First of all, what is this bill about?
On January 22nd, the Offshore Petroleum Bill underwent its second reading and program motion in Parliament. Protesters from XRUK, XR Scientists, Fossil Free London, and Just Stop Oil gathered outside to oppose the bill's passage. But what exactly does this bill entail, and why should it be a matter of concern?
To help everyone understand the Offshore Petroleum Licensing Bill (OPLB), the bill, introduced in the 2023 King’s Speech, aims to enhance the United Kingdom's energy security and reduce dependence on volatile international energy markets and potentially adversarial foreign regimes. According to the proposed legislation:
"This Bill will facilitate the future licensing of new oil and gas fields, supporting the country's transition to net-zero emissions by 2050 without unduly burdening households."
However, we will delve into the reasons below as to why this bill may not effectively bolster energy security and might not lead to a reduction in energy costs.
If the bill is approved, it would mandate the UK to open applications annually for new offshore oil and gas production licenses in the North Sea. This marks a departure from the current practice of conducting licensing rounds on an irregular 'as required' basis.
Granting new licenses for fossil fuel extraction contradicts:
- The Paris Agreement's goal of limiting global average temperature rise to below 1.5°C
- The UK's commitment to achieve net-zero emissions by 2050
- The UK's pledge, made at COP 28, to 'transition away from fossil fuels in energy systems.'
The UK Government asserts that the legislation is essential to enhance national energy security, but this claim is false. Approximately 80% of the extracted fuel would be sold on the global market to the highest bidder, as acknowledged in a written response to the House of Commons.
Contrary to the notion that new oil and gas extraction would reduce energy bills, Energy Secretary Claire Coutinho has admitted that this is not the case. Instead of lowering costs, the extraction of new North Sea oil and gas will deplete the UK's finances through tax breaks. In May 2021, the Treasury introduced a tax relief of 91p in the pound for new oil and gas developments, estimated to amount to £11.4bn in subsidies over five years.
The legislation is widely believed to be politically motivated. Following a by-election victory on an anti-clean air, anti-ULEZ campaign, the Conservative Party reinforced the idea that leveraging 'green' issues as a 'wedge issue' could secure votes. The North Sea Transition Authority board, in a private meeting, concluded that the new mandatory annual licensing process was unnecessary and would have no impact on its efforts to maximize the recovery of UK petroleum. Consequently, the bill is viewed as a mere political spectacle staged as part of the Conservative Party's election strategy.