'Denial and delusion': Green groups slam government refusal to rule out new North Sea oil and gas exploration

Environmental groups have responded angrily to the publication today of the government and industry-backed North Sea Transition Deal, arguing the refusal to rule out the possibility of a new wave of oil and gas exploration licenses and the failure to set a target for ending fossil fuel extraction from UK waters amounted to "a colossal failure in climate leadership in the year of COP26".

Campaigners had hoped that in the wake of the UK's binding net zero emission target and Denmark's recent decision to end the issuance of new oil and gas exploration licenses, the government could set out a clear strategy for ending fossil fuel extraction from the North Sea basin. But today's wide-ranging sector deal with the oil and gas industry combines plans for increased investment in the technologies and skills that will enable a transition to cleaner energy sources with proposals that leaves the door open for a new wave of exploration licenses, if projects can pass a new Climate Compatibility Checkpoint.

The government insisted the sweeping package made the UK the first G7 country to agree a landmark deal to support the oil and gas industry's transition to clean, green energy, while supporting 40,000 jobs and mobilising £16bn of public and private sector investment through to 2030 in emission reduction efforts.

"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," said Business and Energy Secretary Kwasi Kwarteng. "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."

He added that the promise of fresh investment in carbon capture and storage, hydrogen, and renewables technologies would also help attract inward investment for the UK. "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," he said.

Specifically, the new deal includes a commitment for joint government and oil and gas sector investment of up to £16bn by 2030 to reduce carbon emissions, including up to £3bn to replace fossil fuel-based power supplies on oil and gas platforms with renewable energy, up to £3bn for Carbon Capture Usage and Storage projects, and up to £10bn for new hydrogen production capacity.

The investment will support new targets from the industry to reduce its direct emissions by 10 per cent by 2025 and 25 per cent by 2027, before then slashing emissions by 50 per cent by 2030.

And in a bid to maximise investment in the UK the plan also includes a voluntarily commitment from the industry to ensure that 50 per cent of its offshore decommissioning and new energy technology projects will be provided by local businesses, and proposals for a new Industry Supply Chain Champion to support the coordination of local growth and job opportunities with other sectors, such as Carbon Capture Usage and Storage and offshore wind.

Alongside the deal, the government also published a response to its consultation on ending support for overseas fossil fuel energy projects through UK Export Finance, confirming it is to no longer provide support for the fossil fuel energy sector overseas from 31 March 2021. However, it also set out plans for a new Transition Export Development Guarantee', developed by UK Export Finance (UKEF), which would "ensure that businesses, including the supply chain, are supported at all stages of their transition journey, and that oil and gas focused companies with credible transition plans can benefit from UKEF's working capital support to achieve these plans".

The government stressed the new package of measures would help ensure an orderly transition towards a net zero emission energy system, which maintains energy security, supports high-value jobs, and safeguards the expertise necessary to deliver lower carbon infrastructure.

Specifically, it said that the new Climate Compatibility Checkpoint for all future oil and gas licensing rounds would "ensure licences awarded are aligned with wider climate objectives, including net-zero emissions by 2050, and the UK's diverse energy supply". It explained that the checkpoint would 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 before reaching a decision on new licenses.

"The UK government 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," it said in a statement, adding that precise details of the new mechanisms would be finalised by the end of the year following extensive engagement. "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." 

Energy Minister Anne-Marie Trevelyan said the new plan would serve to support the UK's economy wide decarbonisation goals. "We need to urgently end our reliance on fossil fuels and through our pioneering North Sea Transition Deal we will do so without putting our economy and communities at risk," she said. "While the future oil and gas sector will look very different to how it does today, the industry, businesses and supply chains it supports will have a new mission to help the UK decarbonise and develop the clean technologies of the future, as we lead the green industrial revolution."

However, green groups were left unconvinced by the assurances that the plans would prove compatible with the UK's net zero emissions goals.

"This decision has completely exposed the outrageous hypocrisy inherent in the UK Government's approach to the climate emergency which is a mix of denial and delusion with devastating consequences," said Friends of the Earth Scotland's Just Transition Campaigner Ryan Morrison. "The science on this is already crystal clear, burning fossil fuels is the key driver of this crisis so to avoid climate breakdown there can be no new licences and existing production must be wound down over the next decade - a new 'climate compatibility checkpoint' isn't going to change that reality."

His comments were echoed by Greenpeace's Mel Evans, who argued that the "refusal to rule out new oil and gas licences when the evidence is already clear that they are incompatible with UK climate commitments is a colossal failure in climate leadership in the year of COP26".  

"While the government has rightly recognised the need to set a global example in ending fossil fuel finance abroad, its domestic plans for oil and gas continue to fall woefully short, giving mixed messages on the world stage," she added. "Instead of finding ways to prop up this volatile and polluting sector, a better proposition for workers and communities would be for the government to confirm a ban on new licences, and put all its energies into a nationwide programme of retraining, reskilling and investment in renewables and green infrastructure."

Dr Jonathan Marshall, head of analysis at the Energy and Climate Intelligence Unit (ECIU), similarly argued that "for a government usually so keen to set targets, the absence of an end date for extracting fossil fuels from the North Sea is a glaring omission".

"The days in which oil and gas receipts topped up Treasury coffers are long gone, with our ageing oil and gas infrastructure increasingly a drain on national finances," he said. "A bold announcement on ending oil and gas extraction in the North Sea whilst supporting jobs and workers through the transition would have made waves comparable to plans to stop generating electricity from coal and ending the sale of petrol and diesel cars."

However, green business groups struck a more conciliatory note, welcoming the promise of increased investment in low carbon infrastructure and green skills programmes. "This North Sea Deal recognises the importance of helping all key economic sectors and their workforce transition towards net zero emissions and is therefore an important step forward," said Nick Molho, executive director of the Aldersgate Group. "With the right policy framework and low carbon skills strategy, the move to net zero emissions can create significant employment opportunities for the UK's oil and gas workforce, whose skills will much needed in contributing to the huge infrastructure deployment challenge facing the UK in areas such as marine renewable energy, carbon capture and hydrogen."

And oil and gas industry representatives warmly welcomed the new plan, which they insisted would serve to deliver steep emissions reductions in the coming years while protecting jobs and maintaining energy security.

Deirdre Michie, chief executive at trade body Oil & Gas UK, said the deal represented a "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," she said.  

However, Luke Murphy, head of the IPPR Environmental Justice Commission, noted that the promise of a new Climate Compatability Checkpoint simply deferred a decision on future licensing in the North Sea.

"It is welcome that the UK government says it recognises that future oil and gas licensing must be compatible with net zero, but it is deliberately kicking the can down the road by not making a final decision on oil and gas licensing until after COP 26 - when the eyes of the world have moved on," he said. "The evidence is already overwhelming that any further licensing of North Sea oil and gas is incompatible with the UK's and Scotland's domestic and international climate commitments. If the government's proposed Climate Compatibility Checkpoint were a meaningful test it would almost certainly mean an end to new licenses.

"If the government is determined on this course, then the 'checkpoint' should be legally binding, determined by an independent body and in line with overall net zero targets and the Paris Agreement."

In related news, the Just Transition Commission appointed by the Scottish Government this week published its final recommendations, calling on Ministers to take steps to ensure an orderly transition towards cleaner industries and infrastructure, step up investment in green skills development, engage with local communities to manage changes, and ensure any costs associated with the shift to greener technologies are fairly shared.