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Tim Eggar: Times Oped - Gas crisis is a reminder that fossil fuels still matter

Earlier this month, with the sun blazing, the UK fired up a coal power plant to cover an energy shortfall.

The fine, calm weather meant there was not enough wind to keep turbine blades turning.

Gas stocks had been eaten into by a prolonged cold winter, a lack of storage, increased demand from Asia and substantial North Sea maintenance work.

Prices surged, creating the prospect of eye-watering bills for consumers and the collapse of smaller energy suppliers.

Then came the temporary shutdown of fertiliser plants which provide much of the CO2 needed by the food and drinking industry, sparking fears of shortages.

All are harsh reminders of the complexities of moving to a low-carbon economy.

The energy transition is just that – a transition.

Despite the welcome growth of renewables, the UK is still reliant on oil and gas to keep the lights on, homes heated and the country moving.

They currently cover three-quarters of our energy needs and demand for them is expected to persist for decades to come.

To me, it is logical that while demand lasts, we should satisfy as much of it as possible with domestic production.

The alternative is to increase our reliance on imports.

The UK can produce gas with a lower carbon footprint than almost all other producing countries.

Shipping in more from overseas would further reduce our energy security at a time when Russia has no apparent interest in combatting climate change, but a great deal of interest in using energy supplies as a weapon.

Responsibility for our decarbonisation would pass to other countries, many of which have less ambitious plans for reducing emissions from oil and gas production.

We might marginally reduce the UK’s emissions, but the world’s emissions would increase.

Tens of thousands of oil and gas jobs would be jeopardised, too.

These positions need to be protected until work on low-carbon projects has ramped up enough to allow workers to make a managed and “just” transition.

Not only that, oil and gas companies would be deprived of revenues required to fund their diversification into green energy.

Realistically, only these companies have the capital, infrastructure and expertise to deliver carbon capture and storage projects, identified by the Climate Change Committee as essential if we are to meet the UK’s net-zero target.

Of course, the UK’s dependence on fossil fuels must be reduced and we must produce oil and gas in a cleaner way.

In January 2020, I said the climate change debate was over and that the oil and gas industry needed to do much more to retain its licence to operate.

The industry did listen and did act.

It did not use Covid-19 as an excuse for inaction, instead securing a landmark North Sea Transition Deal with the UK Government.

The first of its kind for a G7 country, it set near-term emissions reduction targets and committed industry to invest billions of pounds in decarbonisation.

For the OGA’s part, we revised our statutory strategy to oblige the oil and gas industry to support the country’s net-zero ambitions.

Our actions are already having promising results.

In 2021, OGA interventions have helped the industry avoid producing 980,000 tonnes of lifetime CO2e – the same as taking more than 500,000 cars off the road for a year.

But external attitudes have hardened further since early 2020.

Ahead of COP26, criticism of the oil and gas industry is everywhere I look.

Calls for the rapid wind-down of the industry have been emboldened by recent alarming reports from the IEA and IPCC.

It is clear the sector must work hard to justify new drilling.

The climate compatibility checkpoint for new licensing rounds is a welcome sign of that.

North Sea reserves are being produced at a faster rate than they are being replenished – government projections already show that the UK will be a net importer of oil and gas out to 2050.

New developments are already factored into our forecasts, so we are counting on them to provide energy, investment and employment.

Outlawing them would only widen the supply-demand gap.

At COP26 we need global leaders to agree on ambitious near-term emission reduction targets.

For all our sakes, they must take concrete action which will tackle the world’s fundamental problem – persistent and too-high demand for fossil fuels.

Addressing supply without taking decisive action on demand will lead us down the wrong path; a path to higher oil and gas prices and higher emissions.

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