The UK energy minister said the government is endeavouring to strike a “careful balance” between achieving net zero while preserving North Sea oil sector skills and security of supply.
Anne-Marie Trevelyan insisted Westminster “stood ready” to support the UK oil and gas industry through what would be a “hard” energy transition.
But Ms Trevelyan said the government did need to make “difficult decisions” if it is to “lead the way” in the climate change crusade and support other countries through their own transitions.
Ms Trevelyan added the government hoped to reach an agreement “imminently” on a so-called North Sea transition deal which would “anchor the supply chain” and provide a stable environment for the sector as it moves away from its “traditional focus”.
In December Prime Minister Boris Johnson announced the government would halt taxpayer funding for new fossil fuel projects overseas.
The UK Government said it had supported £21 billion worth of exports from the UK oil sector’s supply chain through trade promotion and export finance in the previous four years.
It intends to implement the new policy before COP26 in November.
In addition, the UK energy department is reviewing its policy on the North Sea licensing regime.
Alex Kemp, professor of petroleum economics at Aberdeen University, predicted the process would result in emissions-reduction obligations being incorporated into the scoring system for future licence applications.
Responses to a consultation on the export finance decision will be published “shortly”, as will the outcome of the licensing policy review, Ms Trevelyan said during a webinar hosted by representative body Oil and Gas UK (OGUK).
Deirdre Michie, chief executive of OGUK, asked how the government could make sure policy decisions didn’t have “unintended consequences” which would undermine the oil industry’s ability to play a key role in the energy transition.
Ms Trevelyan said: “As part of our ambition to be a global leader in tackling climate change, we’ve got to take steps and sometimes they are difficult decisions to reduce our emissions and set an example to other nations.
“Our reviews of licensing and support for overseas fossil fuel projects are intended to verify that we have the tools needed to carry on producing hydrocarbons in a way that is consistent with wider climate goals.
“But we’re absolutely clear we have to strike a balance and find the right way to get to net zero.
“We absolutely recognise the oil and gas sector will make a significant contribution to the energy transition by providing the skills and knowhow to deliver hydrogen, carbon capture and offshore wind.”
On the licensing review specifically, she said the government wanted the North Sea oil industry to remain an “attractive investment destination” and would work with the sector, not against it.