| Summary: | The recent adoption by the UK and Norway of net zero and climate neutrality targets by 2050 has
galvanised the upstream oil and gas industry in both countries to adopt GHG emission reduction targets
for 2030 and 2050 for the first time. Meeting these targets, ensuring an appropriate sharing of costs
between investors and taxpayers and preserving investor confidence will present a lasting challenge to
governments and industry, especially in periods of low oil and gas prices. The scale of the challenge
on the Norwegian Continental Shelf (NCS) is far greater than on more mature UK Continental Shelf
(UKCS) since the remaining resource base is much larger, the expected future production decline is
less severe and the emission intensity on the NCS is already much lower (10 kg CO2e/boe) than on the
UKCS (28 kgCO2e/boe) due to the long history of tighter emission standards and offshore CO2 taxation.
Norway is expected to deliver future CO2 emission reduction through an extension of its existing powerfrom-shore investment programme. The high cost of such new investment, borne mainly by the state
via the tax system, is a political and social choice made by Norway to reduce upstream CO2 emissions
without giving up its commitment to develop its remaining resources of more than 50 bn boe and to
preserve the source of its prosperity.
In the UK upstream, the new industry target to reduce GHG emissions by 50 per cent by 2030 may
demand less new capital but it will require the integration of emission abatement into the OGA’s MER
UK strategy, well-designed economic incentives, including possibly carbon pricing and fiscal reform,
and behavioural changes from operators. The relatively short remaining economic life of many mature
fields and the dispersed nature of offshore power demand penalises both power-from-shore and CCS
as routes to least-cost emission reduction but future integration with offshore renewable electricity
generation may offer abatement opportunities at larger installations or new field developments.
Methane emissions have for some years been a blind spot for government and industry on the UKCS,
amounting to 1.6 mt CO2e in 2018, three times higher than on the NCS. The UKCS has the potential
to reduce methane emissions significantly from flaring, venting and leakage through better emission
reporting, a more robust consents regime and changes to operating practices.
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