UK Rosebank approval could proceed without breaching emissions targets

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UK Rosebank approval and emissions

Highlights

UK ministers argue Rosebank oil project can proceed without breaching domestic emissions targets since most oil emissions will occur abroad.
Treasury and Chancellor John Healey support Rosebank's approval, factoring in up to 500 million pounds per year in expected tax revenues.
Energy Secretary Miatta Fahnbulleh remains undecided amid cabinet divisions, court rulings, and warnings from campaigners and researchers about undermining climate commitments.

Cabinet split over climate and fiscal case

As first reported by The Guardian, government insiders say Rosebank can be approved without breaching the UK’s emissions targets because the bulk of the oil is expected to be burned abroad, placing those emissions outside Britain’s carbon budgets.

The argument strengthens the hand of ministers who want the project to go ahead, even as Energy Secretary Miatta Fahnbulleh is understood to be leaning against approval. Her position puts her at odds with cabinet colleagues, including Chancellor John Healey, while Treasury officials are said to have already factored in billions of pounds in expected tax receipts from the project.

Campaigners are likely to oppose that reasoning, arguing that shifting emissions accounting between countries does not reduce the climate impact. Greenpeace and Friends of the Earth wrote to the prime minister on Tuesday urging him to consider the combined effect of major decisions on North Sea drilling, Heathrow expansion and heat pump support rather than treating each separately.

Rosebank returns to ministers after a 2024 court ruling found the previous environmental consent was granted incorrectly because it failed to consider not only drilling emissions but also those from burning the extracted oil. Experts estimate the field could emit an additional 1 million tonnes of carbon dioxide by 2042, against an overall limit of 90 million tonnes.

North Sea decision carries wider policy stakes

Fahnbulleh is required to consider the UK’s commitments under the Paris agreement to help limit global warming to 1.5C, but supporters of Rosebank argue the direct legal case against the project is narrow. One government source says the main climate objection concerns political leadership rather than domestic emissions totals, while climate researcher Greg Muttitt of University College London says approval would still be inconsistent with the broader goal of staying within safe carbon budgets.

The government’s recent approval of the Jackdaw gasfield has sharpened that debate. In that decision, Fahnbulleh notes Jackdaw would account for about 0.01% of global greenhouse gas emissions created by the oil and gas industry in 2035, a comparison some experts believe could support Rosebank as well, though others say any new oil and gas development undermines net zero aims.

Downing Street insists the final decision rests with Fahnbulleh, but ministers backing the project read the prime minister’s call for a pragmatic approach to oil and gas as support for approval. Allies of the energy secretary say she still questions whether potential tax revenues, jobs and investment outweigh the climate damage, even if that damage may not by itself breach legal limits. People close to the chancellor, however, say the Treasury wants the project approved, with Adura, the field’s operator, estimating tax revenues could reach 500 million pounds a year by the end of this parliament.

In our earlier report on rising sovereign borrowing risks in a higher-rate environment, we explained how prolonged geopolitical strain and elevated public spending can erode fiscal headroom as refinancing costs stay high. We noted that energy and food price shocks linked to major conflicts can keep inflation elevated and worsen debt-servicing pressures, especially in emerging and frontier markets with narrower revenue bases.

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