UK Government To Allow North Sea Oil And Gas Exploration In Return For Carbon Emission Cuts

- Apr 06, 2021-

As part of the announcement, the UK Government vowed that high-skilled oil and gas workers and the supply chain will not be left behind in the transition to a low carbon future. It added that the deal will support workers, businesses, and the supply chain through the transition by harnessing existing capabilities, infrastructure and private investment potential to exploit new and emerging technologies such as hydrogen production, Carbon Capture Usage and Storage, offshore wind and decommissioning.

The deal will see the oil and gas industry work with government on delivering skills, innovation and new infrastructure required to decarbonise North Sea production. According to the government, the deal is expected to cut pollution by up to 60 million tonnes by 2030 including 15 million tonnes from oil and gas production on the UK Continental Shelf – the equivalent of annual emissions from 90% of the UK’s homes – while supporting up to 40,000 jobs across the supply chain.

Key commitments in the North Sea Transition Deal include:

- The sector setting early targets to reduce emissions by 10% by 2025 and 25% by 2027 and has committed to cut emissions by 50% by 2030.

- Joint government and oil and gas sector investment of up to £16 billion by 2030 to reduce carbon emissions. This includes up to £3 billion to replace fossil fuel-based power supplies on oil and gas platforms with renewable energy, up to £3 billion on Carbon Capture Usage and Storage, and up to £10 billion for hydrogen production.

- By 2030, the sector will voluntarily commit to ensuring that 50% of its offshore decommissioning and new energy technology projects will be provided by local businesses, helping to anchor jobs to the UK.

- The appointment of an Industry Supply Chain Champion who will support the coordination of local growth and job opportunities with other sectors, such as Carbon Capture Usage and Storage and offshore wind.

Before each future oil and gas licensing round, the government will introduce a new Climate Compatibility Checkpoint to ensure licences awarded are aligned with wider climate objectives, including net-zero emissions by 2050, and the UK’s diverse energy supply. This Checkpoint will use the latest evidence, looking at domestic demand for oil and gas, the sector’s projected production levels, the increasing prevalence of clean technologies such as offshore wind and carbon capture, and the sector’s continued progress against its ambitious emissions reduction targets. The government said it believes it is vital that any future licenses are granted to industry only on the basis that they are compatible with the UK’s climate change objectives. A dynamic checkpoint enables the assessment of ongoing domestic need for oil and gas, while expecting concrete action from the sector on decarbonisation. If the evidence suggests that a future licensing round would undermine the UK’s climate goals or delivery of Net Zero, it will not go ahead. The UK government will design and implement the checkpoint by the end of 2021 through extensive engagement with a wide range of stakeholders.

Business and Energy Secretary Kwasi Kwarteng said: “Today, we are sending a clear message around the world that the UK will be a nation of clean energy as we build back better and greener from the pandemic. We will not leave oil and gas workers behind in the United Kingdom’s irreversible shift away from fossil fuels. Through this landmark sector deal, we will harness the skills, capabilities and pent-up private investment potential of the oil and gas sector to power the green industrial revolution, turning its focus to the next-generation clean technologies the UK needs to support a green economy. At every step on the path to net zero emissions, we will create the right conditions for new green industries to base themselves in the UK and create new high-value employment opportunities, while future-proofing existing businesses to secure the long-term viability of jobs in our industrial heartlands.”

Chief Executive of Oil & Gas UK Deirdre Michie said: “The North Sea Transition Deal is a transformative partnership which will harness the expertise of the UK offshore oil and gas industry to urgently meet the country’s climate ambitions of net zero emissions by 2050. It will unlock billions of pounds of investment and see government and industry work together to deliver a homegrown energy transition, realising innovative low carbon solutions that can be exported globally.

“The deal will safeguard UK energy security, providing affordable energy to millions of households, secure tens of thousands of jobs in industrial heartlands across the country and support the UK economy. It is the first deal of its kind by any G7 country and a striking example of the UK showing global leadership on climate change ahead of COP26.”

Chief Executive of the Oil & Gas Authority, Dr Andy Samuel said: “This deal marks an exciting new chapter for the North Sea, confirming energy transition in action. It is the culmination of a lot of work between government, industry and the OGA. As long as oil and gas remain part of the UK’s energy mix, they must be produced more cleanly and in line with net zero.

“Our role includes monitoring and holding industry to account on its emissions reduction performance. The recent funding for a number of energy transition projects is very timely. We are happy to be supporting projects like Acorn, Hynet, Net Zero Teeside and Zero Carbon Humber, along with the Energy Transition Zone and the Global Underwater Hub.”