Environmental Audit committee announce new inquiry into Accelerating the transition from fossil fuels and securing energy supplies

• How can the UK reduce reliance on oil and gas and accelerate the transition to net zero?

In response to the surge in fossil fuel prices and continued speculation on what will be included in the Government’s Energy Security Strategy, the Environmental Audit Committee today launches an inquiry examining how the UK can reduce its reliance on oil and gas and protect households from soaring fossil fuel prices.

Currently, fossil fuels make up three-quarters of the UK’s energy mix, with oil and gas being used to generate electricity, heat our homes and fuel our vehicles. As a result of international agreements and domestic legislation on meeting net zero, the UK has been pressing ahead with its renewable energy ambitions. In the light of Russia’s ongoing invasion of Ukraine and the resulting surge in oil and gas prices, there is renewed focus on how the UK can improve its energy security and accelerate the shift away from fossil fuels.

During this inquiry, the EAC will be considering the transitional role of oil and gas exploration and development on the UK continental shelf, and how the UK can phase out fossil fuel use and subsidies in line with the commitments made at COP26 in Glasgow to limit temperature increases to 1.5°C. This work will complement any inquiry the Business, Energy and Industrial Strategy (BEIS) committee undertakes on the UK’s 2035 power sector targets and the future electricity mix in the light of the expected Energy Security Strategy.

This latest EAC inquiry comes as many households across the UK are facing a cost of living crisis with rocketing bills and inflation creating a significant additional squeeze on household finances. Protecting households from high fossil fuel prices and fuel poverty, while ensuring security of supply and continued progress towards net zero, is critical if any energy security strategy is to be successful.  

Environmental Audit Committee chairman, Rt Hon Philip Dunne MP, said:

“The Government’s Energy Security Strategy is sorely needed as many households across the country struggle with an ever-increasing cost of living crisis. As speculation mounts over what will be included in the strategy, our committee is wasting no time exploring how to secure domestic energy supplies, accelerate the UK’s transition to net zero and protect households from eye-watering fossil fuel prices.

“Security of energy supply is absolutely vital. There will be a continued role for oil and gas in the coming three decades as we make the transition to net zero. But how much of the UK’s oil and gas reserves can be exploited while limiting global temperature rises to 1.5c in line with the Paris Agreement? Can we make better use of resources in the North Sea for our own domestic energy supplies to reduce reliance on imports? Should the Government continue to provide tax breaks or financial support to the fossil fuel industry? Can we turbocharge renewable energy installations and energy efficiency improvements to power and heat homes affordably?

“We will be exploring these questions, and many others, as we dive into this issue.”

Terms of reference

The Committee invites written submissions of no more than 3000 words, addressing any or all of the issues raised in the following terms of reference, by Friday 6^th May 2022:

Securing sustainable energy supplies and protecting households from high prices

• How effective will the Government’s Energy Security Strategy be: at reducing reliance on oil and gas at the pace required to limit global heating to 1.5 degrees; securing alternative energy supplies; and protecting households from high fossil fuel prices?
• Should Government policies on onshore energy generation or exploration be revised in light of the energy security situation? Given the current and potential speed of deployment, what low-carbon energy sources are most likely to secure supplies of affordable and sustainable energy rapidly?
• Is the Government doing enough to protect the high number of households likely to fall into fuel poverty as a result of high fossil fuel prices over the coming year? To what extent, and how rapidly, could energy saving or efficiency measures help to reduce reliance on oil and gas and relieve fuel poverty?
• Which elements of the International Energy Agency’s 10-point plans to Reduce Reliance on Russian Natural Gas and Cut Oil Use are relevant to the UK and which could the Government seek to implement as a priority?

Tax and the fossil fuel industry

• What impact will high prices for oil and gas have on production and the net zero transition? What are the pros and cons of a windfall tax levied on fossil energy producers? How should the revenue from any levy be allocated?
• Should the Government continue to provide tax reliefs or financial support to the fossil fuel industry, such as the ring-fence corporate tax relief for new oil and gas fields?
• How can Government phase out support for fossil fuels whilst most effectively supporting households through the transition?

The transitional role of oil and gas in the energy mix

• Can the UK’s oil and gas reserves be exploited while limiting global temperature rises to 1.5c in line with the Paris Agreement?
• Is carbon capture and storage technology sufficiently mature to be deployed at scale in the necessary timescale? What economic opportunities are there in carbon capture in the North Sea? What risks are there to relying on carbon capture technologies?
• While the UK continues to use fossil fuels during the transition to net zero, how significant is the environmental or carbon benefit of exploiting domestic oil and gas reserves compared to importing fuels from other major suppliers?
• Is the North Sea Transition Deal structured appropriately to meet net zero goals and support a ‘just transition’ for those working within the oil and gas sector in the UK? Is there sufficient independent oversight of the Deal?
• Is the North Sea Transition Deal genuinely compatible with the UK’s current domestic carbon targets and international obligations? How rigorous is the proposed Climate Compatibility Checkpoint for new oil and gas fields?