The government and private sector will pour £16bn into the North Sea oil industry over the next decade in a bid to reduce carbon emissions, business secretary Kwasi Kwarteng announced today.
Under the new “North Sea Transition Deal”, ministers will be able to block future oil and gas exploration on the continental shelf if it breaches environmental standards.
It is hoped that the plan will cut emissions from the basin, which produces 3.5 per cent of the UK’s yearly greenhouse gases, by 60m tonnes – or 50 per cent – over the decade.
At the same time, the government vowed that high-skilled sector workers would not be left behind by the transition. There are currently around 40,000 workers supported by the sector.
Kwarteng said: “Through this landmark sector deal, we will harness the skills, capabilities and pent-up private investment potential of the oil and gas sector to power the green industrial revolution, turning its focus to the next-generation clean technologies the UK needs to support a green economy.
“At every step on the path to net zero emissions, we will create the right conditions for new green industries to base themselves in the UK and create new high-value employment opportunities.”
The deal, which also contains provisions for emissions reductions targets and repeats a previously announced pledge to ban UK funding of overseas fossil fuel projects, was welcomed by the industry.
Oil and Gas UK (OGUK) chief executive Deirdre Michie said that the deal was a “striking example of global leadership” ahead of the COP26 climate conference in November.
“It will safeguard UK energy security, providing affordable energy to millions of households, secure tens of thousands of jobs in industrial heartlands across the country and support the UK economy.”
Despite its push towards renewable energy sources, the UK remains dependent on oil and gas resources from the basin.
Industry figures show that the offshore sector met about 45 per cent of the UK’s overall energy needs in 2019.
Environmental campaigners on the other hand were less pleased. Mel Evans, head of Greenpeace UK’s oil campaign, said:
“Instead of finding ways to prop up this volatile and polluting sector, a better proposition for workers and communities would be for the Government to confirm a ban on new licences, and put all its energies into a nationwide programme of retraining, reskilling and investment in renewables and green infrastructure.”
The funding package will comprise £3bn to replace fossil fuel energy sources for oil and gas rigs with renewable power, as well as £3bn to develop Carbon Capture and Storage (CCS) technology.
The remainder will go towards the production of hydrogen as an energy source.
Ministers will also introduce a new “Climate Compatibility Checkpoint” to ensure that new exploration licenses are aligned with the country’s net zero targets.