clean energy jobs

The government noted North Sea oil and gas production is in natural decline, with a 75% reduction between 1999 and 2024. Data from Offshore Energies UK shows over 70,000 jobs were lost in the North Sea oil and gas sector between 2016 and 2023.

The government will establish the North Sea Jobs Service, offering tailored support for the current workforce seeking opportunities in sectors including clean energy, advanced manufacturing and defence. Scotland will benefit from up to 60,000 clean energy jobs by 2030, a 40,000 increase from 2023.

The plan comes alongside £63 billion in government funding over this Parliament confirmed at the Spending Review, representing the most significant programme of government investment in homegrown clean energy in British history.