It is clear that we need to transition away from oil and gas. However, demand will remain as we transition towards net zero. We therefore need to decarbonise the upstream oil and gas process as quickly as possible. To reduce emissions from oil and gas production, government should: • Accelerate the end to routine flaring from 2030 to 2025. • Ensure all new oil or gas fields have abatement built in now to avoid backwards engineering when they are electrified • Ensure the Climate Compatibility Checkpoint is an effective tool now to shape policymaking • Consider setting fossil fuel producers operating domestically a 10% storage obligation target to restore carbon dioxide to the geosphere by at least 2035, separate to any investment on nature-based solutions. • Recognise the importance of geological net zero and work to align international ambitions toward geo zero by 2050, in line with net zero. • The 2023 consultation on the long-term tax treatment of the North Sea must include an option to create a hypothecated net zero fund • Dependent on the response to the consultation, by the end of 2026, HMT should set out a long-term plan for replacing the Energy Profits Levy with a 'Net Zero Fund' that clearly ringfences revenue for investment into clean offshore technologies and/or energy efficiency improvements • Ensure greater transparency and data from industry on the carbon intensity of oil & gas (O&G) imports, and also from the North Sea Transition Authority (NSTA) and industry on O&G that is produced. • Publish an offshore industries integrated strategy by the end of 2024. |
358. We need to reduce our reliance on hydrocarbons as quickly as possible. The shift away from oil and gas will reduce our susceptibility to volatile energy prices and increase our energy security, save consumers money on their energy bills, and play a crucial role in meeting carbon budgets and the net zero target.
359. However, as set out in the previous section, this cannot happen overnight because of the need to meet present demand for hydrocarbons and protect our energy security. The domestic oil and gas industry is an important industry for the UK economy, both historically, and for the future. It supports hundreds of thousands of jobs and is expected to invest £100 billion by 2030.277 It has a world class supply chain, skills base and infrastructure stock that will be crucial for decarbonising the UK Continental Shelf (UKCS) and creating an offshore energy system as we transition towards offshore wind, CCUS and hydrogen. Given its importance to the economy, the transition to decarbonise the UKCS must be equitable. We must do it in a way that protects British jobs, industry, and consumers.
360. Government, industry and the regulator (the North Sea Transition Authority, NSTA) have a plan to reduce emissions. Greenhouse gas emissions from upstream oil and gas activity accounted for 4% of net UK territorial greenhouse gas emissions in 2020 according to data from the National Atmospheric Emissions Inventory.278 Around 70% of emissions from oil and gas production come from powering oil and gas platforms by combustion of either natural gas or diesel, with the next largest cause being flaring at 22%.279
361. As part of the North Sea Transition Deal (NSTD), a 50% emissions reduction target for 2030 was agreed for the upstream industry. The North Sea Transition Authority (NSTA) also produced the Net Zero Stewardship Expectation, which mandates that new field developments demonstrate initiatives to reduce emissions.
362. Industry has played a role as well. In 2021, the UK offshore oil and gas industry published its Methane Action Plan280 to reduce emissions and flaring. The Plan commits to a 50% methane emission reduction by 2030 (against a 2018 baseline). Furthermore, the sector will: through individual assets, seek to accelerate compliance with the World Bank 'Zero Routine Flaring' Initiative ahead of 2030; and commit to the Oil and Gas Climate Initiative (OGCI) 2025 methane intensity commitment.