Treasury Has Counted £500m a Year on Rosebank Approval

The Treasury has already booked the tax revenue from the Rosebank oilfield — an estimated £500m a year by the end of this parliament, according to the field's operator Adura — and would face a budget shortfall if ministers reject the project. That figure, revealed by the Guardian, explains much of the cabinet pressure now bearing down on energy secretary Miatta Fahnbulleh as she weighs the biggest North Sea decision of the government's term.

Government insiders told the Guardian the giant field can be approved on a strict reading of Britain's climate obligations. The logic is simple, and contested: once the oil is exported, emissions from burning it no longer count against domestic targets. "Miatta has more latitude than you might think," one insider said.

Why the numbers work — on paper

The arithmetic hinges on accounting rules. Experts estimate Rosebank could emit an additional 1m tonnes of carbon dioxide by 2042, measured against an overall limit of 90m tonnes — roughly 1% of the headroom, spread over nearly two decades. Because most of the oil will be burned abroad, those combustion emissions land in other countries' carbon budgets, not Britain's.

Fahnbulleh only has to decide the field's fate because of a 2024 legal judgment. A judge ruled that the previous Conservative government had granted environmental consent incorrectly, by accounting for drilling emissions but not the emissions from burning the extracted oil.

She must also weigh Britain's Paris agreement commitment to hold global warming to 1.5C. Last week she approved the Jackdaw gasfield, noting it would account for about 0.01% of global greenhouse gas emissions from the oil and gas industry in 2035. Some experts believe Rosebank, too, could pass without meaningfully moving global temperatures. Others insist any new field undermines safe carbon budgets outright.

What is the political fight about?

Fahnbulleh was reported last week to be leaning toward rejection — a stance that has put her at odds with cabinet colleagues, including the chancellor, John Healey, who sources say wants the project approved. People close to the chancellor point to the tax take; supporters also cite jobs and investment.

Her allies frame her hesitation differently. The climate damage, while arguably within legal limits, is not outweighed by the benefits — that is the case her camp makes. She told the Guardian she approved Jackdaw on national energy security grounds, and the same logic does not necessarily apply to Rosebank, whose oil is largely destined for export.

Climate campaigners and some Labour backbenchers would read approval as a retreat from net zero, and may see shifting emissions from one country's ledger to another as a distinction without a difference. On Tuesday, Greenpeace and Friends of the Earth wrote to the prime minister urging him to assess the cumulative impact of three decisions together — North Sea drilling, Heathrow expansion and heat pump grants — rather than each in isolation.

"The climate case against was never the direct emissions," one source said. "Instead it was the leadership position … the power of a G7 producer seeking to put that into action is the climate point, not the direct emissions."

Who decides — and how the wind blows

Downing Street insiders insist the decision rests with Fahnbulleh, not with the prime minister. Yet supportive ministers have read his promise of a "pragmatic" approach to oil and gas as a signal he would back approval. His recent speech in Motherwell, North Lanarkshire, about "reindustrialisation" — language associated in Scotland with the North Sea — did little to dispel that reading. Scottish Labour MPs are believed to be overwhelmingly in favour.

Greg Muttitt, a climate researcher at University College London, said the government was wrong to approve Jackdaw and would be wrong on Rosebank, which he calculates would generate around seven times the emissions. But he conceded the legal point: "It is true that the UK government is not going to find itself in any international court if it approves Rosebank. Approving it is not inconsistent with what the UK has committed to firmly, because most of the oil will be exported."

A spokesperson for the Department for Energy Security and Net Zero said: "Any decision will be made through the quasi-judicial process, taking into account all relevant evidence, including environmental assessments and public representations received as part of the regulatory process."

The unsaid part is where the risk sits: the legal case for approval is strong, the political case is split, and the Treasury's £500m-a-year assumption means rejection now carries a fiscal price as well as a climate one.