News

- Press release

New net zero requirement for UK oil and gas industry

  • A revised Strategy from the Oil & Gas Authority has been submitted for laying in the UK parliament, featuring for the first time an obligation on the oil and gas industry to support the UK’s net zero target 
  • Oil and gas are expected to remain a vital part of the UK’s energy mix for the foreseeable future, and the landmark Strategy positions the UK Continental Shelf (UKCS) as a key enabler for the transition towards net zero carbon 
  • The onus is on industry to step up efforts to reduce emissions from existing and new production; support game-changing carbon capture and storage projects; and help unlock clean hydrogen production 

A revised Strategy from the Oil & Gas Authority featuring a range of new net zero obligations for the UK oil and gas industry, has been submitted for laying before the UK Parliament today (16/12/2020). 

The revised Strategy reflects the ongoing global energy transition. Oil and gas currently provide about 75% of the UK energy consumption and official government forecasts expect oil and gas to remain important to the UK’s overall energy mix for the foreseeable future, including as we transition to net zero.  

As long as this demand exists, managing production and maximising value from the UKCS as cleanly and efficiently as possible is necessary for security of supply, to ensure an orderly energy transition, and to reduce reliance on hydrocarbon imports. This is especially important as some imports, such as liquified natural gas (LNG) has a carbon footprint more than twice that of UK-produced gas.   

The Strategy requires industry to operate in a way consistent with net zero ambitions, lowering production emissions and making serious progress on the solutions that can contribute to the UK achieving net zero. The OGA believes the industry has the skills, infrastructure and capital to help unlock net zero solutions, such as Carbon Capture and Storage (CCS) and hydrogen production. 

In addition to the net zero obligation, the revised Strategy also requires industry to work in such a way that encourages collaboration with the supply chain and actively support carbon capture and storage projects. The OGA will monitor governance closely and ensure that carbon costs are considered in its regulatory decisions. 

Alongside the direction set out in the Strategy, Industry is also making progress in commitments to reducing production greenhouse gas emissions, and as well as stewarding towards emission reductions, the OGA will track, monitor, benchmark and report on this overall emissions reduction, and published its first benchmarking report on emissions from flaring and venting earlier this year.    

The OGA is working with industry and government to unlock net zero opportunities at pace, and many in industry have already made real progress by taking positive action such as announcing targets for production emissions. 

The OGA’s analysis of Energy Integration illustrated the substantial overall net zero potential of the UKCS. Integration has the potential to make a deep and meaningful impact, with a possible 30% contribution towards the country’s overall net zero target, primarily through CCS projects and through CCS plus hydrogen production. Adding offshore renewables (wind, wave and tidal) could take that up to 60% of the abatement required in 2050. 

Dr Andy Samuel, OGA Chief Executive, said: 

“This is an important moment in the North Sea story, bringing a key sector of the economy into the overall net zero project.  

“We have a clear vision for how to achieve this, supporting industry to reduce production emissions and to provide the infrastructure, expertise and capital to unlock game-changing carbon capture and storage and hydrogen production at scale.  

“With around 30 energy transition projects already underway, this Strategy lays the foundation for that vision to become a reality, unlocking significant high value opportunities and jobs to last long into the future.”   

Energy Minister Kwasi Kwarteng said:  

“As the first major economy to set a target of net zero carbon emissions by 2050 the UK is leading the world towards a cleaner future. Only last week we made another ambitious commitment to cut our greenhouse gas emissions by at least 68% compared to 1990 levels over the next decade, which will see us go further and faster than any other nation. 

 “Our Ten Point Plan and Energy White Paper show how we continue to set the pace for the green industrial revolution, but as we transition to a low carbon future, oil and gas remain an important part of our diverse energy mix and I’m delighted to see net zero placed at the heart of this strategy.” 

Scotland’s Energy Minister Paul Wheelhouse said:  

“I welcome the publication of the Oil and Gas Authority’s revised strategy which includes a requirement for industry to support the UK target of net zero greenhouse gas emissions by 2050 and I know OGA also recognise their strategy will, in its delivery, also support delivery of Scotland’s earlier net zero target for 2045. 

“This revised strategy reflects a commitment from the oil and gas sector to net zero, with the sector already playing a positive role in the transition by channelling resources and its innovative supply chain to help design the diverse energy system we need for the future.  

“The Scottish Government’s Climate Change Plan update, also published today, will, in giving clarity on pathways, give businesses confidence to invest in a low carbon economy. By working together, we can progress at pace and capitalise on the opportunities the energy transition will bring.” 

 

ENDS 

 

Notes to Editors 

The Strategy will come into force post laying subject to Parliamentary process 

The OGA's response to the consultation on proposals to revise the MER UK Strategy

Consultation on proposals to revise the MER UK Strategy 

UKCS natural gas carbon footprint analysis 

Flaring and Venting Benchmarking Report 

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