Recommendation 7

HM Government Rejected

The domestic oil and gas industry is vital to the UK’s energy security. While the Government is scaling up domestic clean energy sources, the UK still relies on oil and gas for most of our energy needs and there will be continued need over the coming decades. Data published by the Climate Change Committee suggests a significant proportion of our energy will come from oil and gas even when we reach net zero in 2050. To meet this supply domestic production is better in terms of jobs, tax receipts and environmental emissions than imported alternatives. Beyond energy, oil and gas will remain essential to modern life for many years to come, including in the production of plastics, chemicals, and fertiliser. As the International Energy Agency has recognised, the skills and resources of the oil and gas industry will be crucial for the transition to net zero. New licensing will help bolster our energy security, decarbonise production, and bring jobs, investment, and revenue to the UK. The sector’s investments, supply chains and skilled workforce are exactly what we need to lead the world in delivering the energy transition. Even with new licences, UK oil and gas production is declining at 7% a year. That is faster than UK consumption will decline as we meet net zero, and faster than the average rate of decline needed globally to align with 1.5-degree pathways, according to the UN environment programme. The Government has taken action to avoid a poorly managed decline by agreeing the North Sea Transition Deal, a global exemplar of how a government can work in partnership with industry to achieve a transition which leaves no-one behind. The Government has also introduced the Offshore Petroleum Licensing Bill, providing industry with long-term certainty about the offshore licensing process. This Bill will make the UK more energy independent by increasing investor and industry confidence with regular annual oil and gas licensing. The Bill’s emissions and net importer tests will ensure that future licensing supports the transition to net zero. New licensing simply slows the fall in UK supply, rather than increasing supply above current levels. This ensures a managed decline at a pace that supports the UK’s energy security and the offshore workforce’s transition away from fossil fuels. The expected emissions from potential future projects are factored into the UK’s carbon budgets and will not compromise them being met.