Select Committee calls for ‘clear date’ to end new oil licensing

A parliamentary committee has pressed the UK government to set a clear date for ending new oil and gas licensing rounds in a bid to show international climate leadership.

The cross-party Environmental Audit Committee (EAC) said the government should set an end date “well before 2050” if it is to remain a credible leader on climate change.

The recommendations were made in a wide-ranging analysis of the British Energy Security Strategy (BESS), in which the committee also called for tougher targets to drive electrification and lower the sector’s operational emissions.

Released Thursday, the EAC’s report “Accelerating the transition from fossil fuels and securing energy supplies” commends the strategy’s ambition in establishing new low-carbon electricity generation, but also finds “significant gaps” in its approach.

The analysis includes months of evidence given by civil servants, industry representatives, academics and environmental campaigners.

Most notably, while the authors note the “admirable” climate leadership shown by the UK during COP26, it emphasised a “historic responsibility” to set a leading example on new licensing.

“The Paris Agreement enshrined an important principle of ‘equity and common but differentiated responsibilities’, which the UK must honour if it is to remain a credible climate leader. We therefore recommend that the UK set a clear date for ending new oil and gas licensing rounds in the North Sea: this date should fall well before 2050,” the EAC said.

It suggested that government should consult on when this date would be, taking into account oil and gas production currently being planned by the UK and other producer states, and on the remaining global carbon budget available within a 1.5-degree heating scenario.

Committee members pointed to other oil-producing countries which have already set pathways to phase out fossil fuel production, such as Denmark, France and Ireland, and the former’s co-founding of the Beyond Oil and Gas Alliance (BOGA).

The Department for Business, Energy and Industrial Strategy (BEIS) has been approached for comment.

‘Further and faster’ on emissions

The EAC said more action was needed on production emissions, particularly as the sector has been aware of its contribution to man-made climate change since the 1990s.

“A responsible industry should have been working to clean up its operations with far greater urgency than this timescale suggests,” the EAC report continues, adding that government should push the sector to “go further and faster than its current approach.”

The EAC said it was “disappointed” that only two offshore electrification projects are expected to be commissioned by 2027 and called on regulator the North Sea Transition Authority (NSTA) to use its powers to insist on electrification for “all new oil and gas projects” as part of the upcoming 33rd licensing round.

“Challenging targets for the industry to undergo rapid decarbonisation must be introduced without delay. The fossil fuel industry should not be granted the headroom in the UK’s carbon budgets that other hard-to-decarbonise sectors may need,” the report adds.

The committee recommended that the North Sea Transition Deal (NSTD) be modified to include stronger targets and verification arrangements in line with the UK Government’s commitments under the Paris Agreement.

Under current NSTD targets the sector has committed to a 50% reduction in emissions by 2030, and 90% by 2040, ahead of reaching net zero in 2050. However, the NSTA has said these goals are the minimum expected and that industry should strive to reduce emissions by 68% by 2030 (a figure endorsed by the Climate Change Committee).

Responding to the report, the NSTA said it “works closely with industry to encourage collaboration and action which supports both UK energy security and the transition to net zero, including reducing emissions from sources such as flaring and venting, using sanctions when necessary.

“We already monitor and publish industry emissions performance including greenhouse gas emissions, carbon emissions and intensity, and flaring and venting and have seen an overall 21.5% reduction in greenhouse gas emissions since 2018 and have set industry a clear expectation of zero routine flaring and venting by 2030.

“Platform electrification is a vital part of cutting emissions in the North Sea and reaching net zero and we continue to support and encourage operators to adopt it wherever possible.”

The EAC also called for further revisions to the Energy Profits Levy (EPL) – also known as the windfall tax – to enable investments to be funnelled towards new low-carbon and energy efficiency projects.

Efficiency and security

Setting out its findings, EAC chairman Philip Dunne MP said: “Fossil fuels have helped keep our homes warm, power our cars and generate the majority of our electricity. Britain will continue to need to access fossil fuel supplies during the Net Zero transition.

“But Government should consult on setting an end date for licensing oil and gas from the North Sea. We can accelerate this transition by fully harnessing our abundant renewable energy resources, including tidal energy that can deliver a reliable year-round source of clean electricity, and by upgrading our energy inefficient buildings.”

“Bold action is needed now. The last year, with Russia’s aggression in Europe choking energy supplies, has shown us just how vulnerable our over-reliance on imported fossil fuels can make us. The Committee has today set out a number of clear recommendations to drive real change: I hope the Government will act swiftly to implement them.”

The EAC called for an update of the Strategy to be published in spring 2023, in which the government should monitor progress on reducing the UK’s reliance on Russian energy imports, securing energy supplies and improving energy efficiency.

Government ‘must go further’

Will Webster, energy policy manager at trade body Offshore Energies UK (OEUK) said it was better for continued UK demand for oil and gas to be met by domestic resources.

While OEUK welcomed the committee’s support for new technologies like hydrogen and carbon capture, Mr Webster added: “We disagree with the Committee’s conclusions supporting the extension of the windfall tax to a 75% rate and the characterisation of investment allowances as a ‘subsidy’.

“These measures are damaging to the UK energy sector and the government needs to re-establish a stable and proportionate regime to drive investment in all primary energy sources including oil, gas and renewables.”

However, Gwen Buck, public affairs manager at pressure group Uplift, said the report was “a clear rebuke” of the government’s approach to energy.

“It is welcome that the committee has called for an end date for new oil and gas licensing, but the government must go further and set an end date for all North Sea production, not just licences,” she added.

“The committee received powerful evidence from experts, like the International Energy Agency, who firmly said that any new oil and gas supply creates a ‘clear risk’ of breaching safe climate limits.

“What’s heartening as we start this new year is the clear message from Parliament that the only route to a safe and secure energy supply that’s in our control is to speed up the transition away from oil and gas.”