In light of the political mood on climate change and the ever changing nature of the UK Oil and gas sector, the UK Government has decided to launch a consultation on what it calls a new “Climate compatibility checkpoint”.

By engaging with the industry – which primarily revolves around the North Sea Oil and gas production – the Department for Business, Energy and Industrial Strategy (BEIS) hopes to achieve reform in the sector, saying
“The checkpoint will apply to any future oil and gas licences to ensure they are aligned with government’s climate change commitment…new measure will support the UK’s oil and gas sector in the transition to net zero”

Why now?

The Oil and Gas sector in the UK, long the subject of other economic debates, is now a huge part of the emotionally charged political discourse on climate change in the UK.

Energy and Climate Change Minister Greg Hands said:
“This new checkpoint will be key to our plans to support the oil and gas sector during its net zero transition. It helps safeguard the future of this vital UK industry as we create more opportunities for green jobs and investment across the country.”

The consultation, which lasts until 28 Feb 2022 is intended to engage all of the industry’s key stakeholders, crucially the private sector companies who the regulation would affect. In September 2020, the Government announced it wanted to look at if the Oil and Gas sector in the UK was in line with its climate targets. The review found it was, but only with reform, that could be agreed across the sector for new licensing requirements.

What will the outcome be?

The UK Government plan seems to be an attempt to balance its climate rhetoric, against the reality, that the economy of the North Sea oil and gas sector is too precious, to simply shut down and discontinue.

By engaging the different parties in the sector and giving stakeholders a chance to put their case, there is clearly a desire to avoid the frantic debate about climate change and environmental impact, affecting any reforms in a negative way. The other key point is to reassure those whose livelihoods depend on the sector, that their jobs are secure. Indeed, the Government says it intends to create jobs from these changes.

With the many stakeholders invited to contribute Andy Samuel, Chief Executive of the Oil and Gas Authority (OGA) said:

“We welcome the launch of this consultation. Alongside the net zero test the OGA is applying to our decisions such as field developments, these proposals recognise the important role of industry in helping meet the UK’s energy needs while accelerating the energy transition to net zero.”

The outcome of this consultation, will be a potentially seismic shift in the way the North Sea oil and gas sector operates, with an emphasis on the environment. As with all things to do with climate change, it remains to be seen if well meaning rhetoric on jobs, reform and climate change will match up with reality.