Mike O’Brien is Minister of State for Energy at the UK’s newly created Department of Energy and Climate Change. The department was formed by Prime Minister Gordon Brown to take over the energy functions of the Department for Business, Enterprise and Regulatory Reform (BERR) and the climate change functions of the Department for Environment, Food and Rural Affairs.
Question: What was the UK’s purpose in stripping the energy-related functions from BERR and creating this new department?
Answer: The department has been created to tackle the challenges of climate change and energy. It reflects the fact that these two issues are inextricably linked; two-thirds of our emissions come from the energy we use. Decisions in one field cannot be made without considering the impacts in the other.
Q: The UK’s oil production was down 6% in 2008 from 2007. What is the government doing to help producers stem decline, especially in the current tight credit environment?
A: Like other sectors, some in the oil and gas industry are already experiencing reduced availability of funding. However, the industry has a very strong track record and is equipped to meet future challenges.
Compared to many other regions around the world, we have a stable and business-friendly investment environment; the numbers of new players and levels of investment attracted to the North Sea in recent years prove this. We have seen around 39 billion boe produced so far in the UK. With up to 20 billion or more remaining, there is still a lot to play for in the North Sea. I want to see full economic development of UK petroleum resources, so that we get full benefit to the economy and to our energy security.
An Oil & Gas UK survey recently pointed to the likelihood of some fall in North Sea investment during 2009. Alongside the impact of lower oil prices, the availability of credit is expected to play a part in this. However, the survey also highlighted continued strong interest in exploration and investment in the UK Continental Shelf and an increase in reserves since the previous year.
DECC is closely monitoring the situation and discussing with the industry the issues which may affect future investment programs. We are adapting our licensing policy to support the industry.
It is important that we maintain the capability of the supply chain so that we can gain full benefit when oil prices start to recover in the medium term. We are watching carefully what is happening to investment, and a government-industry task force is bringing together the evidence of what financing problems are being encountered, and how to tackle them. Government and industry are both committed to maximizing North Sea opportunities.
Q: What is the UK’s strategy for lowering carbon emissions, and what is being done to mitigate the impact of carbon pricing on consumer energy costs?
A: The UK has some of the boldest energy and climate change policies in the world. We have enshrined in law the most ambitious greenhouse gas reduction targets on the planet—an 80% cut on 1990 levels by 2050. And we will work to meet these targets by putting in place five-year carbon budgets, placing an overall limit on emissions. The first three of these will be set out before the summer. They’ll set out the detail of how exactly we will meet the targets under the first three carbon budgets.
But we can’t and won’t tackle climate change alone. We want to play a leading role in securing climate deals in Europe, and globally in the international climate change talks to be held in Copenhagen in 2009. We will be at the forefront of these efforts.
But we recognize that at a time of high energy costs, we need to make sure our energy and climate change policies are fair to people as well as to the planet. We are committed to doing everything we can to bring an end to fuel poverty, which is people spending over 10% of their income on energy. And we have already challenged companies to ensure that the market works for all consumers, including the most vulnerable.
Q: What progress has been made in developing the UK’s alternative energy resources to meet electricity demand?
A: Britain’s a windy place, surrounded by the sea, so there’s plenty of natural resources for us to use.
Increasing our development of renewable energy sources—like wind—is absolutely vital if we are to meet our climate change targets. The UK government played a leading role in European negotiations toward a package that will see Europe cut emissions by 20% (by 30% if there’s a global climate change deal), increase energy efficiency by 20% and source 20% of its energy from renewables—all by 2020. Under this deal, the UK will need to source 15% of all its energy from green energy.
Wind is now the biggest contributor to renewable electricity generation in the UK, with a 26% increase in generation from onshore wind from 2006 to 2007 alone. We are also now the world leader in offshore wind power, overtaking Denmark last year. Offshore wind farms now have the potential to power the equivalent of around 300,000 UK homes. Overall, we’re now getting 3 gigawatts of our electricity capacity from wind power—enough to power more than 1.5 million homes.
Despite this growth in renewables, gas is still going to have an important role to play in how we power the UK.
Q: What role will the UK take in the international effort to lower carbon emissions, particularly from developing countries?
A: Each country must show clear intent to reduce emissions, guided by the science. Many developing countries are setting out national plans to show how they want to tackle climate change and adapt to the impacts it brings, and that is welcome.
If we’re to achieve an ambitious global deal in Copenhagen in December, we need three things: ambitious developed country targets, commitments from developing countries to reduce their emissions from business-as-usual trajectories and, finally, finance and technology flows to support developing country action.
Q: What are the chief areas of interest for future gas supply to the UK?
A: It’s right that the UK doesn’t put all its eggs in one basket, which is why we need and indeed have increasingly diverse sources of gas. So as well as some half of our gas coming from the North Sea, we’ve got Norwegian and Continental European gas flowing into Britain, and are now sourcing increasing amounts of liquefied gas shipped into our ports from such countries as Algeria, Trinidad, Egypt and Qatar. In fact, since 2006 there’s been a sharp increase in our gas import capacity.
And we’ll have vastly greater import capacity from Qatar when the South Hook LNG import terminal at Milford Haven terminal starts commissioning soon. 
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Mike O’Brien is Minister of State for the UK Department of Energy and Climate Change. He is the Member of Parliament for the West Midlands constituency of North Warwickshire, first elected in 1992. He served as a junior minister in the Home Office from 1997 to 2001, then as a Minister of State at the Foreign Office until Sept. 9, 2004, when he became Minister of State for E-commerce, Energy and Competitiveness at the Department for Trade and Industry. In 2005 he replaced Harriet Harman as Solicitor General. In 2007, he was appointed Minister of State for Pensions Reform at the Department for Work and Pensions.
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