A Scottish Conservative MEP has launched an audacious bid to change EU law in a bid to boost the North Sea oil and gas sector by £1.5billion.
Ian Duncan – who is the European Parliament’s designated law maker on the EU’s flagship climate change policy, the Emissions Trading System (ETS) – is seeking to close a loophole in the law
that forces oil and gas operators to pay for emissions permits for the electricity they generate offshore.
Mr Duncan said the change could be worth as much as £150million a year to North Sea firms over a decade.
He said: “Right now the ETS is like a car without an engine – we need to ensure it is fit to do the job it should and drive emissions reductions in Europe.
“Removing this loophole could save the North Sea oil and gas industry billions of pounds of lost revenue.
“I will push as hard as I can to convince my colleagues in the European Parliament and the Council that this is a common sense proposal worth supporting.”
Under current EU rules, electricity providers are not eligible for support – in the form of free allowances – under the ETS because they can pass on the carbon price to the homes and businesses they supply.
However, as off-shore oil and gas platforms are not connected to the electricity grid, they cannot pass on the cost to the consumer, and therefore Ian has sought to make them eligible for free allowances like other industries covered by the ETS such as steel and cement.
The inclusion of the North Sea oil and gas sector in the ETS will mean oil and gas companies are eligible for around £1.5 billion pounds worth of free allowances between 2020, when the law comes into force, and 2030 when it will be reviewed again.
Typically electricity makes up 30-40% of emissions from oil and gas platforms.