Government to review North Sea offshore oil and gas licensing as part of zero emissions strategy

The government today announced it will review its policy on the future UK offshore oil and gas licensing regime as part of the wider aim of achieving net zero emissions by 2050.

Over half of the UK’s electricity comes from clean sources including wind and solar energy. However, oil and natural gas are still required for heating, cooking and transport, and vital to the production of many everyday essentials like medicines, plastics, cosmetics and household appliances. This is likely to remain the case over the coming decades in the UK and abroad as the world transitions to low carbon solutions.

The independent Committee on Climate Change has recognised the ongoing demand for oil and natural gas, including it in all scenarios it proposed for how the UK meets its target for achieving net zero emissions by 2050.

However, there is concern over how the transition to a low carbon future may impact workers. The oil and gas sector supports 270,000 jobs across the UK. It is also a major source of tax revenue for public services and has provided over £330 billion to the UK Government from production taxation alone in today’s prices.

The review comes as the Oil and Gas Authority announces the outcome of the 32nd licensing round for North Sea exploration. This is important for the country’s ongoing energy security and economy, while ensuring that much-needed supplies are maintained even as the UK cuts carbon emissions.

Business and Energy Secretary Alok Sharma said:

Over half of our electricity now comes from low-carbon sources, power from coal is at an all-time low, and we have more installed offshore wind capacity than any other country in the world.

While we have decarbonised our economy faster than any other major country over the past two decades, the oil and gas sector will continue to be needed for the foreseeable future as we move toward net zero carbon emissions by 2050.

Our review into future oil and gas licensing rounds will ensure we are able to meet our net zero target, while protecting jobs across the country as part of our plan to build back better with a greener, cleaner economy.

The review is in keeping with the future direction of the government’s regulation of oil and gas in the UK.

Alan Whitehead MP, Labour’s Shadow Energy and Green New Deal Minister, said:

A review of this licencing regime is long overdue, as the present regime simply does not fit with UK net zero legislation. Oil and gas will have an ongoing role in the economy, but in the long term this will be reduced to a few industrial processes only, much of which can be supplied from known reserves.

If this review lives up to the Government’s claims and is genuinely geared towards meeting climate change targets then we will welcome it.

The Oil and Gas Authority is currently reviewing its core strategy to ensure that it can assist in working with industry to support the UK’s climate change goals. Part of this will be ramping up the already significant role the sector has in developing the infrastructure and capability for green technologies such as carbon capture and storage and hydrogen power.  

The upcoming North Sea Transition Deal is set to provide more details later this year on the government's plans to work with the energy sector and key stakeholders to support the transition to low carbon energy sources, while getting the benefit from the limited reserves in the North Sea and protecting highly skilled jobs.