The U.K. has announced a ‘Landmark Deal’ to drill new wells in the North Sea securing the future of U.K. oil and saving thousands of jobs while calling net-zero promises into question. The U.K. government has approved new licenses for the drilling of more wells in the North Sea, saying their aim is compatible with the transition away from fossil fuels. The deal strives to better safeguard the British economy as well as oil industry jobs.
This comes just weeks after the Financial Times stated that in 2020 oil and gas company spending in the U.K. North Sea fell to its lowest level since 2004, spending around £3.4 billion ($4.6 billion) less than in 2019. Drilling activity also fell to levels not experienced since the 1970s.
While environmentalists have criticized the move, the government insists that ‘Climate Compatibility Checkpoints’ will measure the national demand for oil and gas, projected production levels, the development of alternative energy technologies, as well as the sector’s progress in cutting emissions to help ensure green policy targets are met.
Current targets for the sector include reducing emissions by 10 percent by 2025 and 25 percent by 2027, ultimately requiring oil companies to reduce their emissions by 50 percent by 2030. A public-private investment of £16 billion ($21.8 billion) is expected to achieve this goal, principally going towards hydrogen production and carbon capture technologies.
This week’s announcement goes against earlier speculation that the U.K. might follow in the footsteps of Norway and Denmark, which have banned new oil exploration licenses, to curb its North Sea production in favor of net-zero objectives and greener policies.
The U.K. government has been accused of sending mixed messages by first announcing its net-zero aims followed by promises to secure the position of the country’s oil and gas sector well into the future.
Related: World’s Newest Oil Hotspot Undeterred By Poor Drilling Results
Furthermore, many believe new plans for the oil industry are at odds with a government promise for its leadership role in the critical COP26 climate conference in Glasgow.
However, those in the oil and gas sector praise the government’s decision which is expected to save 40,000 jobs. It will also provide the industry with the time needed to make the transition to a clean energy future by helping companies to decarbonize, according to the U.K. government.
During this period, the government hopes to create the right business environment to attract new industrial sectors to base themselves in the UK, develop new export opportunities for British business, and secure new high-value jobs for the long-term.
Business and energy secretary, Kwasi Kwarteng has stated, the North Sea deal sends “a clear message around the world” that the UK will be “a nation of clean energy”. In addition, the UK will “not leave oil and gas workers behind” in the “irreversible shift away from fossil fuels”.
This suggests that the U.K. is taking a step away from major E.U. powers in their pledge to reduce oil production in favor of alternative energy sources over the next decade, instead opting to make oil production ‘cleaner’.
In contrast to this announcement, the government has also vowed that from 31st March 2021 it will no longer provide support for the fossil fuel energy sector overseas. This is in line with Prime Minister Boris Johnson’s commitment to end taxpayer support for fossil fuels projects overseas.
Only time will tell whether the government’s promise for a clean energy transition developed hand-in-hand with the oil and gas industry will put the U.K. on track to meet its net-zero carbon aims over the next decade.
By Felicity Bradstock for Oilprice.com
More Top Reads From Oilprice.com:
- Oil Prices Drop On Third Wave Of Coronavirus Lockdowns
- How Will We Pay for the Energy Transition?
- Pandemic Puts Saudi-Kuwaiti Oil Plans On Ice