On the 14^th December 2020, the UK Government published its Energy White Paper.

The paper follows the Ten Point Plan for a Green Industrial Revolution announced by Boris Johnson to tackle climate change and to create jobs (see our previous article on this here).

In the Energy White Paper the UK Government sets out a series of commitments in relation to the offshore oil and gas sector.

The aim is to see it become a net zero basin by 2050, as well as playing a critical role in supporting the wider energy transition away from fossil fuels to green energy.

The paper sets out the following key commitments:

1. Make UKCS net zero basin by 2050 – In order to meet the net zero target the oil and gas sector needs to reduce its emissions from offshore operations from 19MtCO₂e to 0.5MtCO₂e. The industry has signed up to become a net zero basin by 2050, with a target of a 50% reduction in emissions by 2030 and a 90% reduction by 2040.
2. Commit the UK to World Bank’s “Zero Routine Flaring by 2030” initiative – The initiative brings together governments and industry to cooperate to eliminate routine flaring by 2030. The Oil and Gas Authority (OGA) intends to take a stronger stance in respect of flaring and venting, with the goal of ending this practice before the end of this decade.

3. Support UK oil & gas sector to repurpose its existing infrastructure – The re-use of oil and gas assets at the end of their commercial life has the potential to provide significant upfront cost savings in the deployment of Carbon Capture Utilisation and Storage (CCUS) projects. Last summer, the Department for Business, Energy & Industrial Strategy (BEIS) published a response to its consultation on the re-use of oil and gas assets for CCUS and is now working to provide clarity on the regulations for repurposing such assets.

4. Undertake a review of OPRED – A review of the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED) shall be undertaken to ensure that it is equipped to improve environmental standards and that its role, powers and priorities reflect the UK Government’s net zero emissions policy.

5. Support UK based oil and gas supply chain to secure new low carbon opportunities – The UK Government is seeking new opportunities in overseas markets to export the UK offshore oil and gas supply chain’s expertise in subsea engineering, decommissioning and other supply chain capabilities.

6. Lay a new strategy for OGA before end of 2020 – In December 2020, the OGA submitted its revised strategy before the UK Parliament. The revised strategy seeks to expand the current strategy of maximising the value of economically recoverable petroleum to include a requirement for relevant persons to take steps to assist the Secretary of State in meeting the net zero target. The OGA will take wide-ranging action to implement its revised strategy including benchmarking greenhouse gas emissions and creating a new asset stewardship expectation for net zero.

7. Ensure the UK maintains a secure and resilient supply of fossil fuels during the transition – The UK Government will be working alongside the downstream oil sector to monitor the resilience of the fuel supply market with the power to intervene, if necessary, to ensure there is an orderly transition to clean energy supplies.

8. Ensure that licensing continues to be compatible with climate change ambitions – A review is currently being undertaken of policy on future offshore oil and gas licensing to ensure that the regime continues to be compatible with the net zero target by 2050 (see our previous article on this here). Going forward, it may be that there are regular independent reviews undertaken to determine whether proceeding with future licensing rounds would impact the UK’s climate change goals.

9. Agree a transformational North Sea Transition Deal – The UK Government is working with industry to agree a deal. The key deliverables are: (i) cleaner energy production through emissions reductions; (ii) supporting the growth and delivery of CCUS; (iii) diversifying the oil and gas service sector into new energies; (iv) supporting the development of hydrogen production; and (v) safeguarding jobs and creating new jobs in diversified energy technologies.

While the paper does not go into too much detail, it does represent a real statement of intent from the UK Government that it is committed to its net zero climate change goals.

It is anticipated further details will emerge over the coming months, in particular on the North Sea Transition Deal which is expected to be agreed during the first of half of this year.

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