Hydrocarbon companies that want to maintain their position in the economy have to become wholly different businesses, the government’s climate change advisor has warned.
Launching the world’s first detailed route map to a fully decarbonised nation, Lord Deben, chair of the Committee on Climate Change (CCC), said:
“We say to the oil and gas industry it would be a good idea for them to look very carefully at the realities of life.”
The CCC’s 1,000-page report, published today, shows how the UK can reach its legally-binding target of net zero carbon emissions by 2050.
The recommendations pose challenges for the hydrocarbon industry, with cuts to demand for oil and gas, and limits on emissions from sites and production.
Key proposals include:
- Phase out of oil-fired central heating boilers by 2028 and gas-fired by 2033
- Phase out sales of new fossil fuel cars, vans and motorbikes by 2032.
- No new unabated gas power plants to be built after 2030
- Unabated gas-fired electricity generation to end by 2035
- Offshore wind to become the “backbone of the whole UK energy system”
- “Major ramp up” of home insulation, heat pumps and heat networks
Lord Deben said:
“you’re beginning to see [oil and gas] companies that recognise that if they are to maintain their position in the structure of the economy, they have to become wholly different businesses.
“And I would say the investor might well choose those companies that recognise where the world as a whole is moving, not just Britain, and perhaps decide that people who are still hanging on to old fashioned views are not places that you want to invest.”
The CCC report said overall UK greenhouse gas emissions must fall by almost 80% by 2035, compared with 1990 levels. 18 months ago, this level of reduction was the UK’s goal for 2050.
By 2035, fossil fuel supply emissions should be reduced by 75%, compared with 2018 levels, the report recommended.
The CCC said existing oil and gas platforms, both on and offshore, should reduce emissions, in line with the report’s recommended pathway to net zero:
- From 2025, flaring and venting should be permitted only when necessary for safety reasons on both onshore and offshore fields
- The government should develop carbon-intensity measurement standards for gas and oil, produced on and offshore, and take steps to improve the measurement and monitoring of fugitive emissions, venting and flaring
- From 2021, any new plans for offshore oil and gas platforms must use low-carbon energy for their operations
- By 2027 new offshore platforms should have no direct emissions from operational energy use
The CCC will comment in March 2021 on how the last two policies could apply onshore.
Emissions from products
Businesses are also recommended to consider and reduce all emissions, including those indirect emissions from the use of their products.
The issue of indirect emissions was at the heart of a legal challenge last month involving production from UKOG’s Horse Hill oil site in Surrey.
The CCC said oil and gas companies could use carbon capture and storage to offset emissions from the use of their fuels.
The report says producers could be required to put back in the ground a proportion of the carbon they extracted. This could rise over time until it covered 100% of emissions associated with fossil fuel extraction, supply and use.
The report also said the government should require disclosure of:
- carbon intensity for selected industrial products and processes in the early-mid 2020s
- whole-life carbon in buildings and infrastructure
Both these recommendations cover the indirect emissions from carbon intensive industries, the CCC said.
Hydrogen and net zero
Onshore gas companies, including IGas, UK Oil & Gas, Angus Energy and Cuadrilla, have said they could diversify by converting methane into low-carbon hydrogen. Some of the operators have suggested this would contribute to net zero. But the CCC report suggests there may be limits to the process.
The CCC said hydrogen could “greatly facilitate the transition to net zero”. But it said the replacement of methane by hydrogen was “unlikely to deliver large emissions reductions over the next decade”.
Blue hydrogen – the production of hydrogen from methane with carbon capture and storage – can reduce emissions by 60-85% but it is not carbon free. The residual emissions may restrict its part in achieving net zero, the CCC said. The process could also push the required amount of carbon capture and storage to levels that may not be feasible.
The report concluded:
“Given the need for strong emissions reductions in the next decade and the availability of more established ways to do so, development of the hydrogen option should not be at the expense of pursuing proven decarbonisation options, such as electrification, in the 2020s.”
