Closing the North Sea will lead to an increase in carbon emissions

The UK's plan to shut down fossil fuel reserves in the North Sea could increase carbon emissions, according to economic analysis. Relying on imported energy instead of domestic production may raise emissions, weakening the nation's green future goals and energy security.

The abandonment of fossil fuel reserves in the North Sea could trigger a broader increase in atmospheric carbon levels, according to an economic analysis. This projection casts a shadow over the UK's commitment to a green future, with a growing concern that relying on foreign energy sources will make the nation dangerously dependent on external suppliers, potentially driving up emissions.

Impact of Energy Imports on Carbon Emissions

The Climate Change Committee has highlighted that sourcing oil and gas from abroad, a practice referred to as carbon offshoring, results in around 50% more carbon emissions compared to domestic production. Kathryn Porter, the architect behind insights from the IEA and a leading figure at Watt-Logic, warned that increasing foreign energy procurement would exacerbate global warming, taking the world closer to a hotter future. The UK’s energy future, she stated, is hanging in the balance; if current trends continue, the country could find itself increasingly reliant on polluting and costly foreign energy sources, leaving it vulnerable during harsh winters.

Policy Debate and Government Goals

Reports from the International Energy Agency (IEA) are expected to fuel further debate regarding the UK government’s net-zero policies. These policies aim to transition the nation's electricity grid to 95% clean energy by 2030. Energy Secretary Ed Miliband has argued that this shift will improve energy security and reduce the UK's reliance on authoritarian regimes and petrostates. However, critics suggest that these policies may have unintended consequences, potentially increasing dependence on imported energy and making the country more vulnerable to international energy price fluctuations.

Windfall Tax and Investment Decline

According to the IEA report, the government's windfall tax on North Sea oil and gas producers has contributed to a decline in domestic production, forcing the UK to rely more on carbon-intensive liquefied natural gas (LNG) imports. The Energy Profits Levy, introduced in May 2022 by the Conservative government, imposes a 78% tax on profits generated by oil and gas companies. The impact of this policy has been significant, with industry experts warning that it has led to a reduction in investment, as well as the loss of talent and capital from the sector. Robert Gordon University has predicted that the workforce in the North Sea could shrink from 115,000 in 2024 to between 57,000 and 71,000 by 2035.

Industry Response and Operational Reductions

Several companies have already announced plans to reduce their operations in the North Sea. American oil company Apache intends to cease its North Sea operations by 2029, while Chevron is closing its office in Aberdeen and withdrawing from projects in the region this year. Lord Frost, the Director General of the IEA, criticized proposals to end North Sea production altogether, calling such measures both destructive and counterproductive. He warned that removing oil and gas production without suitable replacements would result in serious risks for the UK’s energy security.

North Sea Production and Energy Security

Warnings from the UK’s grid operator last year indicated that a rapid decline in North Sea production could leave the country highly reliant on energy imports. According to forecasts from the National Energy System Operator (Neso), domestic gas production could decrease by as much as 78% by 2035 compared to 2025 levels. This would significantly increase the UK's dependence on international suppliers such as Norway, the United States, and Qatar.

Government Response

A spokesperson from the Department for Energy Security and Net Zero responded by stating that issuing new licenses for North Sea oil and gas exploration would not significantly reduce household energy bills or improve energy security in the short term. The government's primary objective is to provide long-term certainty for investors and the sector while supporting jobs. As part of its plan, the government intends to replace the Energy Profits Levy by 2030 or earlier if certain market conditions are met. Additionally, the government anticipates the creation of more than 40,000 new clean energy jobs in Scotland by 2030.

Sources:

• Britain cannot 'just stop oil' and trying to is making us poorer, dirtier and less secure
• Britain cannot 'just stop oil' – Institute of Economic Affairs
• JUST STOP OIL? (IEA report PDF)
• Shutting North Sea ‘will drive up carbon emissions’