The UK government is seeking views on new climate criteria that oil and gas projects must meet to be approved.

The climate compatibility checkpoint will be used to decide whether new licences should be offered for exploration and production, both on and offshore.

It proposes six tests that must be passed to avoid a pause in licensing.

They aim to ensure the oil and gas sector is on track to reduce greenhouse gas emissions and supports investment in energy transition technologies.

The consultation document, published today by the Department for Business, Energy and Industrial Strategy, follows a review which concluded that continued licensing for oil and gas was, in principle, compatible with UK climate objectives.

But the review said the compatibility of future licensing with these objectives should be evaluated before a licensing round was offered.

If the evidence suggested that a future licensing round would undermine the UK’s climate goals or ability to reach net zero, it would not go ahead, the government said today.

The consultation recommends that the checkpoint applies to onshore, as well as offshore licences but is asking for arguments for and against:

“Although the onshore sector is much smaller than the offshore sector, the department is minded to include onshore oil and gas licensing in the outcome of any checkpoint. This means that a future negative checkpoint outcome would also be taken into account in relation to onshore licensing rounds.”

The tests

The first test requires the oil and gas sector to keep to its commitments to reduce operational emissions.

Under the second test, UK oil and gas sector emissions would be benchmarked against other global producers, to stop the possibility of emissions being exported.

Test 3 seeks to minimise reliance on imports, while test 4 would incentivise investments in energy transition technologies, such as hydrogen and carbon, capture, usage and storage.

The proposed Test 5 considers the greenhouse gas emissions from the use of UK produced oil and gas (known as Scope 3 or indirect emissions) and whether these would be expected to fall to keep temperature rise within 1.5C.

Proposed Test 6 looks at the global production gap – the discrepancy between planned fossil fuel production and the global level consistent with limiting warming to 1.5C or 2C.

“Climate compatibility of oil and gas projects is pure fantasy”

Friends of the Earth said the new checkpoint meant the UK would be ineligible to become a full member of the new Beyond Oil and Gas Alliance, launched last month. That would require the UK to commit to ending all new licensing rounds and phase out oil and gas production.

The organisation’s climate campaigner, Danny Gross, said: 

“The idea that a new oil or gas project can ever be ‘climate compatible’ is pure fantasy. Scientists have told us repeatedly that approving new developments is inconsistent with limiting global heating to 1.5. Yet our leaders continue to say one thing and do another, with puffed-up announcements that offer little on close inspection.  
 
“If this new checkpoint leaves the door open to future oil and gas licenses, the UK will fall catastrophically behind on climate and importantly, phasing out fossil fuels. Considering the government holds the COP presidency until late next year, the coming months are ripe with opportunity for the UK to set a good example. This approach is half-baked and undermines the UK’s climate credibility.” 

“Checkpoint is key to support for sector”

The UK energy and climate change minister, Greg Hands, said:

“This new checkpoint will be key to our plans to support the oil and gas sector during its net zero transition.

“It helps safeguard the future of this vital UK industry as we create more opportunities for green jobs and investment across the country.”

The Oil & Gas Authority, which issues licences, welcomed the consultation. Its chief executive, Dr Andy Samuel, said:

“Alongside the net zero test the OGA is applying to our decisions such as field developments, these proposals recognise the important role of industry in helping meet the UK’s energy needs while accelerating the energy transition to net zero.”

The proposals apply only to new licensing rounds. Projects that have been licensed but not yet approved will not be assessed under the checkpoint.

Exploration and production of offshore oil and gas is the responsibility of the UK government, so the offshore proposals relate to all countries in the UK. Responsibility for onshore licensing is a devolved matter so the proposals apply only to England.

The consultation runs until 28 February 2022.