The UK Government’s announcement of binding ‘net zero emissions’ legislation on 27 June 2019 attracted much media attention. The obvious question that follows is, how is that to be achieved. It is an issue that many businesses, including in the oil & gas sector, have been considering for some time. It is perhaps an indication of the extent of focus on this issue that it has become a key focus for the Oil and Gas Authority (“OGA”) over the last year or so and it has now published its policy position on its role in the energy transition.
The energy transition was identified as a thematic priority in the recently published OGA Corporate Plan for 2019 – 2024 and the OGA announced earlier this year that it was working with the Department for Business, Energy and Industrial Strategy, the Crown Estate, Ofgem and other stakeholders to test for potential technical and regulatory opportunities in both the short and longer-term to maximise the value of the UKCS through energy integration.
The objectives of OGA’s policy are stated to be:
- to support fully the UK’s transition to a low carbon economy;
- to have regard to minimising carbon emissions from the UK offshore oil and gas sector;
- to use skills and expertise to work with government, industry and other relevant stakeholders to support wider energy transition initiatives; and
- to engage fully with the energy transition to support MER UK by creating further efficiencies and to contribute to the industry’s continued licence to operate.
In order to meet these objectives, the policy describes the role the OGA will and will not take in relation to energy transition, and also related considerations the OGA will take into account when making decisions.
In summary, the OGA will:
- be responsible for the licensing of carbon storage permits;
- identify opportunities for the development of carbon dioxide storage;
- support opportunities for the re-use and recycling of infrastructure;
- ensure consistency of the OGA’s offshore flaring and venting regime with MER UK and wider government policy (including emissions targets);
- enhance understanding of offshore energy integration;
- support a diverse range of supply chain options; and
- work collaboratively with government and industry in support of its wider objectives.
The OGA will not conduct activities that contradict its statutory duties in respect of MER UK.
Finally, in taking decisions the OGA will consider:
- the principal objective of MER UK and its associated statutory functions and duties;
- how offshore oil and gas developments can benefit from and support the energy transition; and
- re-use and recycling opportunities as part of the cessation of production and decommissioning processes.
The policy position published by the OGA largely mirrors the stance outlined in OGA’s Corporate Plan 2019 – 2024. The policy document sets out more formally and in a little more detail the range of activities which the OGA is already said to be undertaking in support of the energy transition. The energy transition is sometimes seen as a risk to the UK oil and gas industry, and the OGA’s intention appears to be to focus the industry generally on the opportunities it may present.