Rishi Sunak to expand UK’s North Sea drilling and carbon capture

Receive free UK energy updates

We’ll send you a myFT Daily Digest email rounding up the latest UK energy news every morning.

Rishi Sunak has announced a big expansion of carbon capture and storage, and plans for more oil and gas drilling in the North Sea, as ministers aim to “max out” opportunities in the basin.

The prime minister, on a visit to Aberdeenshire, said the plans would help Britain make the move to a net zero economy by 2050 while providing home-produced hydrocarbons during the transition.

Sunak named north-east Scotland and the Humber as the locations for two new carbon capture and storage clusters, claiming the plan to store carbon dioxide under the North Sea could support up to 50,000 jobs.

In contrast to Labour, which wants to stop issuing new oil and gas licences in the North Sea, the government is committing with the North Sea Transitioning Round to undertake future licensing rounds. 

Ministers expect the current 33rd round to award over 100 licences, starting in the autumn. The round was launched in October and in January it was confirmed that 115 bids had been received.

The issue has become politically divisive, with the prime minister insisting that Labour’s plan for a moratorium on new exploration makes no sense. Labour claims Sunak is backtracking on green commitments.

On Sunday, Sunak promised motorists he was “on their side”, vowing to review low traffic neighbourhoods in England. He has also criticised Labour’s London mayor Sadiq Khan over the extension of London’s ultra low emissions zone.

That issue was a big factor in the surprise Conservative win in the Uxbridge and South Ruislip by-election this month, after which Sunak promised a “proportionate and pragmatic” approach to tackling climate change.

Speaking on his visit to Scotland, Sunak said: “Now more than ever, it’s vital that we bolster our energy security and capitalise on that independence to deliver more affordable, clean energy to British homes and businesses. 

“Even when we’ve reached net zero in 2050, a quarter of our energy needs will come from oil and gas. But there are those who would rather that it come from hostile states than from the supplies we have here at home.”

The capture of carbon dioxide from industrial processes and its storage in disused North Sea wells is a crucial part of the UK’s net zero strategy — including after 2050.

Sunak confirmed that projects Acorn in north-east Scotland and Viking in the Humber had been chosen as the third and fourth carbon capture usage and storage clusters in the UK, to be developed by 2030.

Meanwhile, Sunak and the North Sea Transition Authority announced a joint commitment to undertake future oil and gas licensing rounds, although they will continue to be subject to a climate compatibility test.

The government claims that by adopting a more flexible application process, licences could also be offered near to currently licensed areas — unlocking reserves which can be brought online faster.

Sunak said British production would help to break dependence on regimes such as Russia, but Ed Miliband, shadow climate change secretary, said: “Only Labour has a plan to cut bills, create jobs and deliver British energy security once and for all.” 

Greenpeace has criticised the use of carbon capture and storage, arguing that the technology is still being developed and its deployment is being used as an excuse to carry on burning fossil fuels rather than accelerate the switch to renewables.

Sunak has said he remains committed to two big net zero targets: the 2030 date for banning the sale of new diesel and petrol cars and the 2050 objective of the UK becoming a net carbon zero economy.

Earlier this month, Grant Shapps, energy secretary, told the FT that even if the industry “maxed out” all potential North Sea contracts, there would still be a rapid slowdown in production because it was a mature basin that was running out of hydrocarbons.