“Where options are available to reduce emissions through zero-carbon routes, such as electrification, these are strategically preferable to use of hydrogen.
“Hydrogen’s role should therefore be focused in those areas where it is likely to be infeasible or prohibitively expensive to pursue electrification”.
The safety case for hydrogen in buildings had still to be made, the CCC said. The government’s hydrogen strategy, due in 2021, should establish the balance between carbon-free green hydrogen – made from water using renewable electricity – and blue hydrogen.
Planning for emissions
The report did not set out how the planning system might take account of direct and indirect emissions from oil and gas developments.
But the CCC said, where possible, all businesses and local authorities should monitor and report on their emissions. All parties should also consider the impact of the UK’s net zero objective on their decisions.
Local authorities were the “cornerstone of climate change partnerships” that would deliver net zero, the report said. They had potential influence over emissions through land use and transport planning policies.
But a recent review by the National Audit Office found that local authorities were currently absent from the government’s coordination strategy for net zero. The CCC also said local authorities’ climate ambitions were unlikely to be achieved through a lack of local capacity and skills, policy and funding barriers and gaps in power.
The government should consider introducing a duty for local authorities to act in accordance with net zero and to develop climate action plans, the report recommended.
Sixth carbon budget
The CCC’s report includes the sixth carbon budget covering the period 2033-37.
The budget – at 965 MtCO2e – is a 78% reduction from 1990 to 2035. It requires annual reductions in UK emissions of 21 MtCcO2e.
This would “achieve well over half of the required emissions reduction to 2050 in the next 15 years”, the CCC said.
“It can feasibly be achieved at low overall cost and would bring multiple benefits and opportunities for the UK.”
The sixth budget could be met by take-up of low carbon solutions, expansion of low-carbon energy supplies, reducing demand for carbon-intensive activities and removal of greenhouse gases through tree planning and landscape restoration.
The CCC said savings in fuel costs would offset the investment needed to achieve net zero in later years. The net additional cost each year to deliver the same services with lower emissions had now fallen to less than 1% of GDP to 2050.
This was because of the falling cost of offshore wind and a range of new low cost, low-carbon solutions throughout the economy.
Lord Deben said:
“The Sixth Carbon Budget is a clear message to the world that the UK is open for low-carbon business. It’s ambitious, realistic and affordable. This is the right carbon budget for the UK at the right time.”
He said it was a chance to “jump-start the UK’s economic recovery” after the Covid-19 pandemic.
If the CCC’s recommendations were accepted by the UK government next year, Lord Deben said the budget would position the UK as “a true global climate leader” ahead of the UN climate summit, COP26, in Glasgow in November 2021.
Reaction: “Too conservative”
Mike Childs, Head of Science at Friends of the Earth, said:
“This is too conservative given the havoc and misery extreme weather is already causing, particularly to the poorest people in the world who have contributed least to climate breakdown.
“Areas like energy efficiency and eco-heating are challenging but would come on in leaps and bounds with immediate and sustained investment. For example, heat pumps are a proven technology and we should be aiming to phase out the installation of new gas boilers well before 2030 and fitting approximately 10 million heat pumps by the same date. Rapid investment in training fitters and hiring new apprenticeships will get this done.
“It’s what government does right now that will determine if we meet our carbon pollution reduction goals. And what the government is doing is ploughing £27 billion into climate-wrecking roads as well as funding damaging fossil-fuel projects overseas.”
Dr Jenifer Baxter, chief engineer at the Institution of Mechanical Engineers, said:
“Reducing emissions by 80% by 2035 will require investment in technical skills as well as rapid reform to energy system standards and regulations. We will also need to develop innovative new financing mechanisms, and potentially change planning laws. This must all be driven in parallel while simultaneously ensuring the public are confident in this fast-moving transition to a net zero emissions future.”
DrillOrDrop will add to reaction throughout the day.