The UK government is considering whether to approve a giant new oil and gas field in the North Sea, despite warnings from energy economists and climate scientists that the world cannot afford to develop any new fossil fuel projects.
The Rosebank oilfield, which could produce up to 500m barrels of oil over its lifetime, has set ministers on a collision course with climate campaigners. Ministers insist that the government will stay within its carbon budgets while securing the UK’s energy supplies and creating jobs and investment. But there are few clean answers to the questions in this debate.
Can the UK still meet its climate targets?
Campaigners at Uplift, which opposes new North Sea drilling, have said emissions produced from extracting oil and gas from the Rosebank field would exceed the targets set out for the oil and gas sector by the government’s official independent climate advisers, the Climate Change Committee (CCC).
This does not necessarily mean the UK would bust its carbon budgets, which are not officially set out for each sector of the economy. But it would require deeper cuts from other areas. The CCC has said it is “not clearcut” whether the UK should explore for new oil.
In a letter to the business secretary last year, Lord Deben, the CCC chair, said the committee had not been able to establish the net impact on global emissions of new North Sea oil and gas projects. The UK will continue to be a net importer of fossil fuels “for the foreseeable future”, he added, meaning there could be an advantage to domestic oil and gas over imports, which often have a bigger carbon footprint.
Still, ministers should be using policies that drive down demand for fossil fuels to keep a lid on imports, and applying “stringent” tests on new domestic production with “a presumption against exploration”, he said.
How much oil and gas do we really need?
The UK remains heavily reliant on fossil fuels, and consumed about 61m tonnes of oil and 77bn cubic metres of gas last year to meet about three-quarters of the UK’s total energy demand.
This is because 24m homes in the UK still rely on gas boilers for heat and hot water and 32m vehicles rely on petrol or diesel for fuel. In addition, 42% of UK electricity is generated by gas plants.
At the same time, the North Sea’s reserves are in sharp decline. North Sea oil and gas production is on course to fall from just over 90.3m tonnes of oil equivalent in 2019 to just over 46.3m within the next five years, according to data from the North Sea Transition Authority.
Mike Tholen, a director at Offshore Energies UK, formerly known as Oil and Gas UK, said the “natural long-term decline” of the North Sea meant the UK’s oil and gas production would never increase. But some new exploration would still be needed to keep the industry from tipping into a freefall that could dramatically increase the UK’s reliance on imports and deal a blow to jobs and the economy.
Why not import fossil fuels instead?
After Russia’s invasion of Ukraine, governments across Europe have become more wary of relying on foreign countries for energy supplies.
The UK is already a net energy importer, buying gas via pipelines from Norway and continental Europe and taking liquified natural gas (LNG) shipments from Qatar and the US. However, many import sources are more polluting than North Sea-produced oil and gas.
Shipments of LNG are particularly carbon intensive, with a carbon footprint for deliveries from the US more than six times larger than from North Sea extraction. LNG imported from Qatar is three times the carbon footprint.
Norway remains the exception: its gas production has a lower emissions intensity than most countries – including the UK – due to a tough stance on gas flaring, and rigs powered by clean electricity. It is also able to transport most of its UK gas exports via pipeline, which helps to save emissions compared with condensing, chilling and transporting seaborne cargoes. However, the main pipeline into the UK is already running at full capacity and its largest gasfield is in decline, so a large increase in imports is not an option.
How best to balance the UK’s need for fossil fuels with climate responsibilities?
In an otherwise thorny debate, marked by conflicting claims and counter-claims, there is one thing that all sides can agree on: the UK must do more to reduce its reliance on fossil fuels.
By tackling the growing demand for oil and gas, the UK government would face an easier task in limiting new exploration and production in the North Sea, without the risk of an “energy gap” or spiralling market prices.
Experts believe government policies designed to accelerate the rollout of electric vehicles and heat pumps must be matched by ambitious plans to prepare the electricity grid for a boom in car chargers. Measures to improve the energy efficiency of homes and factories with better insulation are also required.
Such changes would require billions of pounds in government spending. But the answer could be found in the North Sea itself. The Office for Budget Responsibility has forecast that oil and gas receipts will reach £11bn in 2022-23, up sharply from receipts of about £300m two years earlier, meaning it could be the perfect time for North Sea oil revenues to be put to work helping to reduce Britain’s need for new North Sea projects in the future.
