The UK's energy landscape is at a critical juncture, with recent signals from the new Prime Minister's team indicating support for further oil and gas activity in the North Sea. This policy direction is set to intensify the debate surrounding the nation's commitment to its legally binding net-zero emissions target by 2050. The discussion centres on balancing immediate energy security needs with long-term climate goals, prompting a closer look at the North Sea's role in the UK's evolving energy strategy.
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Historical context and production trends
The North Sea has been a cornerstone of the UK's energy supply for over five decades, providing significant economic contributions and supporting numerous jobs. However, oil and gas production in the UK Continental Shelf (UKCS) has been in decline for several decades, necessitating new exploration and development to maintain domestic supply. For instance, UK production of primary oil has fallen, leading to increased imports as domestic output decreased.
Economic contributions and energy security
Despite declining reserves, the North Sea oil and gas industry remains a significant contributor to the UK economy. It added over £30 billion in Gross Value Added (GVA) in 2022/23, equivalent to nearly 1.5% of total UK GVA. It also supports over 200,000 jobs across the UK, with 90,000 of these in Scotland alone. Domestic production is often cited as crucial for energy security, reducing reliance on potentially less environmentally friendly and more volatile imported fossil fuels. In 2022, domestic gas production met 44% of the UK's needs.
The UK government's British Energy Security Strategy, published in April 2022, aims to secure an affordable, clean, and above all, secure flow of energy. It acknowledges that while demand for fossil fuels will decline, they retain a crucial role as "critical transition fuels" for ensuring secure energy supplies.
Government stance on new drilling licences
The incoming UK Prime Minister's team is expected to signal strong support for new oil and gas activity in the North Sea.1 This policy direction is anticipated to allow further oil and gas drilling, aiming to balance energy security concerns with climate commitments.
Reconciling drilling with UK climate targets
The UK has a legally binding target to achieve net-zero greenhouse gas emissions by 2050, enshrined in the Climate Change Act 2008. This Act also mandates five-year carbon budgets, which serve as statutory caps on total greenhouse gas emissions to guide the UK towards its long-term goal. The NSTA is responsible for licensing and regulating oil and gas activities.
The decision to permit further drilling creates a tension with these climate goals. Environmental groups argue that any new fossil fuel extraction is incompatible with limiting global warming. Conversely, industry bodies argue that domestic production is preferable to imports and that oil and gas will still be needed during the transition.
Carbon emissions and climate Change policy
The environmental impact of continued fossil fuel extraction is a central concern. Offshore platforms are a source of chronic pollution, including production water and oil-based drilling muds, which can affect marine ecosystems within a few hundred metres of a platform.
Crucially, there is increasing pressure for environmental impact assessments (EIAs) for oil and gas projects to consider the global environmental impacts, including the emissions released from burning the extracted fuel (known as Scope 3 emissions). This marks a significant shift, as previously, only emissions from the extraction process were typically considered.
Hugo Tagholm, Executive Director of Oceana UK, stated that while the government's decision to grant these licences might be legal, it was not morally right, emphasising the need to honour a safe planet for future generations over corporate profits.
The future of oil and gas exploration in the North Sea
While new drilling could add a small percentage to the UK's total oil and gas extraction by 2050, the overall trend of declining production is expected to continue. The debate highlights the finite nature of these resources and the need for a clear long-term strategy beyond short-term supply. The NSTA's role involves promoting exploration.
Investment in renewable energy and decarbonisation
The UK's long-term energy strategy is firmly focused on a transition to clean, home-grown energy, with significant aims for low-carbon electricity generation.
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References
- Carbon Pulse. UK's new PM faces battle over North Sea oil and gas drilling
