The Conservative Government has wasted no time in removing barriers to the development of an onshore oil and gas industry, citing the potential for economic growth and greater energy security as justification for encouraging this form of fossil fuel energy generation. On the other hand, the UK was the first government in the World to set legally binding carbon budgets. This article looks at the legal framework within which the Government must balance the potentially conflicting objectives of the carbon budgets and encouragement for the exploitation of onshore oil and gas. 

The legal framework

The relevant legal framework is set out in the Climate Change Act 2008 (CCA 2008) and the Infrastructure Act 2015 (IA 2015).  Under the CCA 2008 the UK has committed to ensuring that the net UK carbon account for the year 2050 is at least 80% lower than the 1990 baseline.  The emissions reductions pathway to 2050 is to be achieved by way of a series of carbon budgets, which place a cap on the amount of greenhouse gases emitted in the UK over successive five-year periods.  The Committee on Climate Change advises the Secretary of State for Energy and Climate Change on the setting of the budgets and on other related matters.  Carbon budgets have been set to 2027.  

The importance of the carbon budgets is recognised in the Infrastructure Act 2015, section 49, which provides that: 

"The Secretary of State must from time to time request the Committee on Climate Change to provide advice… on the impact which combustion of, and fugitive emissions from, petroleum got through onshore activity is likely to have on the Secretary of State's ability to meet the duties imposed by  (a) section 1 of the CCA 2008 (net UK carbon account target for 2050), and  (b) section 4(1)1(b) of the CCA 2008 (UK carbon account not to exceed carbon budget)."

As soon as possible after each carbon budget reporting period the Secretary of State must lay before Parliament a copy of the advice received from the Committee on Climate Change together with either a set of regulations or a report as to why regulations have not been proposed.  Unfortunately, it seems that there is an error on the face of the statute in terms of the purpose of the regulations.  Section 49 goes on to state (bold emphasis added) that:

"(3) Regulations under this subsection are regulations providing for section 38 to cease to have effect to such extent as may be specified in the regulations.
(4) No provision made in regulations under subsection (3) has effect in relation to anything done in exercise of the right of use conferred by section 38 before the date on which the regulations come into force.
(5) A report under this subsection is a report explaining why a draft of regulations under subsection (3) has not been laid," (emphasis added).

But section 38 of the IA 2015 concerns the 'community electricity right'.  The making of regulations to provide that the community electricity right shall cease to have effect to any extent as a result of advice from the Committee on Climate Change is nonsensical.   It appears from the Parliamentary debates on the IA 2015 that section 49(3)-(5) is meant to refer to section 43 of the IA 2015, which provides that "A person has the right to use deep-level land in any way for the purposes of exploiting petroleum or deep geothermal energy."

So, the intention was to give the Secretary of State the power to suspend in whole or in part the right to use deep-level land for energy exploitation under section 38 if advice from the Committee on Climate Change was that such exploitation was harming the UK's carbon obligations.  However, this is not what section 49 achieves in its current form.     

Devolution

The onshore oil and gas sector is not the only one to be affected by devolution.  Whilst elected as the Government of the United Kingdom, the ability of the Conservative Government to implement its energy policy in the devolved administrations is constrained.  In January and February of 2015, the Scottish and Welsh governments respectively implemented moratoriums on planning consents for shale gas exploration whilst further research is carried out.   Therefore, any possible rise in emissions from the onshore oil and gas industry, particularly any produced during fracking for shale gas, would therefore, at least for the moment, only possibly emanate from sites in England.

Looking ahead

Governments around the world, including the UK, are preparing for the forthcoming UN Convention on Climate Change at which a new international agreement on the climate is sought with the aim of keeping global warming below 2 degrees Celsius.  The outcome will be important for the onshore oil and gas sector, not least in light of advice in the 2013 report of the chief scientific adviser to DECC that exploiting shale gas in the UK will cause global greenhouse gas emissions to rise without an international deal on climate change.  However, for the Secretary of State to have the intended ability to control the exploitation of deep-land energy sources in light of global and domestic climate change developments, section 49 will need to be corrected.