“…the continued licensing for oil and gas is not inherently incompatible with the UK’s climate objectives. However, it was acknowledged that this may not always be the case in future. To resolve this issue, it was recommended that a “checkpoint” be introduced, to ensure that the compatibility of future licensing with the UK’s climate objectives is always evaluated before a licensing round is offered.”
“25. Under the Greenhouse Gas Protocol (which provides a comprehensive global standardized framework for organisations to measure and manage GHG emissions), emissions are categorized into the following three scopes. a. Scope 1: “Direct GHG Emissions” covers direct emissions from sources owned or controlled by an organisation. In a company, these would be any emissions that are directly produced by the company’s facilities (e.g., for a car manufacturer these would be emissions released during the manufacturing of the engine and body, as well as the final assembly). For an oil and gas company, scope 1 emissions include those released when methane is flared on a platform, or from diesel burnt to power the platform. b. Scope 2: “Electricity and Indirect GHG Emissions” covers indirect emissions from purchased electricity consumed by the company, steam, heating and cooling. In the case of a car manufacturer, scope 2 emissions would include GHGs created when the electricity used by the car manufacturer was generated by the electricity company. For an oil and gas company, scope 2 emissions would include emissions produced when the electricity that powers the company’s facilities was generated. In both cases, these same emissions also count as scope 1 emissions for the electricity generator. c. Scope 3: “Other Indirect GHG Emissions” are all other indirect emissions generated up and down the value chain, but not owned or controlled by the organisation. For a car manufacturer, these include emissions related to the sourcing of materials such as steel, the manufacture and delivery of the components to the factory (both upstream activities) and the use of the car by a consumer and its disposal (both downstream activities). In this example, the emissions produced when fuel is burnt to drive the car by a consumer constitute scope 1 emissions for the consumer who is using the car. However, these same emissions would also constitute scope 3 emissions for all other companies that are upstream of the consumer: the company that manufactured the car, the refinery that refined the crude oil, and the oil company that produced that oil. … 27. Scope 3 emissions are further divided into emissions generated “upstream” and “downstream”
“29. The UK follows the agreed international approach for estimating and reporting GHG emissions under the United Nations Framework Convention on Climate Change (“UNFCCC”), the Kyoto Protocol, and the Paris Agreement, which require countries to report emissions released within their territories. All UK domestic and international GHG emissions reduction targets are therefore based on territorial emissions. The CCC has recommended that this is the right basis for the UK’s carbon targets. 30. Thus, from a cumulative emissions perspective at a national level (such as the Government’s carbon budget commitments), scope 1 emissions are the only type of emissions that are counted at a sectoral level. Where scope 2 or scope 3 emissions are released within the UK, they are always accounted for as the scope 1 emissions of some other UK based entity and counted against the emissions for the sector relevant to that entity, and when the scope 1 emissions of all UK-based entities are summed, the result is the total territorial emissions for the UK. Counting any sector’s scope 2 or 3 emissions would introduce double counting in the UK’s territorial emissions and muddy the waters when seeking to measure progress. 31. Therefore, while scope 3 emissions are relevant in some policy contexts, for the purpose of the Government’s Net Zero Strategy, as well as a range of other domestic and international obligations, there is no sector for which scope 3 emissions count towards the UK’s Carbon Budgets for that sector.”
“This test has been proposed in conversations with stakeholders. However as of yet, a full proposal for how the test would work has not been presented. • Scope 3 emissions of UK produced oil and gas would depend on a number of factors, predominantly how the oil is used; burnt for fuel, used as feedstock for chemicals/plastics/aggregates, heavily refined etc. • Methodologies for tracking the Scope 3 emissions of UK produced oil and gas are in their infancy, and there is no universally agreed approach to doing this. It should be noted that some organisations are currently attempting to do this. • We are unaware of an agreed target pathway for reducing Scope 3 emissions of UK produced oil and gas that could be used as a reference for such a test.” • Scope 3 emissions of UK produced oil and gas would depend on a number of factors, predominantly how the oil is used; burnt for fuel, used as feedstock for chemicals/plastics/aggregates, heavily refined etc. • Methodologies for tracking the Scope 3 emissions of UK produced oil and gas are in their infancy, and there is no universally agreed approach to doing this. It should be noted that some organisations are currently attempting to do this. • We are unaware of an agreed target pathway for reducing Scope 3 emissions of UK produced oil and gas that could be used as a reference for such a test.”
“The methodology for accounting for emissions in this manner is potentially highly challenging. Scope 3 emissions from exported oil and gas produced in the UK are covered by the destination country's emissions accounting and targets, and therefore, depending on the test design, there is a risk of double counting. We would need to consider how the evidence would be gathered, reported and assessed in the absence of consensus on calculation and verification.”
