Energy Transition Outlook 2019

Work with the offshore industry in its commitment to deliver Roadmap 2035 • The offshore oil and gas industry is one of the first sectors of the economy to respond to the net-zero target with a clear plan, Roadmap 2035, in which we commit to reduce our own emissions and commit to help develop the technology essential to enable the UK to meet its wider aims. Our industry’s expertise and investment are needed as part of the solution. • More broadly, energy policy should continue to recognise the economic contribution being made by the oil and gas sector and its role in providing secure energy supplies during the energy transition. Government should avoid actions that will lead to disadvantaging the UKCS and other UK industries compared to worldwide competition. Impairing the UK’s production capabilities will simply lead to greater imports. Policies should rather focus on how oil and gas are used within an increasingly low-carbon context. • Meanwhile, carbon pricing will remain an important element of policy design. Post Brexit, the presumption is that government will look to continue with some form of pricing scheme, whether allowance or tax based. This scheme will need to provide large emitters, including the oil and gas sector, with both long-term price signals and suitable allowances to prevent the risk of carbon leakage (offshoring industry). Additional, more targeted carbon-pricing mechanisms, such as contracts-for-difference, will also be needed in specific instances in support of new technology development and implementation. • Government should respond to the National Infrastructure Commission’s recommendation to revise the statutory duties of economic regulators. Anticipatory investment is likely to be needed across a range of infrastructure in support of the net-zero objective. • The role of specialised, sector-specific, environmental and economic regulators, including the Oil and Gas Authority (OGA), should be retained. Horizontal bodies such as the CCC or the proposed Office for Environmental Regulation must support the role of specialised regulators in their decision making.

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