Energy Transition

The UK Department for Energy Security and Net Zero (DESNZ) commissioned Arup to deliver a study considering the strategic, technical, and economic factors of different transportation methods for hydrogen export from the UK to continental Europe. The study provides an overview of the perceived benefits and limitations of potential export routes, a UK-specific LCOT to outline the advantages and disadvantages for hydrogen export to continental Europe, and strategic recommendations to support policy makers and industry considering the potential development of hydrogen export routes from the UK.

As the UK transitions to a low carbon economy, oil and gas and the mining and quarrying sectors will play a different role in meeting the demand for energy as we look to meet our 2050 zero emissions target.

On 27 June 2019, the UK became the first major economy in the world to pass laws to end its contribution to global warming by 2050. The target will require the UK to bring all greenhouse gas emissions to net zero by 2050. The UK’s 2050 net zero target was recommended by the Committee on Climate Change, the UK’s independent climate advisory body. Net zero means any emissions would be balanced by schemes to offset an equivalent amount of greenhouse gases from the atmosphere, such as planting trees or using technology like carbon capture and storage.

As we transition to a low carbon economy, oil and gas will play a different role in meeting the demand for energy over time. However, there will continue to be a need for fossil fuels, particularly gas, and all scenarios proposed by the Committee on Climate Change setting out how we could meet our 2050 net zero emissions target include some continued demand for oil and natural gas. An orderly transition, including UK oil and gas production, is crucial to maintaining security of supply and retention of vital skills and expertise.

Similarly, the mining and quarrying sector is also going through a transformation, including the renewal of mining projects in certain areas of the UK. In addition, mining for minerals and metals will also play a key role in the transition to a low-carbon economy as the demand for green energy technologies continues to grow.

The 2019 EITI Standard included new measures on environmental reporting for EITI implementing countries (requirement 6.4). Implementing countries are encouraged to disclose information on the management and monitoring of the environmental impact of the extractive industries. Data on the environmental taxes paid by the extractive industries can be found on our Sector Data page.

To find out more

If you would like to find out more about the UK extractive industries and energy transition, you may find the following links helpful:

MSG member organisations responses to the energy transition

• The North Sea Transition Authority (NSTA) has a Move to Net Zero area on its website.
• The NSTA have relaunched the Pathfinder website which now includes energy transition work, focusing on carbon capture and storage, offshore electrification, hydrogen and floating wind. The NSTA publishes Carbon Capture Storage licences.
• OEUK has published roadmaps outlining the UK’s offshore oil and gas industry’s contribution to the UK and Scottish Government net-zero ambitions.
• The Mineral Products Association (MPA) has pages on sustainability, carbon reduction and a map of natural parks based in former quarries and other former industrial locations returned to nature.
• The Mineral Products Association have produced a new roadmap on how the UK concrete and cement industry can achieve net zero by 2050.