“21) Such a test seems difficult to apply; given the globally tradable nature of oil, which is a highly fungible commodity product. To have any meaningful effect, such a test would need UK producers to be able to identify – and control – the ultimate use of their oil with confidence – to be able to drive it towards relatively cleaner options. However, oil producers around the world sell to intermediaries and traders on open markets, who can then resell the oil, driven by changing prices and oil qualities – and have no realistic ability to influence the end user. 22) There are also challenges in sourcing reliable figures: tracking the ultimate destination (and hence emissions) of UK produced oil poses some practical challenges, when oil is sold around the world on an open market basis – however there are some methods for estimating the ultimate emissions of UK-produced oil and gas. UK-based companies operating globally are encouraged to report on their global emissions, although the situation with other users is less clear. 23) If other countries were to substitute UK-produced oil with another product, or with fossil fuels from a different source, it's difficult to see how this would affect overall global emissions. If the substitution was from countries with a poorer environmental record than the UK, this would lead to higher global emissions overall (See Annex B for further discussion of UK oil and gas emissions compared globally). We will continue to consider this over the summer, but at this stage we are inclined not to adopt this test. This argument is also explored in further detail in question 3 of Annex A.”
“However, there are several arguments against considering the UK as being responsible for the emissions of other countries, due to the origin of the oil and gas. • This approach is an optically easy accusation, but it does not make sense in practice. It would be difficult to reconcile with any reliable global accounting of emissions – as some emissions would be double counted, both at the point of production and at the point of consumption. This would weaken, rather than strengthen, moves towards global carbon accounting.” • This approach is an optically easy accusation, but it does not make sense in practice. It would be difficult to reconcile with any reliable global accounting of emissions – as some emissions would be double counted, both at the point of production and at the point of consumption. This would weaken, rather than strengthen, moves towards global carbon accounting.”
“(1) In this Part the “principal objective” is the objective of maximising the economic recovery of UK petroleum, in particular through— (a) development, construction, deployment and use of equipment used in the petroleum industry (including upstream petroleum infrastructure), and (b) collaboration among the following persons— (i) holders of petroleum licences; (ii) operators under petroleum licences; (iii) owners of upstream petroleum infrastructure; (iv) persons planning and carrying out the commissioning of upstream petroleum infrastructure. (v) owners of relevant offshore installations.”
“2. Relevant persons must, in the exercise of their relevant activities, take the steps necessary to: a. Secure the maximum value of economically recoverable petroleum is recovered from the strata beneath relevant UK waters; and, in doing so, b. Take appropriate steps to assist the Secretary of State in meeting the net zero target, including by reducing as far as reasonable in the circumstances greenhouse gas emissions from sources such as flaring and venting and power generation, and supporting carbon capture and storage projects.”
“(2) The report shall identify, describe and evaluate the likely significant effects on the environment of— (a) implementing the plan or programme; and (b) reasonable alternatives taking into account the objectives and the geographical scope of the plan or programme. (3) The report shall include such of the information referred to in Schedule 2 to these Regulations as may reasonably be required, taking account of— (a) current knowledge and methods of assessment; (b) the contents and level of detail in the plan or programme; (c) the stage of the plan or programme in the decision-making process; and (d) the extent to which certain matters are more appropriately assessed at different levels in that process in order to avoid duplication of the assessment.” (b) reasonable alternatives taking into account the objectives and the geographical scope of the plan or programme. (c) the stage of the plan or programme in the decision-making process; and (d) the extent to which certain matters are more appropriately assessed at different levels in that process in order to avoid duplication of the assessment.”
“The likely significant effects on the environment, including short, medium and long-term effects, permanent and temporary effects, positive and negative effects, and secondary, cumulative and synergistic effects, on issues such as— … (i) Climatic factors …”
“The starting point is that the SEA Directive plainly does not require an environmental assessment to be carried out for all “plans or programmes” whose implementation would have a major impact on the environment.
“122. The effect of Parliament and Council Directive 2011/92/EU (“the EIA Directive”) is that subject to limited exceptions an environmental impact assessment is required before development consent can be granted for any specific project of a kind specified in the Annexes which is likely to have a significant environmental impact. The effect of the SEA Directive is that where the grant or refusal of development consent for a specific project is governed by a policy framework regulated by legislative, regulatory or administrative provisions, the policy framework must itself be subject to an environmental assessment. The object is to deal with cases where the environmental impact assessment prepared under the EIA Directive at the stage where development consent is granted is wholly or partly pre-empted, because some relevant factor is governed by a framework of planning policy adopted at an earlier stage.”
“The downstream emissions from any future oil and gas production associated with further seaward licensing are not within the scope of the draft plan/programme being assessed. For clarity, the draft plan/programme covers objectives related to the exploration for and production of oil and gas from the UKCS from further licensing; the draft plan/programme does not include objectives which relate to the end use of hydrocarbons and such end uses are not therefore within the scope of OESEA4. Whilst an SEA assesses the environmental effects of a broader plan/programme rather than a specific project, the environmental effects in question are still those flowing from the implementation of development consents granted pursuant to the framework set by that plan/programme. This will not, however, include the end use of products made from extracted oil and gas, since much is exported as crude oil and sold into the worldwide market for refining and consumption in a variety of locations. As a result, OESEA4 will consider the environmental effects of further licensing in the context of those activities directly related to the offshore oil and gas industry, and any secondary or cumulative effects related to these. This will cover emissions from upstream oil and gas activities but downstream and end use emissions will not be assessed due to the inability to attribute any specific end use to a development that may take place under the draft plan/programme.”
