In March this year, the UK became the first country in the G7 to agree a deal to support the oil and gas industry’s transition to clean, green energy. Successful implementation will play a vital role in helping the Government meet its target of net zero emissions by 2050. However, the effort will also require the industry to perform a delicate balancing act between reducing emissions and preserving 40,000 precious jobs – a number that soars to an estimated 147,000 if you also include those employed in supply chains.
The UK’s switch to alternative energy sources has already made considerable progress. In 2012, it is estimated that 43% of this country’s electricity came from burning coal; gas, nuclear and biomass, wind, solar and hydro accounted for only 54%. By 2020, that contribution had risen to 90% although obviously that means there is still some distance to go.
The key players involved agree that full transition will only come through continued innovation. For the UK to become a world leader in new and emerging technologies will require considerable investment in areas such as carbon capture and storage (CCUS), hydrogen production and offshore wind. The joint Government and oil and investments agreement provides us with some idea of the scale of the financial commitment: CCUS, £3bn; Hydrogen production, £10bn.
Innovation will also be required to decarbonise North Sea production to achieve reductions of 10%, 25% and 50% by 2025, 2027 and 2030 respectively. It is encouraging to note that the deal ensures that half of the decommissioning of mature oil and gas assets in the North Sea (estimated to be worth £270bn globally), and the same proportion of new energy technology projects, are to be provided by local UK businesses by 2030.
Added to that, intellectual property rights, designs and copyright will need to be protected by international patents so that all this accumulated experience and know-how remains right here in the UK. It is this knowledge that will give us an edge and help us both to remain competitive and to achieve the national net zero target.
The UK, and the North East of Scotland in particular, has transitioned to become a centre of excellence in the oil and gas industry in the last 50 years. The North Sea transition deal will ensure that the same industry is seen as a global centre of excellence for energy transition through the development of innovative technologies in the UK. Having got ourselves into pole position, we need to make sure we stay there.