SSEZY SSE PLC (PK)

By Jaime Llinares Taboada

The U.K. government on Thursday published details of its new energy security strategy, which includes renewed support for oil-and-gas extraction and 120 million pounds ($156.8 million) of funding for new nuclear power.

The government's strategy aims to accelerate the deployment of clean technologies, such as wind, nuclear, solar and hydrogen, but also support the domestic production of oil and gas.

The statement confirms that a new license auction for offshore oil-and-gas projects will be held this year.

"A licensing round for new North Sea oil and gas projects planned to launch in Autumn, with a new taskforce providing bespoke support to new developments--recognising the importance of these fuels to the transition and to our energy security, and that producing gas in the U.K. has a lower carbon footprint than imported from abroad," the government said.

However, this won't have an immediate effect on the current gas supply crisis in the U.K. and the rest of Europe, Professor John Underhill from the University of Aberdeen said. "Any gas and oil production that follows from an exploration licensing round is years away and so, is not a short-term solution for the U.K.'s gas supplies," he said.

Downing Street is also setting a new ambition to have an offshore wind capacity of up to 50 gigawatts by 2030, of which 5 gigawatts would be floating facilities, supported by lower approval times and overall streamlining.

Moreover, the strategy reaffirms the government's support for nuclear power, which is intended to meet 25% of the country's power demand by 2050. The government is launching a GBP120 million Future Nuclear Enabling Fund this month, and setting up a new body to bring forward new projects.

It also includes higher hydrogen production ambitions, consultations to accelerate onshore wind and solar deployment, and up to GBP30 million for heat pump manufacturing.

"We support the government's commitments in the Energy Security Strategy to accelerate the deployment of domestic clean power sources, build a modern energy system, and reduce demand for volatile international gas," Emma Pinchbeck, chief executive of industry lobby Energy UK, said.

FTSE 100 paper and packaging firm DS Smith PLC said that the government's strategy should be more far-reaching. "Diversified energy is to be welcomed, but the proposed renewable sources, along with nuclear power, won't deliver lower carbon energy at scale until 2030 and that is simply too late," Alex Manisty, the company's head of strategy, said.

Climate organizations and unions, which had been pushing for a windfall tax on oil-and-gas profits, reacted with skepticism.

Greenpeace said that the strategy fails to tackle soaring energy bills and take control of the climate crisis. "While there are some improvements on renewables targets, they have prioritised slow solutions, dishing out rewards to vested interests in the nuclear and the oil and gas industries, which won't tackle the cost of living crisis or reduce our dependence on gas," Greenpeace U.K.'s head of politics Rebecca Newsom said.

"Energy producers are making more cash than they know what to do with. A targeted windfall tax could get cash directly into the pockets of the people in this country who are facing the terrifying dilemma of heat or eat," Sharon Graham, general secretary at the Unite union, said.

"Looking beyond the 'aims' and 'ambitions' of this plan, there are serious questions about the worrying lack of specific commitments on U.K. jobs," said Gary Smith, general secretary at the GMB union.

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

(END) Dow Jones Newswires

April 07, 2022 06:37 ET (10:37 GMT)

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