UK Oil and Gas Industry Hits Emissions Target Four Years Early

The UK oil and gas industry has hit one of its emissions reduction targets four years early, Offshore Energies UK, the industry association, reported, citing increased power system efficiency.

“Oil and gas will remain essential for decades to come,” said Mark Wilson, OEUK’s director of health, safety, environment and operations, as quoted by Bloomberg. “It is better from all points of view — financial, environmental, and social — that energy comes from our own homegrown North Sea supplies.”

According to OEUK, oil and gas operators in the North Sea had reduced their carbon dioxide emissions by 25% over the five years until 2023, even though the target for that cut was 2027. Oil and gas producers also reduced their methane emissions by half over the period—seven years before schedule.

Britain has one of the most ambitious energy transition programs in the world, rivaling those of the European Union and the United States. Under this program, the oil and gas industry is seen as mostly a source of funding for the construction of more wind and solar installations. To that end, the Starmer government has removed an investment incentive from the profit tax regime for the energy industry, which would see the total tax burden for oil and gas operators rise to 78%.

This has prompted warnings that companies would start leaving the country in what would effectively be a boomerang effect of the tax regime change, leaving less money to be spent on wind and solar.

Oil and gas production would also suffer, falling by 50% by 2030 under the new tax regime, assuming the hefty windfall profit tax remains in place indefinitely.

“This scenario would wipe out £19bn, or 65 per cent, of the UK’s remaining development capital expenditure, halve UK production by 2030, and all but eliminate industry cash flows by the 2030s,” Wood Mackenzie analysts wrote in a note, cited by the Financial Times, earlier this month.

By Irina Slav for Oilprice.com

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