A Commons vote on the Offshore Petroleum Licensing Bill was pulled on Monday evening, with the government claiming a “lack of time” for it to be properly debated.
Opposition had been mounting ahead of the Bill’s second reading, with former Energy Minister and Chair of the Net Zero Review, Chris Skidmore, resigning as an MP in protest, a cross-party group of MPs writing to Energy Security and Net Zero Minister, Claire Coutinho, calling for the Bill’s withdrawal, and COP26 President, Alok Sharma, describing it as a “distraction” from the key task of significantly expanding home-grown renewable energy.
With additional Commons business leaving 45 minutes to debate the Bill, Marcus Jones, Deputy Chief Whip, said it was being pulled having described it as significant and “crucial to the UK’s energy security”. The expectation now is that it will return “within the next two weeks”.
The Offshore Petroleum Licensing Bill was introduced to Parliament back in November, setting out plans for annual oil and gas licensing rounds subject to the UK remaining a net importer of both oil and gas, and the carbon emissions associated with the production of UK gas being lower than the average equivalent emissions from imported liquefied natural gas.
It was because of this Skidmore tendered his resignation as an MP.
Sharing his resignation letter on social media, Skidmore explained he was stepping down because of “the government’s decision to prioritise and politicise new oil and gas licenses above a sensible investment plan for the future.” Plenty of the coverage around the Bill and the government’s net zero approach in general under Rishi Sunak has spoken of the aim to “create a dividing line with the Labour Party”. Skidmore also stressed that new licenses would do nothing for energy security and risked creating stranded assets and jobs for the future.
Furthermore, considering the decision taken at COP28 to transition away from fossil fuels, Skidmore said the UK should be setting an example now, “not sending out the toxic message that opening new oil fields should be business as usual”. Supporting his argument, Skidmore cited conclusions from the International Energy Agency (IEA), UNCCC and Climate Change Committee (CCC), all of which have said “there is no place for new additional fossil fuel extraction beyond what is taking place if we are to meet the Paris Agreement and net zero.”
Alok Sharma, formerly President of COP26, was another to raise his opposition against the bill and said he would not be supporting it. Sharma pointed out that the North Sea Transition Authority (NSTA) can already issue licenses for fossil fuel exploration “when they deem it necessary” and labelled the bill as a “distraction from the task of pressing ahead with the government’s own plans for a significant expansion of home-grown renewable energy” which is something that would do far more for enhancing the UK’s energy security.
Sharma also suggested that one of the things the bill does is “reinforce that unfortunate perception about the UK rowing back on climate action […] and not being serious about meeting our international commitments”.
Designed for impact, or just to distract?
Defending the legislation, the government came out stating oil and gas will be needed “for decades to come, even when we reach net zero in 2050” and said it was “common sense to make the most of what we can produce here” rather than importing fuels from afar.
So, what is the truth? Will new oil and gas licenses actually make a material difference to the UK’s energy security, impact on bills and aid the path to reaching net zero by 2050?
According to the Energy Climate and Intelligence Unit (ECIU), the answer is no.
Releasing analysis on 8 January, the ECIU concluded oil extraction from the UK Continental Shelf (UKCS) is growing less and less important for the UK’s energy independence and security. This means new licenses for drilling in UK waters would make very little difference.
It found that in 2022, production from UK oil fields accounted for one in every 13 litres of petrol, one in every 16 litres of road diesel and one in every 30 litres of aviation fuel. As North Sea il production continues to decline, those numbers are likely to become even more stark.
Even if UK oil production were to be expanded to the maximum level in North Sea Transition Authority projections, and demand for fuels did not fall, only a small minority of fuels used in the UK would come from UK oil fields through UK refineries. The ECIU determined this would see one in every 20 litres of petrol, one in every 26 litres of road diesel and one in every 50 litres of aviation fuel. This would mean new licenses for drilling in UK waters would increase by less than 1% of the amount of each fuel used in the in 2030 that would come from UK oil fields that go through UK refineries.
Head of Analysis at ECIU, Dr Simon Cran-McGreehin said that the government should instead be looking to policies that would have a “real, lasting impact” on the UK’s energy independence. This would include properly backing British renewables and helping people to insulate their homes and cut energy waste.
“The government is doing much less well on those fronts,” continued Cran-McGreehin. “With everyone in agreement that the North Sea will inevitably continue to decline, unless efforts are upped, the UK’s energy independence is being put further in jeopardy.”
Professor Gavin Bridge, meanwhile, Fellow of the Durham Energy Institute at Durham University, added: “The reality is very little of the oil pumped from the North Sea is refined and sold on British soil, and even then the price is largely dictated by international markets. The notion that more drilling on the continental shelf boosts our energy security doesn’t stand up to scrutiny. Most of the oil is extracted by private or foreign state-owned companies over which the Government has little control.”
The CCC says ‘inconsistent with climate goals‘
The Climate Change Committee (CCC) has also come out to reiterate its previous advice that the UK’s oil and gas consumption needs to fall by over 80% to meet its climate targets.
Both Energy Security and Net Zero Minister, Claire Coutinho and Chancellor, Jeremy Hunt, had used the CCC’s admission that oil and gas would still be needed in 2050 as justification for the legislation.
Coutinho claimed the CCC had said that come 2050, oil and gas will be needed for a quarter of the UK’s energy. The CCC, however, as quoted by The Guardian, said the data used for that was from its sixth carbon budget, but the government had used its own calculation to get to that 25% figure.
Hunt, meanwhile, similarly told the Today Programme that the CCC had said the UK will get a “significant proportion of our energy from fossil fuels” in 2050 even when reaching net zero, suggesting this allows for more oil and gas extraction. When that comment was put to CCC Chair, Piers Forster, on social media, Forster pointed to the panel’s previous advice, adding that both that and the decision taken at COP28 makes “further licensing inconsistent with climate goals”.
In that advice, issued to then Business, Energy and Industrial Strategy Minister, Kwasi Kwarteng, back in 2022, the CCC said the best way to reduce the UK’s future exposure to volatile prices is to cut fossil fuel consumption. They also suggested any increases in UK extraction of oil and gas would have a marginal effect on prices faced by UK consumers in the future “at most”.
The CCC further stressed that an end to UK exploration entirely would help to send a clear signal to investors and consumers that the UK is committed to the 1. 5°C global temperature goal. This would also aid efforts from the UK to strengthen climate ambition globally.
