Rosebank’s oil – when burned – will produce more than the combined annual CO2 emissions of all 28 low-income countries in the world. And a £755mn tax break for its developers.
Britain is set to make a loss of more than £755 million if the proposed new Rosebank oil field is approved, according to new analysis by climate group Uplift.
The analysis comes as Rosebank’s developer, Equinor, posted global profits of over £15 billion in the first six months of this year.
Campaigners have accused the government of selling Britain short over the huge subsidies to new North Sea developments that will do nothing to lower fuel bills or boost UK energy security. The majority of Rosebank’s reserves are likely to be exported, as is 80 per cent of all North Sea oil currently.
Rishi Sunak, the prime minister, has also recently come under pressure for his seeming lack of interest in tackling the climate crisis.
If approved, Rosebank’s oil – when burned – will produce more than the combined annual CO2 emissions of all 28 low-income countries in the world.
Tessa Khan, executive director of Uplift, said: “The chancellor Jeremy Hunt has just said he wants energy firms to use their bumper profits to help ordinary people cope with the cost of living.
"He should start by telling Equinor to stop Rosebank and instead put far more of its billions into building cheaper, clean renewable energy. This is what the public want, not more oil for export.
“Instead this government seems determined to sell Britain short, while boosting the profits of obscenely wealthy foreign oil companies.
"Approving Rosebank will actually make Norway’s citizens richer as Equinor – which made £62 billion last year – is majority owned by the Norwegian government.
She added: “To knowingly green light a project that delivers a loss to the treasury, seems incompetent. To do so while watching the climate crisis worsen thanks to the continued burning of fossil fuels is even more baffling.
"When we know that Rosebank’s oil won’t lower energy bills for consumers one bit, at a time when millions in this country are living in fuel poverty, you’ve got to ask, who is this government batting for?"
A decision on whether or not to approve Rosebank has been delayed, reportedly because of concerns from the regulators over the field’s compatibility with the UK’s climate commitments.
The potential loss to the Exchequer comes from the gap between the generous tax breaks being handed to Rosebank’s developers to kick start the project and the predicted tax payments from the profits of selling Rosebank’s oil reserves.
An investment allowance for new oil and gas developments, introduced by Sunak last year, will see Rosebank’s developers, including Norwegian state backed oil firm Equinor, receive total tax relief of £3.75 billion to develop Rosebank.
However, most of the field’s oil will be produced – and taxed – after the current 75 per cent windfall tax period has elapsed, at the previous rate of 40 per cent. Equinor has described the tax breaks as “helpful”, while the Institute for Fiscal Studies deemed it a “huge tax subsidy”.
While the government share of Rosebank will be negative – calculations by Rystad Energy also show that the field has a negative net present value for the UK government of -116 per cent – Rosebank will be highly profitable for the developers, with the Net Present Value calculated at £1.4 billion.
The UK Treasury stands to lose even more than the current estimate of £755 million if oil prices fall in the longer term, while the development would remain profitable for investors, according to additional analysis by WWF Norway.
Brendan Montague is editor of The Ecologist. This article is based on a press release from Uplift.