The UK government will not fight a legal challenge against the decision to grant consent to drill in untapped oil fields off Shetland and Aberdeen.

Greenpeace and Uplift jointly brought judicial reviews in an attempt to stop the development of the Rosebank and Jackdaw fields.

It comes after the Supreme Court ruled that a UK council should have considered the climate impact of new oil wells – setting a precedent for all regulators.

The litigation does not mean the licences for Jackdaw and Rosebank have been withdrawn.

The UK government is planning to consult later this year on its manifesto position not to issue new oil and gas licences to explore new fields.

Energy Minister Michael Shanks said: “We will consult at pace on new guidance that takes into account the Supreme Court’s ruling on Environmental Impact Assessments, to enable the industry to plan, secure jobs, and invest in our economy.”

The government pledged that oil and gas would play an important role in the economy “for decades to come” as the UK transitions to clean energy.

Environmental groups welcomed the government’s decision.

Greenpeace said the licences should not have been granted without being “properly assessed” for their climate impact.

Mel Evans, Greenpeace UK climate team leader, said: “Following the Supreme Court ruling earlier this year, conceding these cases is the logical course of action.

“The two new fields combined would generate a vast amount of emissions while doing nothing to lower energy bills.

“The only real winners from giving them the greenlight would be multi-billion-pound oil giants.”

The Supreme Court ruled in June that the way fossil fuels are used – known as Scope 3 emissions – have to be considered when environmental impact assessments are being carried out.

The decision could still be challenged by oil companies.

Industry body Offshore Energies UK urged the government to conduct its consultation “at pace”, warning that uncertainty “further impacts investor confidence”.

A spokesperson added: “We remain absolutely committed to operations in the North Sea that meet the UK’s net zero ambitions and support energy security.”

Rosebank off Shetland, owned by Norwegian energy giant Equinor and British firm Ithaca Energy, is the UK’s largest untapped oil field. Consent for drilling there was granted in September last year.

Scotland’s then first minister Humza Yousaf said he was “disappointed” at the decision and accused Downing Street of “climate denial”.

Shell’s proposals to develop Jackdaw, east of Aberdeen, were approved in 2022 after initially being rejected on environmental grounds.

A spokesperson for the energy giant said it would carefully consider the implications of the government’s announcement.

They added: “We believe the Jackdaw field remains an important development for the UK, providing fuel to heat 1.4 million homes and supporting energy security, as other older gas fields reach the end of production.”

In its draft energy strategy, published last year, the Scottish government confirmed a “presumption against” any new oil and gas exploration.

But First Minister John Swinney said in June that North Sea oil and gas would still be needed “for a period of time” to help the country meet its net-zero emissions target by 2045.

First things first. This does not mean the end for either the Jackdaw or Rosebank fields. But it is another significant victory for environmental groups trying to stop them.

They key to this is whether the emissions from consuming the oil and gas being produced is considered in environmental impact assessments.

Historically those Scope 3 emissions are disregarded, but the Supreme Court changed that.

The judicial review is against assessments for previously approved consents at two of the most prominent future North Sea developments.

If the court rules in favour of the green lobby, the operators will have to resubmit their environmental impact assessments which will have to be considered afresh.

The regulators could then stick to their guns and approve it again. But what this creates is more delay and significant additional costs which environmentalists hope will make fossil fuels less appealing to investors.