There’s much talk about the ambitious targets that have been put in place to reduce the level of production emissions in the North Sea so that it becomes a net zero basin by 2050.
Set out in the North Sea Transition Deal, published in March, the steps begin with a reduction of 10% by 2025, rising to 25% in 2027 and 50% by 2030.
Across some areas of the industry, there have been rumblings of concern that those targets can’t be met in that timescale and musings that they might be allowed to slip slightly.
That is highly unlikely, in fact the opposite is likely to apply. Public sentiment is pushing the world to move more swiftly, swelling the opinion that net zero needs to happen sooner rather than later and that decarbonisation of the oil and gas industry should happen now.
It can’t happen overnight of course. It is, after all, a transition and the oil and gas sector will be an essential element of our energy mix and a safeguard of our energy security for decades to come. But that doesn’t mean it can’t be greener; it can and it must.
Until that happens, we will increasingly see an oil and gas industry threatened by paralysis, rapidly passing the tipping point of no return. Recent controversy and scrutiny over West of Shetland oil and gas developments will only increase the urgency and the need to accelerate the decarbonisation of North Sea assets. New developments can’t be allowed to proceed if they’re going to be adding to the already unacceptably high level of emissions; they must come from a starting point of zero emissions.
There is a perfect opportunity for the OGA and the other regulators to use this field development to showcase that new developments will be delivered with zero emissions, taking a greener oil and gas industry into the transition.
Giving the go-ahead for new developments without this reassurance flies in the face of public sentiment and political will and should act as a wake-up call to industry players who think time is on their side.
There is a real possibility that we could see targets tightening up even more. We’ve already had an indication of that when Boris Johnson agreed to legislate a new target to reduce national emissions by 78%, compared to 1990 levels, by 2035 as opposed to the previous target of 80% by 2050.
This is seen as the most ambitious target in the world.
It’s bold, it’s brave – and beatable.
Never mind ambitious targets, we need to be more ambitious in our thinking. We shouldn’t be looking to achieve those targets as a measure of success; we should be knocking them out of the park. Instead of a 25% target by 2027, why not a 50% target?
We have the technology to do it, we have the wherewithal in our grasp, we just need to be bold and much quicker in our decision making.
So, let’s look at raising the bar; all indications are that public sentiment wants to set the bar higher. So, what’s stopping us?
Some of the concerns around achieving those targets centre on the realisation that to achieve them you must make a material impact immediately, with decisions being taken now, not next year or the year after.
In a recent report, the European Technology and Innovation Platform on Wind (ETIPWind) and WindEurope said that electrification is the most cost-effective way to decarbonise Europe’s economy.
A scheme proposed by Cerulean Winds for an integrated 200-turbine floating wind and hydrogen development can do just that in the North Sea, accelerating decarbonisation of oil & gas assets in the basin.
These assets currently produce 18 million tonnes of CO2 emissions a year. This proposal would half those emissions by 2025 by generating enough power to electrify the majority of UKCS assets. Excess green power would be used to generate green hydrogen providing opportunities for export and to decarbonise other industrial sectors.
That last point would line us up to follow Germany which has taken the decision to decarbonise its heavy industries and is actively looking at how to use green energy from windfarms to do that.
Cerulean Winds has a schedule which is on course to make this happen. Some might describe this as ambitious, we prefer achievable. We’re already effectively a year into it. We have funding in place and discussions with contractors well advanced.
The project represents up to £10billion of potential investment in a single strategic infrastructure project with no requirement for government subsidies but the potential to bring in more than £300million in direct government revenue via leases and taxation through to 2030.
The North Sea Transition Deal recognises that tackling change will require decisive global action.
Energy transition must be a priority and regulators must be bold, challenging conventional consenting and other regulatory frameworks to speed-up decision-making, committing to advance that priority, adopting a flexible and urgent approach to enable projects of this scale to gain approval if there is to be any chance of meeting the targets laid out in the deal.
And, in an environment which has already been hit hard by successive years of downturn followed by the impact of the pandemic, we’re already seen the loss of thousands of oil & gas jobs. If assets don’t reduce their CO2 emissions by the mid-2020s, the financial impact will be crippling. Increased emissions penalties through carbon taxes will see North Sea fields moving towards decommissioning by the end of the decade, at the cost of even more jobs.
Our proposal will help preserve more than 150,000 existing jobs in oil & gas through the transition and accelerate the creation of many thousands of new jobs in the floating wind and hydrogen generation sectors.
We have submitted a formal request to Marine Scotland to make an exceptional case to grant seabed leases for our sites West of Shetland and in the Central North Sea. Everything hinges on those being granted by Q3 in 2021 so we can target financial close in Q1 2022 and begin construction soon after.
We’ve spoken to a lot of stakeholders about this; we’re not trying to solve the decarbonisation problem alone, it’s about working together to achieve what needs to be done. And at the moment, there’s no other project in the pipeline with enough scope to make achieving and exceeding those targets in the given timescales a reality.