UK ministers are considering banning new oil exploration licences in the North Sea in a move away from fossil fuel, as the UK prepares to host the COP26 — the UN Climate Summit — in November.
According to the Telegraph, options on the table include ending permits by 2040 and an immediate temporary pause in licensing. It is also possible that there will be no changes to the licensing regime.
The move could impact the industry, jobs and the Scottish economy. Approximately, 39% of the 270,000 jobs in the oil sector are in Scotland, the newspaper said.
Some production from the region also make up the global benchmark for the Brent (BZ=F) pricing.
Britain became the first G7 country last year, to set in law a net zero emissions target by 2050, so it is legally bound to deliver on that and has been looking to renewables to provide alternative sources of energy.
In December last year, during the United Nations Climate summit, the UK submitted a new national climate plan — or nationally determined contribution (NDC) — which confirms its pledge to cut greenhouse gas pollution by at least 68% by 2030 from 1990 levels.
Industry figures show that last year, over 30% of Britain’s electricity was generated by gas-fired power plants, while the offshore industry met about 45% of its overall energy needs in 2019. D
Data also revealed that flaring in the UK North Sea declined by 22% in 2020 from the previous year as production facilities cut the overall volume to 33 billion cubic feet (bcf).
The reduction which is roughly equivalent to the gas demand of 200,000 UK homes — is the lowest level of flaring on the UK Continental Shelf (UKCS) on Oil and Gas Authority (OGA) records.
A BEIS spokesperson said: “Our review into the future of the oil and gas licensing regime seeks to ensure it remains compatible with our target to reach net zero emissions by 2050. This commitment also forms part of the Energy White Paper published in December.
“We will agree a transformational North Sea Transition Deal with industry in the coming months to create jobs, retain skills and deliver new business and trade opportunities to support the sector’s transition to a lower carbon future.”
It comes after Denmark’s government announced in December last year that it will end all new oil and gas exploration and extraction in the North Sea by 2050.
The Nordic country also agreed to cancel its latest licensing round, which allows companies to search for and produce oil and gas. The move meant that eight planned licensing rounds and future tenders were cancelled.
Oil and gas production in Denmark has become an issue of political debate, after it agreed in 2019 on one of the world’s most ambitious climate targets of reducing emissions by 70% by 2030 and being climate neutral in 2050.
Denmark is the EU’s biggest producer of oil and gas, which excludes Norway and the UK — which are both bigger producers. The country is estimated to produce 83,000 barrels of crude oil and another 21,000 barrels of oil equivalent in 2020.
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It comes as controversial plans to build the UK's first new deep coal mine in decades will be subject to a public inquiry after climate change advisers said the project would “increase global emissions.”
It was given the green light in March by Cumbria County Council, which has been assessing the project since 2017, but councillors have since decided to review the application.
The government decided to intervene in the planned project, near Whitehaven in Cumbria in a U-turn, after initially deciding to leave it in the hands of local officials.
A letter, signed on behalf of the secretary for housing, communities and local government Robert Jenrick, said that the decision to "call in" the application for the mine had been taken in light of new information and called for an inquiry.
“The Secretary of State has decided to call this application in because of the further developments since his original decision,” the letter said. “The Climate Change Committee’s recommendations for the 6th Carbon Budget have been published since he was advised on this decision.”
The mine privately owned by West Cumbria Mining, will extract coking coal which is used for steel production rather than power generation. Over 80% of this coal would be exported to Europe and scientists have estimated that the mine would produce 8.4 million tonnes of CO2 per year.