“With respect to climate and meteorology, and as stated in the response to the scoping consultation dated November 2021, the SEA will not include an assessment of the environmental effects of the downstream emissions arising from the end use of extracted oil and gas. The draft plan/programme covers the exploration for and production of oil and gas from the UKCS. The Department has considered carefully whether the degree of connection between developments that might come forward pursuant to the draft plan/programme and end use emissions is sufficient to make those emissions a likely significant effect that needs to be included in the SEA. Hydrocarbons are sold to the domestic or worldwide market, and the end uses of these hydrocarbons are various and may be for fossil fuel and non-fossil fuel purposes including following a process of refinement. It is acknowledged that the processes and products associated with these end uses will result in greenhouse gas emissions, but these are likely to be far removed in both time and space from development that might take place pursuant to the draft plan/programme, and the nature, location and extent of such effects are therefore not sufficiently closely causally connected to implementation of the draft plan/programme to be taken into account in the SEA. These do not constitute a likely significant effect of implementing the draft plan/programme itself”
“One respondent challenged the reasoning behind not including downstream emissions of further oil and gas exploration and production in the scope of the assessment in the ER. As noted in Section 3.6 of the ER, the Department considered carefully whether the degree of connection between developments that might come forward pursuant to the draft plan/programme and end use emissions was sufficient to make those emissions a likely significant effect of the draft plan/programme that needed to be included in the SEA. For example, any hydrocarbons extracted as a result of any further seaward licensing round covered by the draft plan/programme would undergo various processing stages following their initial extraction. These may include blending and refining and lead to numerous potential fossil fuel and non-fossil fuel end uses both domestically and internationally and may also be subject to downstream processes which incorporate carbon capture and storage or blue hydrogen production. Whilst it is acknowledged that the processes and products associated with end use will result in greenhouse gas emissions, it was not considered that they were sufficiently closely causally connected to implementation of the draft plan/programme to be taken into account in the SEA and therefore do not constitute a likely significant effect of implementing the draft plan/programme itself.”
“ – further Seaward Rounds of oil and gas licensing of the UK territorial sea and UK continental shelf (UKCS), subject to the outcome of periodic Climate Compatibility Checkpoints.”
“a: emissions from oil and gas exploration and production will make a minor contribution to the wider greenhouse gas emissions of the UK, and not adopting this aspect of the plan would limit these domestic emissions. In the absence of a corresponding change in demand for oil and gas, a greater proportion would need to be imported. It is therefore considered that alternative 1a would either be neutral, as it would have no effect on the demand for hydrocarbons in the UK, or potentially minor negative due to the higher emissions intensity of most imports (refer to Section 5.12 where this is discussed in greater detail).”
“a: the demand for oil and gas is being dealt with through a range of measures that are not considered in this SEA, however, projections of demand for hydrocarbons, and production of these from the UKCS, shows both a decline towards 2050 and a significant gap between the demand and production. If no further licensing was undertaken on the UKCS, and in the absence of any indication that demand will reduce more quickly than projected (and also recognising the need for hydrocarbons as feedstocks and not just fuel), the UK would need to import more oil and gas, with it being highly likely that these imports would have a higher upstream carbon intensity than that which would have been produced domestically (e.g. as the foundations for decarbonising upstream emissions have already been set for the UK in the NSTD, OGA Strategy, Net Zero Strategy etc., see Section 5.12). It is therefore considered that alternative 1a would either be neutral, as it would have no effect on the demand for hydrocarbons in the UK, or minor negative due to the higher emissions intensity of imports.”
“However, given this information, it is not clear what action Ministers would take, as there is no agreed target for the reduction of scope 3 emissions”
“…the Government’s view is that scope 3 emissions are not directly relevant to the decision on whether to endorse [a] further licensing round. Including any estimate of scope 3 emissions in the checkpoint would add little value, and it is not clear how Ministers would take such a number into account.”
“Responses to questions 18 and 19 outlined a number of different methods for estimating the magnitude of scope 3 emissions from UK produced oil and gas. While there are many methods to choose from, the government acknowledges that estimation of scope 3 emissions is fundamentally feasible, and many oil and gas producing companies have applied these techniques to estimate their own scope 3 emissions levels which they publish openly. However, on balance, the government finds limited benefit to including an evaluation of scope 3 emissions in the checkpoint. Reasons for this include: • The limited control that UK oil and gas producers have over scope 3 emissions of their production, beyond simply reducing their production. • The lack of clarity over what step a Minister should take given even perfect knowledge of what scope 3 emissions are. The government will not be including a test on scope 3 emissions in the checkpoint.”
“The purpose of any test for scope 3 emissions is to ensure the UK’s production is consistent with the global carbon budget. This can also be done by assessing the required rates of decline for oil and gas in various climate scenarios and measuring UK production against these. This is, therefore, best incorporated into a single assessment of the UK’s production against the global production. This would avoid dependence on company scope 3 reporting and could rely instead on production decline rates compatible with Paris. See answer to Question 20.”