By City A.M – Jun 07, 2023, 4:00 PM CDT
- Wood Mackenzie, a top energy consultancy, warns that the prospect of a Labour government, which has vowed to ban new North Sea oil and gas projects, is leading energy companies to reconsider their investments in the UK.
- The report indicates that a Labour government could send a signal to investors that the UK is not a secure destination for new energy projects, deterring future investment in renewable energy developments.
- Despite the potential risks to investments, polls suggest that Labour’s plan to ban new oil and gas projects is popular among Brits, with 40% support, compared to 32% opposed.
Some $30bn (£24.2bn) of investment in new UK energy projects is at risk if Labour wins the next election, a top energy consultancy has warned.
Consultancy giant Wood Mackenzie believed the growing expectation of a Labour government – which has pledged to ban new North Sea oil and gas developments – was already causing energy firms to pivot from the UK.
The Conservative government’s windfall tax has already angered many oil and gas firms, with several currently reconsidering their pipeline of UK projects.
But it added that a Labour government also risks sending a message to investors that the UK is not secure for new energy projects more broadly, deterring future investment in renewable energy developments amid an increasingly poor financial climate.
“The prospect of a new Labour government – which plans to introduce a ‘proper windfall tax’ – is a major headwind to [final investment decisions],” the consultancy said.
It feared that “fiscal and political uncertainty is causing investor paralysis and could prematurely shut down the industry”.
Wood Mackenzie argues that demand will remain robust, even if domestic supplies are slashed
“While some robust projects will still go ahead, investment – already at historical lows – could fall below $1bn per year by 2027.”
Labour was contacted for comment.
Despite the concerns, polling suggests that Labour’s plan to ban new oil and gas projects gaining 40 per cent support among Brits, with only 32 per cent opposed.
You Gov polling shows Labour’s policy is popular with voters (Source:You Gov)
Meanwhile, Just Stop Oil have published an open letter calling for Keir Starmer to pledge his resignation if any new oil and gas project is signed off and if the Rosebank field’s potential development isn’t cancelled.
It has given Starmer a six month deadline from winning the next election – which is expected late next year.
By CityAM
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