By Nicholas Earl
One of the UK’s leading energy bodies has supported the scrapping of scope three emissions requirements for new oil and gas exploration.
Offshore Energies UK (OEUK) told City A.M. it was not possible to devise a meaningful test for emissions linked to the end product use of oil and gas – such as the burning of fossil fuels to power a car or light up a house.
Instead, they argued it was right that the Government and offshore watchdog, the North Sea Transition Authority (NSTA), focused on carbon emissions linked to the production of hydrocarbons.
Ross Dornan, market intelligence manager at OEUK, explained: “There is no internationally agreed methodology for the tracking and reporting of scope three emissions and therefore it would not be possible to implement an evidence based, transparent and simple test as part of the climate compatibility checkpoint.”
OEUK also pointed out that oil and gas products are used for a vast array of purposes spanning petrochemicals, plastics, pharmaceuticals and fuels, including outside the UK.
“As a result of this, data which accurately tracks the end use of UK continental shelf production, and associated scope three emissions, is not available and therefore it would not be possible to monitor this in an evidence based, transparent and simple manner,” argued Dornan.
The ‘Climate Compatibility Checkpoint’ establishes the environmental criteria for North Sea oil and gas exploration, which all projects are expected to pass to be involved in licensing rounds.
The terms for the checkpoint were finally revealed by the Government last week, paving the way for the upcoming 33rd licensing round for new projects.
City A.M. understands could take begin as soon as October 4, with announcements on projects expected next April.
More than 100 licences could be issued, with a focus on both expanding existing infrastructure and exploring for new oilfields.
It is more than two years since the last round, which is usually carried out annually and overseen by the NSTA.
Prior to the announcement, the checkpoints were expected to include six tests, as suggested by Downing Street’s independent advisory board, the Climate Change Committee (CCC).
Three of the proposed six tests for the climate compatibility checkpoint have remained in place, including emissions from oil rigs and pipelines, how such emissions compare to global rivals and whether new projects will could help curb imports.
However, three other potential tests have since been scrapped, including the scope three emission requirements.
One of the other proposed tests was whether an oil and gas field would push up global production to levels that would endanger the international goal of holding temperature rises to 1.5C – in line with the Paris Agreement.
A test on linking approvals to how firms were investing in clean energy was also ditched by the Government.
North Sea oil and gas exploration featured prominently in the Government’s released energy security strategy in April, with Downing Street eager to boost domestic energy generation following Russia’s invasion of Ukraine in February.
However, environmental groups and green think tanks have slammed the latest developments – accusing the Government of watering down environmental regulations.
Friends of the Earth Scotland’s Oil and Gas campaigner Freya Aitchison dismissed the checkpoints in their current form as a ‘hopeless charade”
She said: “The UK government’s supposed checkpoint is a worthless charade as there can be no climate compatible new oil and gas. It is a deeply cynical attempt to provide cover for reckless plans to expand the very industry that is fuelling both the climate and the cost of living crises.”
Meanwhile, Heather Plumpton, policy analyst at Green Alliance, hammered the new checkpoints as “meaningless”.
She added: “The UK government is risking its global reputation as a leader on tackling climate change and its commitment to keep warming to 1.5 degrees as set out under the Paris Agreement.”
OEUK: Oil and gas still has a role to play
OEUK argued that exploration has a key role to play in meeting the UK’s green targets and ensuring its energy independence.
The industry body highlighted that domestic oil and gas projects remain essential to the transition from fossil fuels and renewables, meeting nearly half the UK’s fossil fuel needs and reducing its reliance on overseas imports.
This both helps to bolster supply security and cut emissions involved in transporting essential fuels.
Dornan said: “A premature end to licensing is inconsistent with the expected transition towards net zero and would result in higher levels of imports and a higher emissions footprint; it would damage employment and constrain the pace of investment needed to deliver net zero and reduce the supplies of skilled labour available to support longer term development of the UK energy market.”
He also noted that the CCC has consistently outlined the role of oil and gas in meeting the UK’s energy requirements between now and the net zero target of 2050 – which OEUK supports.
The CCC predicts that half of the UK’s energy requirements between now and 2050 will still be met by oil and gas, and as much as 64 per cent of UK energy needs between 2022 and 2037.
However, as the UK is a mature basin, the NSTA has warned in its resources report that without further exploration the UK faces a cliff edge in production decline and increased reliance on imports.
OEUK recently published its economic report on the sector, which revealed that just five exploration wells were drilled last year.
This was the lowest total since the North Sea sector was opened up to development nearly 60 years ago.
There is expected that there will be a comparable level of activity this year.
OEUK currently has sight of around £26bn of capital investment opportunities at various stages by 2030.
If all are progressed, this could deliver more than 4bn barrels of oil and gas (37 per cent gas and 63 per cent oil) by the end of the decade.
For context the CCC’s reporting estimates that the UK will consume about 8bn barrels of oil and gas during this period.
This means the UK would likely remain reliant on international net imports for about half of its needs, even in a full investment scenario.
Despite the role of the North Sea fossil fuel industry in meeting the UK’s energy sectors, the streamlining of of climate compatibility checkpoints is likely to remain controversial.
Fossil fuel giants BP and Shell were among the industry producers that pushed for the Government to scrap scope three emission rules for new projects in the North Sea, according to documents first reported by The Times and obtained by lobby logger Influence Map.
They also pushed for tests concerning projects contributing to global temperatures to be removed.
BP and Shell have both been approached for comment by City A.M.
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