No new North Sea oil and gas licences? Or lots? Maybe some?

It has been hard to escape the phrase “oil and gas licences” over the past few weeks in Scotland.

“No new oil and gas licences”, says the Labour Party. ‘Lots’, to paraphrase the Conservatives. ‘Maybe some’ the SNP seems to be saying when Kate Forbes talks about an “in between position”.

“On one hand,” she said, “the Conservatives are wanting to issue hundreds of new licences, which we don’t think is compatible – but on the other hand Labour’s position could jeopardise 100,000 jobs.”

New oil and gas licences, she explained, must pass three tests: climate compatibility, energy security and energy cost.

But this is nothing new – the climate compatibility checkpoint was already baked into the system by the current Conservative government, and the process delegated to the North Sea Transition Authority. 

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And, of course, the SNP have little power over this matter, making it an easy issue to focus on when you want to portray yourself as a party that will defend the workers but still vaguely care about climate, yet don’t have to give a definitive answer.

But, if the SNP still want to look green, and committed to climate mitigation as well as jobs, backing licences is not a good look – especially when the debate comes just months after the dropping of a key 2030 climate target and the ending of the Bute House Agreement.

Another missed target

In the backdrop, there is also the difficult issue of Scotland’s 2022 greenhouse gas emissions, revealed this week to be only 50.1% down on the 1990 baseline, missing the 53.8% target, and only 0.1% down on 2021. Though Scotland is ahead of other UK countries, progress in recent years has plateaued.

It’s not that no emissions reduction is happening – buildings have seen decreases – but the rise in international aviation and domestic transport emissions is wiping them out. Small comfort, then, in the fact that at least the Scottish Green manifesto is pushing for a private jet supertax.

(Image: Derek McArthur)

We can’t all be right

But in terms of new oil and gas licences, the difficult question not discussed often enough in this election campaign, is what new oil and gas licences would mean, not just for our own Net Zero, but for global progress. The UK’s oil and gas reserves are in decline. Graphs show how, whether new licences are created or not, the trajectory is downwards. But the difference is still millions of barrels of oil equivalent. It is still, if burnt as fuel, significant emissions that we should be strongly striving to avoid.

Research has shown that, globally, if existing fossil fuel infrastructure is used to its full extent, it would cause three times the emissions as a global carbon budget consistent with a 50% chance of staying below 1.5C. That’s why the International Energy Agency in 2021 stated: “there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required”.

As the Grantham Institute said in a report published last month, “Production from new oil and gas fields in the UK runs contrary to this conclusion… There is no evidence that new UK production will displace other oil and gas production from elsewhere. Rather, it will just add to what is already a very large over-supply of oil and gas in relation to the Paris Agreement targets.”

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And what does the UK Climate Change Committee say? Its 2023 UK progress report acknowledged that there would be need for some oil and gas until Net Zero, but said that “this does not in itself justify the development of new North Sea fields”.

There are various arguments that are made for how extracting more oil and gas may be net zero compatible.

One argument frequently given for more North Sea oil and gas is that it is cleaner – though it is worth noting that it is only cleaner than some other oil and gas, and actually not so clean as others. Another is that it provides jobs and energy security, and that, surely if demand is to continue, it should be met where possible by our own reserves.

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But all of them seem to be arguments for ourselves as a special case – and we are not alone in doing this. An Oil Change International report published earlier this year found that no major oil producing country in the North Sea has a plan to stop drilling soon enough to meet the 1.5C (2.7F) global heating target, suggesting that is true.

As a 2023 IEA report put it: “Many producers say they will be the ones to keep producing throughout transitions and beyond. They cannot all be right.”

Cutting supply before demand

A further argument, made last year by the chief executive of Offshore Energies UK, is that the UK must cut demand for oil and gas before restricting North Sea supplies. That makes sense in terms of security – but the problem is that the more we create oil and gas opportunities to fall back on, the longer we are likely to allow ourselves to keep up demand.

In this context, the Labour Party’s plan is a bold, high-pressure move that takes the risk of cutting in tandem. It puts an end to new supply without certainty over demand decline. And the real question is whether GB Energy, with its renewables, nuclear power and home energy transformation, can deliver that shift.

(Image: Derek McArthur)

Hopelessly nuclear

A quick aside on nuclear power. Earlier this week, Tom Greatrex, chief executive of the Nuclear Industry Association lambasted John Swinney as “hopelessly ideological” and “anti-science” for this dismissal of nuclear power.

But being against nuclear power is not self-evidently anti-science in a world where all energy answers are some kind of science – and in which there are valid pragmatic and economic arguments against nuclear. 

Among them is the question of whether an energy system based around renewables, as has already been committed to in Scotland, needs nuclear to make it work? Is nuclear, widely regarded as inflexible – in spite of its increasing flexibility – what is needed to fill in the gaps in our wind and solar and fluctuating demand?

And can we trust these small modular, or other, reactors to be economically viable? 

Not according to a recent report by the Institute for Energy Economics and Financial Analysis whose title said it all: “Small Modular Reactors Still Too Expensive, Too Slow and Too Risky.”