As part of the agreement, the U.K. will no longer provide financial support for fossil fuel projects overseas from March 31 “with very limited exceptions,” according to the statement. It will also introduce a process later this year called “dynamic checkpoint,” which will ensure future oil and gas exploration and production licenses are only granted if they don’t undermine the nation’s climate goals.
The plan comes at a time when the U.K. oil and gas industry is struggling to recover from an investment slump caused by the coronavirus. Even before the Covid-19 crisis, the North Sea had undergone dramatic changes as many major companies departed from aging fields. Oil production fell by more than half in the past two decades and is expected to decline further.
The U.K. didn’t go as far as North Sea neighbor Denmark — a much smaller producer — which will stop offering new oil and gas licenses and end production by 2050. Exploration on the U.K. continental shelf is already dwindling as resources become scarce and investment is diverted to other regions, dropping to the lowest since 1965 last year, according to a trade body Oil & Gas U.K.
“Refusal to rule out new oil and gas licenses when the evidence is already clear that they are incompatible with U.K. climate commitments is a colossal failure,” said Mel Evans, head of Greenpeace U.K.’s oil campaign. “While the government has rightly recognized the need to set a global example in ending fossil fuel finance abroad, its domestic plans for oil and gas continue to fall woefully short.”
The new deal requires certain commitments from the sector. It should reduce emissions by 10% by 2025, 25% by 2027, and 50% by 2030.
By 2030, the sector will also voluntarily commit to ensuring that 50% of its offshore decommissioning and new energy technology projects will be provided by local businesses. It plans to appoint an industry supply-chain champion who “will support the coordination of local growth and job opportunities.”
“We need to urgently end our reliance on fossil fuels,” Energy Minister Anne-Marie Trevelyan said in the statement. “Through our pioneering North Sea Transition Deal, we will do so without putting our economy and communities at risk.”