Spring has returned to the North East of Scotland, bringing with it (slightly) better weather and a sense of renewal. Residents of Aberdeen will undoubtedly be pleased with the prospect of a fresh start, but question marks still remain over the city’s ability to deal with change. Like the coming of Spring, the move from traditional fossil fuels to renewables is inevitable. However, this period of transition has put the so-called Granite City on increasingly shaky ground.
Aberdeen was, and to some extent remains a global player in energy production and research. Offshore activity has bolstered the region for decades, but recent years have not been kind. The costly business of North Sea exploration left many businesses that operated out of the area vulnerable, evidenced particularly when the value of oil slumped in 2016. While the price of crude has fluctuated, it could be argued that there is no way Aberdeen can find its oil and gas redemption in the shadow cast by the Covid crisis.
Covid has brought uncertainty
The lasting effects of Covid can be heard in the words of industry leaders. OGUK were recently quoted in the Herald with a rather grim assessment of the coming year stating, “We are going to see the effects of the pandemic, the consequences of low oil and gas prices endure for some time. 2021 will still be a challenging year for the industry..” With regards to the supply chain, OGUK’s description as being in “a very fragile position” is hardly going to fill industry figures in Aberdeen with much confidence.
As has been surmised by other contributors here on Energy Voice, it’s time that we came closer to accepting the idea that Aberdeen’s salvation lies in the local industry’s ability to innovate in providing support to renewables. This expertise must be unlocked to secure Aberdeen, Scotland, and indeed the wider UK’s position as a world-leader in this field.
Scotland wants to lead in renewables
Scotland itself is just about hitting its goal to generate 100% of its electricity demand from renewables, with output tripling in the last decade. While some of these targets have previously been described as ambitious, investing in the development of a power grid that relies on renewables will future-proof our ability to meet tomorrow’s net zero energy demands.
Scotland has a long way to go, and it is clear that the expertise to bring the country up to speed must be utilised from the existing supply chain in places like Aberdeen. Initiatives like the Scottish Government’s £62 million Energy Transition Fund come as welcome news, as they demonstrate that the state has a serious ambition to support the industry’s shift from fossil sources. More recently, the UK government has stepped in with support as well;
The North Sea Transition Deal
Within the last couple of weeks, another key lifeline has been offered to energy firms in the form of the North Sea Transition Deal. This initiative from the UK government has been hailed as the first of its kind from any G7 country. The involvement of the aforementioned OGUK shows that it could act as a template for other oil and gas producing nations, showing how their valuable home-grown supply chains could be adapted for net zero energy production.
Some have hailed the deal as a big win for recognising skills found in existing industries and how they might help in the shift to net zero. Some of the commitments outlined in the deal include creating 40,000 new jobs across the UK, reducing emissions by 60 million tonnes by 2030, and perhaps most tellingly, “[ensuring] energy communities like Aberdeen and Teesside can successfully transition, retaining jobs and skills and creating a more diverse and inclusive workforce”. This sounds great on paper, but it’s worth noting that as with all flagship initiatives that come with a big fanfare of press coverage, it might be best to reserve judgement until the specifics are put into action.
Supporting the economy of Aberdeen city
In addition to the North Sea Transition Deal, feasibility studies have been created for an Energy Transition Zone. The ETZ has been described as a net-zero environment, “dedicated to the development, production, assembly and storage of infrastructure required to support energy transition, including renewable energy related industries (offshore wind, tidal, hydrogen and solar), and underpins the broader process of energy integration that is underway in the North Sea”, as reported on the Aberdeen Harbour site.
The implementation of the ETZ in Aberdeen is, of course, no accident. The talent to foster this project already exists here, and the city itself has an opportunity to transform along with the very industry that supports the local economy. Encouraging greener investment in Aberdeen is not only logical from an environmental perspective but an economic one too. The local businesses in the area are just as connected to the price of a barrel of crude as the exploration teams drilling in the North Sea, as history has already shown us.
A reliable barometer for the condition of a local economy can be found in house prices. A look at the latest data reveals a somewhat unexpected level of stability has come to the area. Local property specialists have even reported an increase in interest around property over the last year, indicating confidence that the city can ride out this period of strain. With lockdown restrictions beginning to loosen, Aberdeen is at a crucial moment. It will be down to the UK and Scottish Government’s continued support coupled with the dogged determination of the energy companies supporting Aberdeen that will secure its transition to our post-fossil world.
Chris Smith is a Scottish-based writer and blogger. He writes extensively about finance on his website, Spend It Like Beckham. His articles about modern finance in the UK, as well as a number of other topics have been published by the Oilprice.com, Huffington Post, The Guardian, and The Telegraph.