Britain on Wednesday approved the Jackdaw North Sea gasfield, ending years of legal and political wrangling that had pitted the Labour government's climate commitments against its push to bolster energy security.
Energy Minister Miatta Fahnbulleh said the project will start to supply gas to British homes and businesses from as early as the end of this month.
At the same time, she said a new Energy Wealth Fund would be established by the government with a £2 billion downpayment to reinvest oil and gas revenue into the climate transition.
Ms Fahnbulleh said Jackdaw was expected to increase domestic gas production by about 6 per cent at its peak and support the country's gas supply over its lifespan of up to 11 years, boosting energy security and protecting hundreds of jobs.
“At a time when people are really struggling, it's right that we look in a responsible way at maximising the existing energy reserves we have in Britain that could help,” said Prime Minister Andy Burnham.
“Even on our ambitious climate path, we’ll still require oil and gas as part of our energy needs for decades to come. That’s why we’re taking a pragmatic approach to the North Sea.”
Adura, the joint venture between energy giants Shell and Norway's Equinor that operates the project, has said Jackdaw will produce gas equivalent to up to 40,000 barrels of oil a day at peak output.
Environmental groups could mount a fresh legal challenge to the approval.
The issue has become a rallying point for climate activists, who say approving new fossil fuel projects undermines Labour's green pledges and ignores warnings from a summer of record-breaking heat across Europe.
The fate of Jackdaw had been in limbo for years and has forced Mr Burnham to take sides in a battle over the future of the North Sea while risking alienating voters.
The relatively small gas project has become a symbol of a bitter political fight over Britain’s energy transition. Approving Jackdaw risked a backlash from some on the left of the Labour Party and the Greens. Rejecting drilling in the field would have fuelled criticism from Reform UK, the Conservatives and the oil industry that climate policies are costing Britain jobs and investment.
The previous Conservative government approved the project in 2022, but climate activists challenged the decision in court alongside approval for the Rosebank oil and gasfield. A 2025 ruling barred operators from extracting oil or gas until they received fresh government consent that takes into account emissions from the burning of the fields' hydrocarbons.
The decision has taken on added significance for Mr Burnham since he took office in July.
In its 2024 general election manifesto, the Labour Party pledged to block new drilling in the North Sea, but officials say decisions on Jackdaw and Rosebank – the largest undeveloped oil and gas reservoir in British waters – fall outside that commitment because they involve licences approved years ago under the previous government.
“Jackdaw has been made into this big issue because it’s become a symbol of the wider North Sea debate,” said Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, an independent non-profit. “But even if the government approves it and Rosebank, the North Sea debate isn’t going to get any less flammable.”
Even once drilling gets under way, few believe the UK could ever compete again with major oil and gas regions. Its stretch of the North Sea is 90 per cent depleted for commercial resources, according to consultant Wood Mackenzie. The international companies that pioneered drilling there 60 years ago have retreated.