Annual oil and gas licences planned with net zero commitment required

Licences for oil and gas projects in the North Sea are set to be awarded annually, under government plans.

There is currently no fixed period between licensing rounds – but this would change under a bill to be announced in Tuesday’s King’s Speech.

Ministers said projects would have to meet net zero targets and claimed the policy would guarantee energy security.

Greenpeace said oil and gas exploration was “backward-facing” and vowed to fight new licences in court.

Labour has said it will honour existing licences granted before the next election, but would not allow any new ones to be granted if it won power.

A spokesperson for the Department for Energy Security and Net Zero said the new policy would relate to offshore production licences.

Applications to explore oil and gas fields are assessed by the North Sea Transition Authority (NSTA), an independent regulator.

According to the trade body Offshore Energies UK, there are just under 300 active oil and gas fields in the North Sea. But more than half of them will have ceased production by 2030.

The current licencing round opened in October last year, with the first set of 27 licences granted earlier this month.

However, the government says the UK will still need oil and gas to meet its energy needs, even if it meets its goal to meet net zero carbon emissions by 2050.

It also argues importing energy from abroad creates more emissions overall, whilst also making the UK reliant on “hostile foreign regimes” such as Russia for its energy security.

Under the plans, a new law requiring an annual licensing process will be listed in the King’s Speech, where the monarch will set out the government’s law-making plans for the year ahead.

A licensing round would only take place if the UK is projected to import more oil and gas from abroad than it produces domestically.

The carbon emissions linked to UK gas production would also need to be lower than the equivalent emissions from imported liquefied natural gas.

These two tests are currently part of the government’s climate tests for new licences, known as the climate compatibility checkpoint. However, the bill would make them legally binding.

Shadow energy security and net zero secretary Ed Miliband dismissed the plans as a “stunt”.

“We already have regular North Sea oil and gas licensing in Britain, and it is precisely our dependence on fossil fuels that has led to the worst cost of living crisis in a generation,” he said.