Recommendation 32

HM Government Rejected

73. Even with continued development, UK production is projected by the NSTA to fall by 7% per year, while it is estimated that global production will need to shrink by 3–4% in order to meet 1.5°C (UN Production Gap Report). The North Sea is a super- mature basin. Even with continued licensing, output is expected to decline. 74. Supporting our domestic oil and gas sector is not incompatible with tackling climate change, when we know we will need oil and gas for decades to come. As the energy crisis in the UK has shown, constraining supply and dramatically increasing prices does not eliminate demand for oil and gas. While we are working to drive down demand for fossil fuels, even when the UK has achieved net zero in 2050, some oil and gas will be needed for certain industrial purposes and essential products. Even with significantly reduced fossil fuel use in 2050, the UK is projected to remain a net importer of both. A faster decline in domestic production would mean greater reliance on imports, at greater expense, and in the case of gas, potentially resulting in additional global emissions. Imported Liquified Natural Gas (LNG) has twice the associated emissions of domestic gas production. 75. The Government has implemented a Climate Compatibility Checkpoint to check whether offering new oil and gas licences remains compatible with meeting our climate targets. The tests of this Checkpoint compare production emissions internationally, and against sector commitments in the North Sea Transition Deal, giving Ministers key information to assess the overall climate impacts of UK oil and gas production. The Checkpoint also looks ahead to whether the UK is forecast to remain a net importer of oil and gas; it would not be helpful environmentally, economically or in terms of maintaining offshore skills for the transition, to reduce domestic production where this merely increases our dependency on imports. 76. The Government agrees with the principle of ‘equity and common but differentiated responsibilities’ and acts on this by following IPCC recognised equity principles in its Nationally Determined Contribution (NDC). This is because the Government believes that principles of equity, when applied to restrictions on greenhouse gas emissions, result in better global outcomes. Through internationally agreed NDCs more economically developed countries are incentivised to invest in alternative sources of energy, transitioning traditional energy systems, and directly reducing GHG emissions. However, it is unclear that applying the same equity principles on the supply side would have the same shared benefits. If the UK were to scale down production, the international market would determine where additional production is scaled up. In a market where suppliers manage output to influence prices, it cannot be said that a small producer like the UK limiting production would decrease production overall or result in lower emissions globally.