UK government hails North Sea Deal to aid in oil and gas green transition

The UK government has vowed to support 40,000 jobs while assisting oil and gas transition to a lower carbon future. In a deal worth up to £16 billion agreed with the oil and gas industry, the government will assist business in developing low carbon alternatives and reducing emissions.

The deal is aimed at using the UK’s highly skilled oil and gas workforce, industrial capabilities and existing infrastructure to nurture and accelerate emerging green technologies such as Carbon Capture Usage and Storage (CCUS), offshore wind and hydrogen production. These green technologies will be used to cut UK sector carbon emissions from production by 50% in 2030 and aid net zero emissions by 2050.

In return for committing to these targets, the government will continue to allow future exploration licencing rounds. Each new round will include a Climate Compatibility Checkpoint designed to ensure licences meet the UK’s wider climate objectives. The checkpoint will analyse domestic demand, production and the maturity of clean technologies as well as the progress of industry towards the reduction goals. If a Compatibility Checkpoint finds a planned licensing round will undermine the UK’s climate targets, it will not continue.

Oil and gas extraction is directly responsible for around 3.5% of the UK’s greenhouse gases. With the North Sea Transition Deal, the industry expects to reduce production emissions by 15 million tonnes in 2030. The government has ear-marked £3 billion to replace fossil fuel power supplies on platforms, £3 billion to develop CCUS solutions and up to £10 billion for hydrogen production.

As part of the deal, the UK government will stop providing taxpayer support to overseas fossil fuel projects by the end of March 2021. This decision follows the government’s announcement in December to end overseas support to fossil fuel projects. From the 31^st March there will no longer be UK Export Finance, international aid funding, or trade promotion for new fossil fuel developments.

The oil and gas industry is responsible for hundred’s of thousand’s of jobs, generates significant tax revenues and provides energy security to the whole of the UK. With this deal, thousands of jobs will be supported while the industry transitions to a cleaner future.

The UK government’s Business and Energy Secretary Kwasi Kwarteng said, “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.”

With a huge potential for future growth, these emerging industries can help economies in areas such as the north east of England, Yorkshire and The Humber, Scotland, and East Anglia. Decommissioning, an industry already worth around £1.5 billion to the UK, will continue to grow as more assets are brought offline. The government’s ambitious offshore wind targets will generate up to 60,000 jobs in the next decade and new technologies such as low carbon hydrogen production and CCUS have significant potential.

Some green campaigners are claiming the agreement does not go far enough, but the North Sea Transition Deal will at least aid in an orderly transition to a greener economy, while supporting thousands of jobs that would otherwise be at risk.