Net Zero: UK Government takes further steps to support transition by 2050

The UK Government is taking further steps to support the country’s transition to net zero by 2050 in a pragmatic, proportionate and realistic way, confirming new licensing opportunities that will protect British jobs and bolster energy security, reducing the UK’s reliance on imports from hostile foreign regimes such as Russia.

• Government to mandate annual oil and gas licensing to bolster UK’s energy security and reduce dependence on imports from overseas
• Certainty on future licensing will help secure 200,000 jobs and billions in tax receipts
• Licensing rounds will support lower carbon emissions and be contingent on specific tests to transition to net zero

Legislation to be set out later this week in the King’s Speech will require the North Sea Transition Authority (NSTA) to invite applications for new production license on an annual basis, providing certainty and confidence to investors and industry.

The UK still relies on oil and gas for most of its energy needs, and data published by the Climate Change Committee shows that the UK will continue to rely on oil and gas to help meet its energy needs even when the UK reaches net zero in 2050.

Encouraging domestic gas production, rather than importing higher-carbon emitting liquified natural gas from other countries, means lower carbon fuels for the UK and also benefits families and businesses. The combined oil and gas industry supports more than 200,000 jobs and adds about £16 billion to the UK economy annually.

The government seeks to reduce UK vulnerability to imports from hostile states, leaving  less exposed to unpredictable international forces. This should ensure a more secure and diverse energy system and as progress is made on renewables and new nuclear, a more robust energy mix will help to lower household bills in the long-term.

Each annual licensing round will only take place if key tests are met that support the transition to net zero. The first test is that the UK must be projected to import more oil and gas from other countries than it produces at home.

The second is that the carbon emissions associated with the production of UK gas are lower than the equivalent emissions from imported liquefied natural gas.

If both these tests are met, the NSTA will be required to invite applications for new licences annually.

Prime Minister Rishi Sunak.

“I am proud that the UK is a world leader in reducing emissions, and of our new plan to transition to net zero without adding undue burdens on households and securing the country’s long-term interest. 

“Domestic energy will play a crucial role in the transition to net zero, supporting jobs and economic growth, while also protecting us from the volatility of international markets and diversifying our energy sources.

“The clarity and certainty that our new legislation will provide will help get the country on the right path for the future.” Prime Minister Rishi Sunak.

The UK’s oil and gas industry has an important role to play in the UK’s energy transition.

Production from new gas and oil fields in the North Sea can be much cleaner than producing hydrocarbons from older existing fields, reducing the emissions impact of future production.

Domestic production will help unlock green investment, drawing on the key role our oil and gas industry plays, and driving forward investment in clean technologies that we need to realise the net zero target.

The UK’s current dependence on fossil fuels (75 per cent) is similar to other advanced economies. Japan gets 85 per cent of its energy from fossil fuels, the United States 81 per cent and Germany 76 per cent.