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New UK energy security strategy expected

Out-Law News | 11 Mar 2022 | 9:36 am | 4 min. read

A new energy security strategy is expected to be outlined by the UK government next week.

The strategy could provide renewed support for the UK’s oil and gas sector and encourage the development of onshore wind farms, according to recent comments by a government minister and media reports.

The UK is reconsidering how demand for energy should be met in the long-term after taking the first steps to phase out the importation of Russian hydrocarbons to the UK market in response to the war in Ukraine.

Cutout portrait image of Melanie Grimmitt

Melanie Grimmitt

Partner, Global Head of Energy

Governments around the world are looking at all options now energy security has been brought into such sharp focus

Energy law expert Melanie Grimmitt of Pinsent Masons said: “We are seeing speculation about an increased appetite for the first new exploration licencing round since 2019 and acceleration of regulatory approvals for up to six new developments in the UK Continental Shelf, as well as a call for more offshore wind, onshore wind and nuclear. Governments around the world are looking at all options now energy security been brought into such sharp focus.”

In a speech on Wednesday, Kwasi Kwarteng, secretary of state for business, energy and industrial strategy, confirmed that the UK will phase out Russian oil imports during 2022. Russian oil currently accounts for 8% of total UK oil demand. The government has set up a Taskforce on Oil to help companies source alternative oil supplies.

“Over the course of the year the taskforce we set up will work closely with international partners including the USA, the Netherlands, and the Gulf to ensure alternative supplies of fuel products,” Kwarteng said.

According to Kwarteng, the UK government is also looking at bringing an end to the supply of Russian gas into the UK, which currently accounts for 4% of the UK’s gas supplies, though no firm plans have been outlined on that yet.

In relation to oil, Kwarteng said “more investment in North Sea oil and gas production” is needed as the UK looks to offset the upcoming loss of Russian oil from its supplies.

Kwarteng said: “Turning off domestic production – as some are calling for – at this moment would be completely the wrong thing to do. We’re not going to do it.”

Chadwick Rosalie

Rosalie Chadwick

Partner

It seems that the UK government will pivot to a model of support closer to that already in place in Norway

Rosalie Chadwick, an expert in corporate transactions in the energy sector at Pinsent Masons, said that the UK oil and gas industry can expect climate change-related conditions to be attached to the government’s refreshed support for oil and gas in the UK continental shelf.

Chadwick said: “It seems that the UK government will pivot to a model of support closer to that already in place in Norway. This approach would be designed to ensure the country makes better use of its own natural resources improving security of supply. In connection with oil and gas, we anticipate this would also include a mechanism for incentivising low carbon production, with industry being encouraged to fund the energy transition away from higher carbon intensity barrels.”

In his statement to parliament, Kwarteng said the new energy security strategy would also provide for renewable and nuclear power in the UK’s energy mix. The Times has reported that revisions to strict planning requirements, which have effectively stalled the development of onshore wind farms in England since 2015, could be announced as part of those plans.

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Gareth Phillips

Partner

Changing the planning regime to be more supportive of onshore wind would be likely to restart an important energy market in England

In its energy white paper, published in December 2020, the UK government confirmed that “onshore wind and solar will be key building blocks of the future generation mix, along with offshore wind”. However, the government has been criticised for omitting onshore wind from the revised draft energy-related national policy statements (NPSs) published for consultation in September last year.

Industry body, the National Infrastructure Planning Association (NIPA), brought this inconsistency to the attention of the BEIS Committee in the UK parliament in January this year and called for the reinstatement of onshore wind to planning policy. The BEIS Committee’s report published on 25 February 2022 recognised the importance of onshore wind as a significant source of clean energy and as an important part of the energy mix required to achieve ‘net zero’. The Committee recommended the inclusion of onshore wind in the planning regime.

Renewable energy expert Gareth Phillips of Pinsent Masons said: “The National Infrastructure Commission has identified a need for 18 to 27GW of onshore wind in order to achieve net zero in the UK by 2050, yet this technology features nowhere in the draft NPS for renewable energy infrastructure. It was great to see the BEIS Committee adopt NIPA’s recommendation that onshore wind be included in the NPS, and that ministers are now seemingly on the brink of removing planning-related barriers to deployment of this technology. This is welcome news and changing the planning regime to be more supportive of onshore wind would be likely to restart an important energy market in England.”

The UK government has already pledged to make the UK a "world leader" in offshore wind. It has set a target of 40GW of UK electricity usage to be produced by offshore wind by 2030. The government has also confirmed support for utility scale solar in the revised NPS for renewable energy. 

The debate over how to replace Russian oil and gas supplies in the UK has also reactivated the debate over ‘fracking’. Fracking is a process which involves pumping water at high pressure into rock to create narrow fractures through which trapped natural gas can flow out and be captured.

The UK government imposed a ban on fracking in England in 2019, but the Independent has reported that it is now reconsidering the issue.

In a statement, a UK government spokesperson said: "In light of Russia’s unjustified invasion of Ukraine and rising global gas prices, it’s right we move away from dependence on Russian gas and increase our self-reliance in our energy security. We are considering all our options. We will set out an energy supply strategy which will supercharge our renewable energy and nuclear capacity as well as supporting our North Sea oil and gas industry.”

The UK’s plans to revise its approach to energy security arise in a broader context in which it is pursuing economic and financial sanctions to increase pressure on Russia over its war in Ukraine. The UK is taking action in coordination with others internationally. In relation to energy policy particularly, US president Joe Biden announced that “all imports of Russian oil and gas and energy” would be banned in the US. In his speech, Biden acknowledged that while European countries were also reconsidering their energy policies to reduce their dependency on Russian oil and gas, not every country is in a position currently to stop supplies from Russia and still ensure supply meets demand.

Russia-Ukraine crisis
Russia's invasion of Ukraine in February 2022 shocked the world and had immediate economic and political consequences. We track and analyse the implications of the situation as it develops.
Russia-Ukraine crisis