“Now more than ever, it’s vital that we bolster our energy security and capitalise on that independence to deliver more affordable, clean energy to British homes and businesses.
“Even when we’ve reached net zero in 2050, a quarter of our energy needs will come from oil and gas. But there are those who would rather that it come from hostile states than from the supplies we have here at home.”
Monday’s announcement from the Prime Minister was primarily a dedication to undertake future licensing rounds for North Sea oil and gasoline tasks, in essence agreeing in precept to permit the fossil gasoline trade to undertake new tasks.
The announcement didn’t make choices on particular oil fields, such because the Rosebank and Cambo tasks, and it’s unlikely to end in vital sensible modifications within the rapid future.
Instead, it instructed extra of a political dividing line between the Conservatives and Labour, which has promised to not challenge new licences for oil and gasoline manufacturing if it involves energy.
The Government has additionally permitted two new carbon seize, utilization and storage (CCUS) tasks in Scotland and the Humber , that are anticipated to be delivered by 2030.
– Why has the Government chosen to decide to new licences?
The Government has stated that, even beneath its plans to realize web zero by 2050, oil and gasoline will stay a part of the UK’s power combine.
Therefore, the Prime Minister stated, use of North Sea assets must be maximised as it’s a safer supply of provide than imports from “hostile states”. The UK imports round 50% of the pure gasoline it wants, primarily from Norway, however with different contributions from Qatar, the United States and, previous to 2022, Russia.
The Government additionally argued that North Sea fossil fuels would imply power was cheaper and had round 75% fewer carbon emissions related to its manufacturing than imported fossil fuels.
– What impact would new licences have on value?
It won’t be clear how a lot oil and gasoline might be produced beneath the following licensing spherical till the Government reveals the place the brand new licences might be, and it might probably take 4 years from a licence being awarded to the primary exploratory drilling being performed, with one other few years on prime of that earlier than business manufacturing.
Areas with present oil and gasoline discoveries might be exploited faster, however it’s nonetheless more likely to be a number of years earlier than any new licences produce fossil fuels.
Even as soon as they begin producing, specialists from oil and gasoline trade analysts Wood Mackenzie instructed they’d have little impact on family payments, with power costs being depending on the European value of oil and gasoline.
Greg Roddick, principal analyst at Wood Mackenzie, stated: “If there was a giant gas discovery it might soften gas prices a bit, but it seems unlikely to make a significant difference.”
– Will new licences enhance power safety?
All gasoline produced within the North Sea is both used domestically or exported, so further manufacturing in UK waters would doubtless displace a few of the gasoline that we import from elsewhere, offering extra safety.
But the Wood Mackenzie analysts careworn that power safety additionally trusted the extent of demand, saying that driving down demand for oil and gasoline would play a big position in lowering the UK’s reliance on imported fossil fuels.
– What would be the local weather impression?
Fossil gasoline manufacturing within the UK does generate much less emissions than manufacturing in lots of different locations because of a drive to decarbonise the trade, whereas the transport prices of importing oil and gasoline add additional emissions when put next with home manufacturing.
James Reid, additionally of Wood Mackenzie, stated: “We do see in our modelling that it’s more beneficial from an emissions-saving perspective when you produce it domestically.”
But, once more, the analysts careworn the significance of lowering demand, which Mr Roddick stated be “the biggest factor in terms of climate impact” as it’s the precise burning of fossil fuels that generates the most important amount of CO2 related to the trade – far outstripping the quantity saved by changing imports with domestically produced oil and gasoline.
And whereas producing gasoline within the UK emits much less carbon than importing liquified pure gasoline from, for instance, Qatar, it nonetheless emits greater than imported gasoline from Norway – which offers round three-quarters of the UK’s gasoline imports.