The UK and climate change

• The UK government has set out an “action plan” for reaching its target of clean power by 2030, which it describes as “the most ambitious reforms to our energy system in generations”.
• UK government announced new climate goals at COP29, including reducing emissions by 81% by 2035, as Prime Minister calls on other countries to bring forward ambitious targets.
• The UK Critical Minerals Intelligence Centre (CMIC)supports the UK in securing adequate, timely and sustainable supplies of critical minerals. This ensures the UK can transition its economy in the coming decades to meet challenges such as net-zero emissions, circular economy and a modern industrial strategy. Led by the British Geological Survey (BGS) with support from the Department for Business & Trade (DBT), work together with universities and private and public sector partners to gather and analyse intelligence on the supply and demand of critical minerals, their global value chains and use by UK industry. Their aim is to guide decision-making by government and industry to mitigate risks to supply security, helping to deliver economic prosperity and create opportunities for UK businesses in critical mineral supply chains, domestically and internationally.
• The latest UK Criticality Assessment, produced by the UK Critical Minerals Intelligence Centre, shows that growing diversification brings an increasing vulnerability in terms of disruption to supply.  
• Updated environmental guidance for offshore oil and gas projects will provide greater certainty and stability for the industry in response to a Supreme Court ruling. It sets out the elements that must be considered by operators when assessing emissions from burning of the oil and gas they produce. The ruling in the Finch case on 20 June has required operators to consider the impact of burning oil and gas in Environmental Impact Assessments for oil and gas extraction projects. The government has acted quickly and will now consult with stakeholders including the offshore industry on draft guidance, so it can be implemented from Spring. Separately, the government will consult before the end of the year on the implementation of its commitment not to issue new oil and gas licences to explore new fields, as part of its plan to ensure a fair and prosperous transition in the North Sea.
• The UK Department for Energy Security and Net Zero (DESNZ) commissioned Arup to deliver a study considering the strategic, technical, and economic factors of different transportation methods for hydrogen export from the UK to continental Europe. The study provides an overview of the perceived benefits and limitations of potential export routes, a UK-specific LCOT to outline the advantages and disadvantages for hydrogen export to continental Europe, and strategic recommendations to support policy makers and industry considering the potential development of hydrogen export routes from the UK.
• In April 2024 the Northern Ireland Assembly announced that all onshore petroleum operations, including fracking, are to be banned in Northern Ireland and no new licences will be granted in the future. A proposal to ban all onshore oil and gas exploration and production is being brought forward with legislation expected in 2025. 
• The International Development White Paper was launched by the Prime Minister on 20th November 2023. The policy paper outlines the UK's plan to accelerate progress to eliminate extreme poverty, address climate change and biodiversity loss, whilst accelerating sustainable economic growth. The White Paper sets out the case for renewed global development partnerships and emphasises a reinvigorated role for the UK in delivering the Sustainable Development Goals (SDGs).
• Powering Up Britain policy paper was published on 30th March 2023. The paper sets out how the government will enhance our country’s energy security, seize the economic opportunities of the transition, and deliver on our net zero commitments.
• The UK Critical Minerals Strategy refresh was published on 13th March 2023.
• The Green finance strategy is a strategy to harness the UK’s world-leading financial services sector to support our climate and environmental objectives.
• Geopolitics of the energy transition: Critical materials provides comprehensive insights into the significance of critical materials, examining their associated geopolitical implications and offering recommendations for a sustainable and efficient global energy transition.
• The inaugural edition of the Critical Minerals Market Review provides a major update on the investment, market, technology and policy trends of the critical minerals sector in 2022 and an an initial reading of the emerging picture for 2023. Through in-depth analyses of clean energy and mineral market trends, this report assesses the progress made by countries and businesses in scaling up future supplies, diversifying sources of supply, and improving sustainable and responsible practices. It also examines major trends for individual minerals and discusses key policy implications. The report will be followed by a forthcoming analysis that will feature comprehensive demand and supply projections for key materials and a number of deep-dives on key issues. It also makes available an online tool, the Critical Minerals Data Explorer, which allow users to explore interactively the latest IEA projections.
• The UK’s first ever ‘Critical Minerals Strategy’ was launched in July 2022 to bolster the resilience of supply chains and seize on the economic opportunities of growing industries, such as electric vehicle manufacturing and offshore wind. 
• End to coal power brought forward to October 2024 by UK. The deadline to phase out coal from Great Britain's energy system has been brought forward by a whole year, highlighting the UK’s leadership to go further in driving down emissions and tackling climate change.
• As at March 2022 progress made on the North Sea Transition Deal includes reducing production emissions by 11%, supporting the development of carbon capture, and setting out a hydrogen strategy for the UK. The deal is a key part of the how the UK government is backing the decarbonisation of the oil and gas sector while protecting the UK’s energy security. More information is available in the Press release: North Sea Transition Deal cuts emissions as clean energy transition continuesand Policy paper: North Sea Transition Deal.
• The Association of Chartered Certified Accountants (ACCA) published a report in August 2021 on TCFD disclosure in the extractive industries.
• The G7 Ministers responsible for Climate and Environment met virtually on 20-21 May 2021. They agreed a series of joint commitments, including the following: mobilising and aligning finance to support the green recovery, supporting the transition to a net zero economy, net zero energy and the transition to sustainable and legal use of natural resources. The G7 Ministers reaffirmed their commitment to the elimination of inefficient fossil fuels subsidies by 2025 and encouraged all countries to adopt this commitment. The also encouraged general international action to meet this commitment and supported calls for greater transparency. A communique was issued by the G7 Climate and Environment Ministers' on 21st May 2021.
• The UK EITI Civil Society Network (CSN) members provided a response to the consultation on mandatory climate-related disclosures in May 2021. The response is UK EITI Civil Society Network (CSN) response to the consultation on climate-related disclosures.
• In March 2021 the North Sea Transition Deal, agreed by industry, was published. The UK government vowed that high-skilled oil and gas workers and the supply chain will not be left behind in the transition to a low carbon future.
• In March 2021 the Government launched its consultation on mandatory climate-related financial disclosures by publicly quoted companies, large private companies and Limited Liability Partnerships (LLPs). The consultation is open until 5th May 2021.
• These proposals build on the expectation set out in the UK Government’s 2019 Green Finance Strategy, that all listed companies and large asset owners should disclose in line with the TCFD recommendations by 2022. The proposals have been developed in co-operation with the HM Treasury led TCFD joint taskforce, which has considered an approach to economy-wide mandatory climate-related financial disclosure, as set out in the UK’s 2020 Roadmap and Interim Report.
• In December 2020 the Government announced the publication of the Energy White Paper setting out plans how the UK will clean up its energy system and reach net zero emissions by 2050, as well as keeping energy bills affordable, and levelling up the country by creating greener and more sustainable jobs. The proposals set out in the consultation are an important step towards the UK’s intention to become the first G20 country to make Task Force for Climate-related Financial Disclosure (TCFD) -aligned disclosures mandatory across the economy as set out by the Chancellor on 9th November 2020.
• The UK responded to the CCC’s recommendations by passing laws 27th June 2019 to end its contribution to global warming by 2050.
• The Committee on Climate Change (CCC) provides independent advice to the UK government on building a low-carbon economy and preparing for climate change. The CCC published a report in May 2019 recommending that ‘the UK should set and vigorously pursue an ambitious target to reduce greenhouse gas emissions (GHGs) to 'net-zero' by 2050, ending the UK's contribution to global warming within 30 years.’
• A report from the Intergovernmental Panel on Climate Change (IPCC), published in October 2018, set out the impacts of global warming of 1.5 °C above pre-industrial levels.
• In 2016 the UK ratified the Paris Agreement, which provided a framework for governments as well as business and investors to keep global warming well below 2°C, pursuing efforts to limit the temperature increase to 1.5°C.

