The UK government announced the establishment of a new Energy Wealth Fund, focused on investing in renewable and low carbon energy projects, and funded from tax revenues from North Sea oil and gas.

The new fund is being launched with an initial £2 billion, with future revenues from the North Sea oil and gas to be added into the fund over time.

The new fund was announced alongside the government’s approval of gas production from the long-delayed Jackdaw North Sea ​gas field, which is anticipated to increase the UK’s domestic gas production by around 6% at its peak.

While the UK has committed not to issue any new licenses to explore new oil and gas fields, the government has faced pressure over increasing energy prices and energy security concerns. The government said that the new approval was consistent with its commitment, which allows for the management of existing fields for their lifespan.

The government also said that the Jackdaw project will not prevent the UK from being able to meet its legally binding limits on carbon emissions and achieve net-zero by 2050.

In a statement announcing the new fund and Jackdaw approval, the government said:

“The heatwaves and extreme weather events experienced this year highlighted the importance of tackling the climate crisis. The government remains committed to the green transition and net zero – moving away from fossil fuels and towards renewable and nuclear energy. But even on the path to net zero, the UK will still require oil and gas as part of our energy needs for decades to come.”

Established within the National Wealth Fund, the new Energy Wealth Fund will invest in renewable and low carbon energy infrastructure across the UK, which the government said will help unlock growth and support projects that will drive the country’s transition to a low-carbon economy.

Chancellor of the Exchequer John Healey said:

“Since North Sea gas and oil were discovered decades ago, the benefit of our existing nation’s natural resources have not been turned into the long-term investment our country needs. Through our new Energy Wealth Fund, we will invest in the clean energy industries of the future, creating jobs, driving growth and strengthening Britain’s energy security.”