The UK government said it has reached an agreement with the country’s oil and gas industry that will help safeguard jobs as the nation strives to achieve net-zero emissions of greenhouse gases.

The North Sea transition deal published on Wednesday sets out a path to attract investment into renewable energy, carbon-capture and storage, and hydrogen. Spending of as much as 16 billion pounds ($22 billion) by 2030 -- shared between the government and industry -- should reduce emissions and create as many as 40,000 jobs across the supply chain, according to a statement from the Department of Business, Energy and Industrial Strategy.

As part of the agreement, the UK will also introduce a process later this year called “dynamic checkpoint,” which will ensure future oil and gas exploration and production licenses are only granted if they don’t undermine the nation’s climate goals. The government also said it will no longer provide financial support for fossil fuel projects overseas from March 31, “with very limited exceptions.”

The plan comes at a time when the UK oil and gas industry is struggling to recover from an investment slump caused by the coronavirus. Even before the Covid-19 crisis, the North Sea had undergone dramatic changes as many major companies departed from aging fields. Oil production fell by more than half in the past two decades and is expected to decline further.

Investment Slump

The UK didn’t go as far as North Sea neighbor Denmark -- a much smaller producer -- which will stop offering new oil and gas licenses and end production by 2050. Exploration on the UK continental shelf is already dwindling as resources become scarce and investment is diverted to other regions, dropping to the lowest since 1965 last year, according to a trade body Oil & Gas UK

The absence of a firm ban on exploration prompted a wave of criticism from environmental activists, with Greenpeace calling it a “colossal failure.”

The oil and gas licensing decision is “kicking the can down the road” until the world is not looking, said Luke Murphy, head of the environmental justice commission at the Institute for Public Policy Research. “If the government’s proposed ‘climate compatibility checkpoint’ were a meaningful test it would almost certainly mean an end to new licenses.”

The industry body Oil & Gas UK, on the other hand, said the deal would safeguard UK energy security and support the economy.

Aging Fields

The government said the new agreement requires certain commitments from the sector. It should reduce emissions by 10% by 2025, 25% by 2027, and 50% by the end of the decade.

By 2030, the sector will also voluntarily commit to ensuring that 50% of its offshore decommissioning and new energy technology projects will be provided by local businesses. It plans to appoint an industry supply-chain champion who “will support the coordination of local growth and job opportunities.”

“We need to urgently end our reliance on fossil fuels,” Energy Minister Anne-Marie Trevelyan said in the statement. “Through our pioneering North Sea Transition Deal, we will do so without putting our economy and communities at risk.”

 

Source - www.worldoil.com