UK Emission Trading Scheme

The UK Emission Trading Scheme (ETS) is a cap-and-trade system which caps the total level of greenhouse gas emissions, creating a carbon market with a carbon price signal to incentivise decarbonisation. The UK ETS came in to force on 1 January 2021 to replace the UK’s participation in the EU ETS, which was established in 2005.

Participants in the scheme are required to obtain and surrender allowances to cover their annual greenhouse gas emissions. Participants can purchase allowances at auction or trade them amongst themselves, which allows the market to find the most cost-effective way to reduce emissions. Industrial sectors considered at risk of carbon leakage (whereby carbon costs would make them uncompetitive prompting industry to relocate outside the country in which the ETS applies) receive a proportion of allowances for free.

The Government has established the scheme to increase the climate ambition of the UK’s carbon pricing policy and provides continuity of emissions trading for UK businesses. Many of the features and processes in the new UK scheme will be familiar to operators. The UK ETS was established through The Greenhouse Gas Emissions Trading Scheme Order 2020.

The UK Government, Scottish Government, Welsh Government and Department of Agriculture, Environment and Rural Affairs for Northern Ireland collectively constitute the UK ETS Authority to oversee the scheme. 

Emissions trading schemes work on the ‘cap and trade’ principle, where a cap is set on the total amount of certain greenhouse gases that can be emitted by sectors covered by the scheme. This limits the total amount of carbon that can be emitted and, as it decreases over time, will make a significant contribution to how we meet our Net Zero 2050 target and other legally binding carbon reduction commitments.

Guidance: Participating in the UK Emissions Trading Scheme (UK ETS)

Guidance: Participating in the UK ETS

News story: Emissions scheme to reduce sale of carbon allowances on path to net zero

Climate change Policy: UK emissions trading scheme

Carbon emissions: The UK Emission Trading Scheme (UK ETS)

EITI and climate change

• A study entitled “Mission Critical Strengthening governance of mineral value chains for the energy transition”, commissioned by the EITI and published in November 2022, provides an overview of global value chains of selected transition minerals and highlights the relationship between global energy transition objectives and the need for stronger minerals sector governance. It demonstrates that EITI implementing countries account for a substantial share of transition minerals mining. The report identifies four risk areas in the value chains of transition minerals and provides recommendations on how to mitigate risks through policy actions, advocacy, analysis and partnerships.
• A study by Professor Benjamin Sovacool from the University of Sussex found a correlation between EITI implementation and lower per capita carbon footprints. The study found that countries that are part of the EITI saw their carbon emissions reduce by 13% on average between 2000 and 2014. The world average carbon footprint per capita, on the other hand, grew by 23% over the same period.

• The study, entitled “Is sunshine the best disinfectant? Evaluating the global effectiveness of the Extractive Industries Transparency Initiative (EITI)”, was published in 2020 in the journal The Extractive Industries and Society. It explains that while the relationship between EITI membership and carbon reductions is not necessarily deterministic, the scheme allowed countries to use recovered funds no longer lost to corruption to invest in more sustainable forms of energy and other environmental practices.

• "Transparency in Transition: Climate Change, Energy Transition and the EITI" a study by Chatham House focuses on the strategic direction of EITI and its implementing countries. Its findings may also help inform debate as governments and their development partners seek to support a recovery in line with a ‘well below 2°C’ world.