UK's oil and gas sector outlines net-zero vision, but remains reluctant to downsize

The watchdog for the UK's oil and gas industry has published a strategy designed to align businesses with the 2050 net-zero target, but green groups want more done to cap production and increase investment in renewables.

The UK's oil and gas sector employs 270,000+ people and pays £350m+ in taxes annually

The UK's oil and gas sector employs 270,000+ people and pays £350m+ in taxes annually

The Oil & Gas Authority (OGA) published the 13-page strategy earlier this week and plans to lay it before Parliament when MPs return from the winter recess in January. It is the first revision to the strategy since the UK Government enshrined its net-zero target in law last year.

As expected, the strategy prioritises increasing efficiency over the diversification of the sector. While the OGA concedes that oil production will need to decrease over the coming decades, it states that “as long as demand exists, managing production and maximising value… as cleanly and efficiently as possible is necessary”.

As well as increasing efficiency within their own operations, the strategy states, businesses must be more willing to enter pre-competitive collaborations around technologies like carbon capture, utilisation and storage (CCUS) and hydrogen.

The OGA sees CCUS and hydrogen accounting for up to 30% of the emissions reductions needed in the energy sector and related sectors through to 2050. This is the same proportion of reduction it allocates to renewables, even though the Climate Change Committee (CCC) sees renewables playing a larger role and hydrogen and CCS playing a far smaller role.

The OGA’s strategy additionally outlines measures to help end-user businesses better engage with their suppliers and the communities in which they work, to deliver a “just” transition.

The OGA published its first benchmarking report on emissions from flaring and venting earlier this year, and the strategy confirms that this data will be published annually. Metrics will also be added to account for the full scope of emissions and companies will be benchmarked against each other.

‘Underwhelming’

As expected, several of the UK’s biggest green groups are opposing the proposals, as they contain no formal, time-bound numerical targets to cap production. The climate impact of this is clear, but MPs and activists are also concerned that communities which depend on UK oil and gas for employment could take an economic and social hit in the coming decades without more substantial transition plans.

"This is a classic example of wanting to have your cake and eat it," Greenpeace UK’s head of politics Rebecca Newsom said.

"The OGA’s solution to net zero is to carry on producing oil and gas as if fossil fuels had nothing to do with the climate emergency we face. Rather than tying themselves up in knots trying to justify the unjustifiable, their new strategy should be focused on delivering a fundamental shift away from fossil fuels to 100% renewables in the North Sea and supporting offshore workers to access new secure green jobs."

The proposals from the OGA have the backing of the UK’s Energy Minister Kwasi Kwarteng and Business Minister Alok Sharma, as well as Scottish Energy Minister Paul Wheelhouse. But they will need to gain Parliamentary approval before they are formalised.

BEIS is currently reviewing whether its plans for the future oil and gas licencing regime are "aligned with tackling climate change" and compatible with the UK's 2050 net-zero target.

The review comes as Oil and Gas UK – the trade body for the sector – is striving to halve emissions from production and exploration within a decade. Critics are pressuring the organisation to introduce further measures covering Scope 3 (indirect) emissions and to set time-bound targets to cap production.

Sarah George



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