09 Oct Licensing Projects in the North Sea: Shunak’s Policy for Energy Security and its Consequences for UK Climate Change Policy

Globally, nations are grappling with the challenge of meeting their energy demands while addressing the urgent need to combat climate change. Prime Minister Rishi Shunak’s recent policy move to licence over 100 energy projects in the North Sea, encapsulates this complex dilemma faced by governments. While the move promises positive outcomes for energy security and possible climate change outcome, it has faced significant criticism, particularly concerning the UK’s moral commitment to climate change goals and Net Zero aspirations. This article aims to explore the details of Shunak’s action, its underlying justification, and the implications for climate change mitigation strategies.

Why is the North Sea Important?

The North Sea has historically served as a crucial source of oil and gas for the UK. However, recent years have seen a decline in production due to factors such as ageing infrastructure, maturing fields, and depleting reserves, which has posed economic challenges for oil and gas extraction. Following its peak in 1999, production in the North Sea has exhibited a consistent decrease, a decline from 4.5 million barrels of oil equivalent per day (boe/day) in 1999 to 1.4 million boe/day in 2014. In spite of this decline, the North Sea retains significant petroleum reserves. The North Sea Transition Authority (NTSA) estimates the UK continental shelf reserves to be at 4 billion boe, and some research suggests that the waters off the UK coast could potentially yield up to 15 billion barrels of oil equivalent. 

In light of these challenges, the UK government, under the guidance of Prime Minister Rishi Sunak, has strategically opted to grant a significant number of fresh licences for oil and gas exploration in the North Sea. At present, the North Sea Transition Authority (NSTA) is actively evaluating the 115 bids received for licences in the 33rd Oil and Gas Licensing Round, with intentions to allocate these licences at a later point in the year. The rationale they put forth for this policy move is to effectively combat the diminishing production trend, fortify energy security, and foster a catalyst for economic growth. 

As of now, the NSTA has already extended 21 licences for carbon storage, a development stemming from the UK’s inaugural Carbon Storage Licensing Round. These designated sites hold the potential to store up to 10% of the total annual emissions of the UK. Nevertheless, this strategic decision has not escaped critique. However, this decision has not been without its critics. Voices from various quarters argue that in an era where climate change is an existential concern, the UK’s commitment to reducing carbon emissions and transitioning to cleaner energy sources is compromised by this reliance on fossil fuels.

What are the Potential Benefits?

Examining the potential benefits, Prime Minister Shunak has defended his decision by contending that approving these new licences would enhance energy security, foster job creation, and provide a platform for carbon capture usage and storage (CCUS) projects. In support of the Net Zero commitment, the Prime Minister emphasised that even under the ambitious Net Zero target for 2050, a quarter of the UK’s energy needs will still derive from oil and gas sources. He underscored the significance of securing these supplies within the country rather than relying on potentially unstable sources from overseas.

Furthermore, the North Sea Transition Authority asserts that domestic gas production is approximately four times cleaner than imported liquefied natural gas (LNG), supporting that the North Sea gas is considerably cleaner and aligns more closely with the pursuit of net-zero greenhouse gas emission. In 2022 for instance, the UK’s domestically produced gas accounted for 38% of its gas supply while being responsible for only 24% of total emissions associated with gas supply. In contrast, LNG from the United States contributed 35% of emissions despite constituting only 14% of the supply. This insight demonstrates that domestically-produced gas generates significantly fewer emissions than imported alternatives, and continuing to produce gas in the UK with a focus on cleanliness could simultaneously bolster the drive to reduce emissions and secure energy needs. The issuance of these new licences thus holds the potential to enhance energy security and contribute to emission reduction by reducing dependence on more carbon-intensive gas imports.

Of considerable importance, the NSTA reported successes in its collaboration with the industry to curtail emissions from flaring and venting, leading to 50% cut over the past five years. Additionally, the NSTA emphasis on energy transition is underscored by its claim to have prevented the emission of 3.9 million tonnes of CO2 equivalent, which equates to taking 1.9 million cars off the road for a year.

Criticism

Some of the foremost criticisms of the move are;

Climate Impact: Arguably the most salient criticism is the perceived exacerbation of climate change. As our planet grapples with increasingly frequent and intense wildfires and heatwaves, largely attributed to the warming climate, the decision to expand oil and gas extraction is viewed as pouring fuel onto an already raging fire. By allowing increased fossil fuel consumption and subsequently heightening associated emissions, the decision appears to stand in stark contradiction to the urgent global imperative to mitigate climate change.

Fueling Global Environmental Issues: Beyond its immediate consequences, the decision also draws condemnation for its potential to further ignite global environmental crises. As wildfires and heatwaves intensify, the concern is that granting more oil and gas licences might contribute to the amplification of these climate-induced disasters, inadvertently fanning the flames of an already escalating global environmental emergency.

Energy Security Doubts: Curiously, the decision has raised questions about its actual impact on energy security. While it purports to fortify the UK’s energy security, critics argue that the reality might differ. The central argument posits that the extracted fossil fuels would predominantly find their way to international markets rather than being stockpiled for domestic consumption. Consequently, the decision might not yield the intended energy security benefits, leaving the UK’s energy vulnerability largely unaddressed.

Mismatch with Renewable Future: A pivotal facet of the criticism revolves around the perceived misalignment with the global trajectory towards renewable and sustainable industries. Those advocating for a greener future underscore that the world’s economic evolution hinges upon a shift away from fossil fuels and towards renewable energy sources. This transition is vital to curb emissions, combat climate change, and ensure long-term sustainability. Against this backdrop, the decision to expand fossil fuel licensing is cast as out of step with the forward march towards clean energy alternatives.

Conclusion

Shunak’s decision to licence projects in the North Sea serves as a prime illustration of the policy quandaries that governments encounter when attempting to strike a balance between achieving climate objectives and guaranteeing the safety and well-being of their populace. This underscores the reality that the shift towards renewable energy remains a considerable hurdle for leaders, necessitating cooperative efforts from both governmental bodies and industries to concretize the ambitious Net Zero objective