Electric cars will boost UK energy security more than new North Sea oil licences

Ahead of the delayed second reading of the Offshore Petroleum Licensing Bill on Monday 22nd January, [1] new analysis from the Energy and Climate Intelligence Unit (ECIU) has found that by 2030, when some newly licenced North Sea fields could be producing oil, electric cars are likely to be cutting foreign imports for petrol by as much as new licences could, and potentially more so if EV sales surge. [2]

Just a small proportion (about 20% in recent years) of oil from UK oil fields is piped back to British refineries to produce petrol and other fuels, with the rest being sold abroad.5t6gv

There are already around 1 million electric cars on British roads, and under the Government’s Zero Emission Vehicle mandate, which requires car makers to sell an increasing proportion of EVs and started on 1st January, an additional 5.3million EVs are expected to be added by the start of 2030. [3] The analysis suggests that these 6.3million EVs in 2030 would have the same effect as new oil licences in terms of limiting imports for petrol consumption, and that beyond 2030 the impact of EVs would begin to exceed that of new oil licences. And by pressing ahead with an accelerated build-out of renewables, the majority of British electricity powering those EVs will be generated in the UK. [4]

Commenting on the analysis, Dr Simon Cran-McGreehin, Head of Analysis at ECIU, said: “The licencing debate only distracts from a more permanent solution to securing the UK’s energy independence which means building out British renewables more quickly to power homes and EVs as well as cutting energy waste by insulating roofs. The Government’s recent track record on some of these policy areas is less than stellar.

“The Government’s electric vehicle mandate policy is in effect an energy security policy weaning us off foreign oil imports as the North Sea’s output inevitably declines. But as the OBR has noted, last year’s Government U-turn on the phase-out of sales of new petrol cars will likely reduce the number of EVs that might have been on the UK’s roads, weakening our energy security, leaving us more dependent on foreign oil.”

In November, the OBR noted that the Government’s delay to phasing our new sales of petrol and diesel cars, from 2030 to 2035, could result in some consumers delaying a switch to EVs, [5] meaning that new EV sales in the run-up to 2030 could have been even higher were it not for the change in policy. Were sales to actually reach those higher levels, the EVs would boost the UK’s energy independence further and could exceed the impact of new oil licences by 2030.

Having claimed that the Bill mandating new licencing rounds would ‘bolster’ the UK’s energy security, the Government recently acknowledged that 80% of oil from new fields such as Rosebank will be traded internationally and said that “it is not desirable” that it be allocated to the UK. [6]

Britain has the least efficient homes in western Europe. Since 2013, when government support schemes were cut, insulation rates have been 90% lower than their 2012 peak, and have actually fallen even further during the gas crisis.

The Government failed to secure any offshore wind bids in the 2023 Contracts for Difference auction. Changes have been made to the scheme’s parameters for the next auction round in 2024 with the hope that construction of these windfarms will begin shortly after the auction.

Previous ECIU analysis found that British fuel from new North Sea licences would make up less than 1% of a tank of petrol in 2030. [7]

ENDS

Notes to editors:

1. The Offshore Petroleum Licensing Bill 2023-24 was introduced in the House of Commons on 8 November 2023. It was rescheduled for its Commons Second Reading stage on 22 January 2024: https://commonslibrary.parliament.uk/research-briefings/cbp-9924/
2. ECIU analysis was based on data from Government statistics: DUKES Tables 3.1 & 3.2; Oil Production – Trade since 1890; and Energy Trends, Tables 3.1 & 3.10. The methodology for fuel production was the same as in this previous analysis (EICU, 2024). The methodology for fuel demand with the ZEV Mandate was as follows: SMMT car sales forecasts and ZEV Mandate sales percentages give BEV new sales per year from 2024 onwards; and cumulative new BEV sales by the start of 2030 include the 950,000 already sold pre-2024. Assuming that new BEVs displace petrol and diesel cars in proportion to their current market shares (petrol c.60%, diesel c.35%), and noting that virtually 100% of UK petrol demand is for cars, this allows an estimate of the reduction in petrol demand in each year. This lower demand then scales the percentage of fuel coming from UK sources via UK refineries due to the effect of the ZEV Mandate, e.g. shifting the amount of petrol coming from UK sources via UK refineries in 2030 from about 4% to 5%, the same impact as projected output from new licences (as per the previous analysis). The decline of the diesel car fleet means that diesel will be less of a factor than petrol in ZEV Mandate calculations. This decline in the diesel fleet could affect petrol demand in some years, but this is separate to the comparison of new licences and petrol demand reduction.
3. https://www.gov.uk/government/news/government-sets-out-path-to-zero-emission-vehicles-by-2035
4. Most scenarios by analytical organisations foresee the UK obtaining the majority of its electricity from wind, solar and hydro by 2030 or earlier. See, for example, this ECIU report with electricity scenarios that drew on a wide range of sources: https://eciu.net/analysis/reports/2023/getting-off-gas
5. https://obr.uk/box/updated-electric-vehicle-assumptions-and-their-fiscal-implications/
6. Government press release: https://www.gov.uk/government/news/new-opportunities-for-north-sea-oil-and-gas Written parliamentary question: https://questions-statements.parliament.uk/written-questions/detail/2023-11-28/4233
7. https://eciu.net/media/press-releases/2024/british-fuel-from-new-north-sea-licences-would-make-up-less-than-1-of-a-tank-of-petrol
   

For more information or for interview requests:

George Smeeton, Head of Communications, ECIU, Tel: 07894 571 153, email: george.smeeton@eciu.net