New Oil Fields Should Have to Build the Carbon Storage Market
The debate over new oil and gas fields usually ends in a familiar deadlock. Industry argues that production will still be needed for decades, supports jobs and reduces dependence on imports. Climate campaigners respond that every new field locks in emissions incompatible with net zero.
Both sides then discuss carbon capture and storage as an afterthought: either a technological excuse for continued extraction or a costly public project unrelated to the licence being approved. There is a more useful option.
If a government decides that a new oil or gas development is necessary, it should require the producer to fund the permanent geological storage of a progressively rising share of the carbon contained in its products.
No vague promise of “CCS readiness.” No voluntary target for 2040. A measurable carbon storage obligation attached to the right to produce.
That would not settle every argument over fossil fuels. But it could solve one of carbon capture’s largest commercial problems: everyone says CO? storage will be needed, while too few parties are legally required to buy it.
The North Sea Exposes the Contradiction
The immediate test is the UK’s reconsideration of the Rosebank oil field and Jackdaw gas field. Their previous development approvals were overturned after a court found that the environmental assessments had failed to account properly for emissions generated when the fuels are ultimately burned.
This is more meaningful than requiring operators merely to reduce emissions from platforms and production equipment. Cleaner operations and tight methane controls are essential, but most emissions from an oil or gas field occur when customers use the fuel.
Rosebank illustrates the scale. Estimates put the lifetime emissions from its products at roughly 250 million tonnes of CO?. Jackdaw is smaller, at around 24 million tonnes. Capturing only operational emissions would leave the central climate impact untouched.
The obligation should therefore be based on the carbon eventually released from the fuel sold, not just the emissions generated while extracting it.
CCS Has a Demand Problem, Not a Geology Problem
In my previous discussion of CCUS business models, I argued that capture projects scale when contracts allocate cost, volume, performance and liability risk clearly enough to make the full chain investable. The reservoir matters. The product is certainty. A carbon storage obligation would manufacture that certainty.
The UK estimates that its continental shelf may hold around 78 billion tonnes of theoretical CO? storage capacity. Yet the entire world’s operational commercial capture capacity reached only about 64 million tonnes per year in 2025.
The mismatch is enormous. Storage resources exist. Engineering capability exists. Hundreds of projects have been announced. What remains unreliable is the revenue.
Industrial emitters are often unwilling to sign long-term transport and storage contracts without subsidies, guaranteed carbon prices or protection against cross-chain failure. Storage operators cannot finance pipelines, terminals and injection wells without committed CO? volumes. Capture projects then wait for infrastructure that is itself waiting for customers.
Governments have responded by underwriting the chain. The UK has committed up to £20 billion to support CCUS and wants to capture and store 20–30 million tonnes annually by 2030. Public support is defensible for first-of-a-kind infrastructure, but it cannot remain the permanent business model.
Attaching storage demand to fossil production would provide a growing customer base with both the resources and subsurface expertise to deliver it.
A Takeback Obligation Is Extended Producer Responsibility for Carbon
The principle is already familiar in other industries. Producers can be required to collect packaging, recycle electronics or pay for waste disposal. A carbon takeback obligation applies the same logic to fossil fuels: the company introducing geological carbon into the economy becomes responsible for returning an increasing fraction to secure geological storage.
The producer would not necessarily have to capture emissions from the exact vehicle, boiler or aircraft using its fuel. That would be impractical. It could instead procure verified permanent storage from industrial capture, bioenergy with CCS or direct air capture, provided the CO? would otherwise have entered—or had already entered—the atmosphere.
This creates competition. Oil and gas companies could build storage themselves, contract with independent storage providers or purchase rigorously certified storage certificates. The obligation creates the market; companies choose how to comply.
The UK government has already explored a Carbon Take Back Obligation, and a proposed amendment to the Energy Act 2023 would have required new licence holders to certify permanent storage of a prescribed and eventually rising share of the emissions from their fuels. The amendment was withdrawn, but the commercial logic remains strong.
Research led by Oxford academics found that a progressively increasing obligation could finance permanent storage at costs to consumers below conventional carbon-pricing pathways until the 2040s and comparable thereafter. More importantly, it would turn storage from a policy aspiration into a compliance market.
The Obligation Must Rise, or It Becomes Greenwashing
The strongest objection is obvious. If CCS becomes a condition for new fields, governments may use a small capture commitment to justify large volumes of additional fossil production. That risk is real.
A credible obligation must therefore begin at a meaningful level, rise on a legally fixed trajectory and eventually approach 100% of the carbon still being produced. It should apply to imported fuels as well as domestic production where trade rules allow; otherwise governments simply export emissions and disadvantage local operators.
Certificates would also need stringent rules. Storage must be permanent, independently measured and additional. Avoided emissions cannot be treated as equivalent to physically returning CO? underground. Temporary forest credits should not qualify as substitutes for geological storage of fossil carbon.
Nor should takeback replace policies that reduce consumption. Electrification, renewables, efficiency and behavioural change remain cheaper and more efficient than extracting carbon, releasing it and removing an equivalent quantity later. The obligation is for the fossil fuels that remain, not an argument for preserving demand.
Costs would ultimately enter fuel prices. But that is not a design failure. Fossil energy currently externalizes much of the cost of its waste while taxpayers finance early CCS infrastructure. A takeback obligation places that cost inside the product and gives producers a reason to reduce it through innovation and scale.
New Production Should Buy a Transition Asset
Rosebank and Jackdaw present the UK with more than a yes-or-no decision about two fields. They offer a test of what continued production must contribute to the transition.
Approval without binding storage conditions would repeat the old model: private production, public climate liability and taxpayer-supported cleanup. Rejection may avoid additional production, but it does not by itself create the CO? storage industry needed for cement, lime, chemicals, waste-to-energy and carbon removal.
Conditional approval could do something different. It could convert contested fossil investment into contracted demand for shared transport and storage infrastructure that hard-to-abate industries will also need.
This is not a free pass for oil and gas. It is a tightening one-way ratchet: every new licence comes with a growing physical responsibility for the carbon sold.
If producers believe their products will remain necessary in a net-zero economy, they should be prepared to prove it underground.
This post appeared first on https://oilprice.com
