• Licensing structure for new oil and gas set out in King's Speech

Fuel for Thought

Licensing structure for new oil and gas set out in King's Speech

Nov 07 2023

In a highly anticipated move, this year’s King’s Speech – Charles III’s first as monarch - commended a new legislative framework that will mandate an annual cycle for the issuance of oil and gas licenses, a strategy aimed at cementing the UK's energy autonomy. With an emphasis on adhering to net zero commitments, this Bill attempts to disarm its many opponents, who are adamant that this expansion of the North Sea fields is an act of ‘climate vandalism’ with gruesome consequences.  

The proposed legislation will attempt to justify the expansion by proposing a regulatory framework which can make it appear as if the project is moving in the direction of the government’s commitment to total decarbonisation by 2050. This framework, like many such frameworks around the world, claims to ‘balance’ the quantity of greenhouse gases produced with the amount removed from the atmosphere. Says the King: 

“Legislation will be introduced to strengthen the United Kingdom’s energy security, and reduce reliance on volatile international energy markets and hostile foreign regimes. This bill will support the future licensing of new oil and gas fields, helping the country to transition to net zero by 2050 without adding undue burdens on households.” 

Understandably, many environmental advocacy groups like Greenpeace, which has criticized the initiative as a regressive move and has expressed intent to legally challenge the awarding of new exploration licenses, remain strictly opposed to the project. Contrasting the government's position is the Labour party, which has underscored its commitment to green energy solutions and, if victorious in the forthcoming elections, intends to halt the grant of new fossil fuel licenses. 

Energy Security Secretary Claire Coutinho acknowledges that while the newly proposed licensing scheme may not directly lower energy costs for citizens, it is poised to increase the resilience of the country's energy supply and generate increased tax revenue from oil and gas companies, potentially easing the funding of public services. 

As the government faces scrutiny over its ability to balance its net zero ambitions with the immediate needs of energy security, the King's Speech is anticipated to clarify the administration's stance. This includes establishing criteria that must be met before any new licensing round can be initiated, including the need for domestic production to outpace imports, and for emissions from domestic production to remain lower than those associated with imported liquefied natural gas. These criteria are designed to reinforce the government's commitment to its climate compatibility checkpoint, while also aiming to make them legally enforceable. 

Prime Minister Rishi Sunak has been steering the nation’s energy policy through turbulent times, advocating for a pragmatic and cost-conscious path towards achieving the net zero target. His approach, labelled by most as a "doubling down" on anti-green policies, seeks to delineate his government’s position distinctly from that of Labour, especially in the lead-up to the next general election. 

The unveiling of these plans in the King's Speech promises to establish the legislative bedrock for the UK’s future energy strategy, highlighting the delicate interplay between sustaining economic growth, securing energy supply, and honouring environmental commitments in a rapidly evolving global landscape. Once more, it will be the words of the monarch that encapsulate the government's blueprint for navigating the crossroads of energy policy, national security, and climate responsibility. 

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