Climate tests to decide future North Sea oil and gas projects

New licences for oil and gas projects in the North Sea will only be issued if a series of climate-friendly tests are met under a regime being proposed by ministers.

The Government has launched a consultation on a “checkpoint”  used to decide whether future licensing rounds go ahead, as part of a transition deal announced earlier this year.

It would consider factors such as the UK’s commitment to reach net zero carbon emissions by 2050, and whether oil and gas firms are reducing their own emissions.

One of the tests would also examine whether constraining domestic production could make the UK more reliant on imported oil and gas, which results in higher emissions.

The consultation comes after ministers were warned that a lack of clarity on the viability of future projects, in helping the UK reach its environmental targets, could make Britain a less attractive place for energy firms to invest.

Earlier this month Shell pulled out of the Cambo oil field project amid opposition from climate campaigners.

The International Energy Agency has also said there should be no new projects if the world is to reach net zero carbon emissions by 2050.

Greg Hands, minister for energy and climate change, said: “This new checkpoint will be key to our plans to support the oil and gas sector during its net zero transition.

“It helps safeguard the future of this vital UK industry as we create more opportunities for green jobs and investment across the country."

Malcolm Offord, minister for Scotland, added: “The UK government fully supports the oil and gas industry in its transition away from fossil fuels to cleaner, greener energy sources, such as wind and tidal power.

“Until we have sufficient supply in those areas, maintaining a domestic supply of oil and gas – albeit reduced – will be necessary.”

The checkpoint would be separate to more stringent environmental tests also being imposed on individual projects by the Oil and Gas Authority.

The Cambo project was paused by developer Siccar earlier this month following Shell’s decision to pull out. Environmental activists hailed it as the death knell for further oil and gas schemes in the North Sea.

Oil and gas still accounts for 75pc of the UK’s energy needs, however, with gas in particular seen as important to the transition to greener sources.

As a result, ministers have been urged not to create a hostile environment for investment by industry figures.

Sir Ian Wood, an oil and gas industry veteran now leading efforts on green technologies in Scotland, warned last month: “The skills, experience and infrastructure of a world class oil and gas industry will play a crucial role in accelerating energy transition and meeting net zero.

“We must support the industry in meeting this ambition and it is essential the Scottish and UK Governments do too. I urge politicians to reflect carefully on their public statements on oil and gas and the impact they have on investment in the industry.”

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