The Tony Blair Institute for Global Change has called on the UK Labour Government to scrap its ban on new North Sea exploration licences and bring the Energy Profits Levy to an orderly end.
The former Labour prime minister warned that current energy policy is driving up bills, deterring investment and accelerating the decline of a strategic national asset.
In a report published today entitled Why Britain Needs an Energy-Strategy Reset, the institute chaired by Blair argues the UK’s push to decarbonise the electricity system by 2030 is “leading the country in the wrong direction”.
It urges a shift from the government’s “Clean Power 2030” mission to a “Cheaper Power 2030” approach that prioritises affordability, security and economic growth while still pursuing net zero by 2050.
“Clean Power 2030 has become an exercise in measuring the wrong achievements: It counts capacity, contracts and milestones but neglects affordability, system performance and political durability,” the report states.
“In a country responsible for less than one per cent of global emissions, that is not climate leadership – it is climate theatre.”
The report’s most eye-catching recommendations concern the North Sea.
It states that 7.5 billion barrels of oil and gas remain untapped, with a potential economic value of £165 billion (€189.5 billion).
Production in the basin has already fallen 68 per cent since its 1999 peak and the UK has been a net energy importer since 2004.
The institute warns that the combination of the licensing ban and the windfall tax is hastening this decline beyond what geology alone would dictate.
The windfall tax, formally known as the Energy Profits Levy, is an additional tax introduced in 2022 under the then-Conservative government on the profits of oil and gas companies operating in the UK North Sea after energy prices surged.
It was designed to capture unusually high profits and help fund support for households facing rising energy bills. While temporary in nature, its lifespan is being continued.
“A managed-decline strategy requires continued exploration to sustain economically viable production, protect supply chains and slow – rather than accelerate – the loss of domestic capacity,” the report says.
It adds that domestic production emits less greenhouse gases than imported liquefied natural gas and provides vital fiscal revenue and jobs during the transition.
The Energy Profits Levy, introduced in 2022 and repeatedly expanded, has pushed the effective tax rate on North Sea profits to 78 per cent — among the highest in the world.
The institute describes the repeated changes as having “materially increased policy risk, raised hurdle rates and deterred long-term investment in mature assets”.
It recommends replacing the levy with a stable, predictable fiscal regime that allows full investment deductibility, drawing on Norway’s model of long-term certainty even at high headline rates.
The report was written by Tone Langengen, senior policy adviser for climate and energy at the institute.
It argues that oil and gas will remain part of the UK energy mix for decades, even in the most ambitious net-zero scenarios. It further says that treating domestic production as a “moral signal rather than a strategic asset” is a mistake.
The Labour Government’s ban on new oil and gas exploration licences was a manifesto commitment and was formalised in the North Sea Future Plan published on November 26, 2025.
The plan confirmed that no licences would be issued for exploration of new fields, onshore or offshore, while allowing existing fields to produce for their full lifespan and permitting limited “tie-back” developments linked to current infrastructure.
Energy secretary Ed Miliband has described the policy as the first major economy to align with 1.5°C climate science by ending new fossil fuel licensing.
Sources close to Miliband dismissed the Tony Blair Institute’s proposals as “nonsense”, insisting they would not reduce household electricity bills.
The UK Government continues to defend its clean power targets and net-zero trajectory.
A government spokesman told The Telegraph yesterday: “Our clean power mission is the only way to bring down bills for good.
“The alternatives leave Britain dependent on petrostates and dictators whose control of fossil fuel markets helped drive the cost of living crisis, and are not in the interest of the British people.
“The route to energy sovereignty, lower bills and thousands of good jobs in our communities is becoming a clean energy superpower,” the spokesman said.
The report has nevertheless sparked renewed debate.
It builds on earlier institute analysis that criticised the speed and cost of the 2030 decarbonisation push. It argued that the UK’s electricity prices, which are among the highest in the developed world, are stalling electrification, deterring AI investment and eroding public consent for climate policy.
The institute insists its recommendations do not dilute the 2050 net-zero goal but seek to deliver it in a way that supports growth and maintains political support.
It warns that a strategy that “raises electricity prices hollows out industry and undermines competitiveness will not endure – and it will not be emulated” by other countries.
The full report is available on the Tony Blair Institute website.
