Making the most of the UK’s resources is the best pathway to energy security and net zero.
This is the message I took to Number 10 Downing Street this week for a summit with leaders from across the energy industry and Secretary of State, Grant Shapps. The renewed commitment by government to North Sea licensing, carbon capture projects and to update the fiscal regime is a welcome boost for energy security, growth and reaching net zero. But there’s more to be done.
The UK’s skilled offshore workforce, its engineering expertise and its geology have given our nation a unique opportunity to lead the way in building a net zero world with the expertise of our sector in Scotland and around the UK.
New licences are critical because oil and gas fields decline naturally over time. The UK needs the churn of new licences to manage production decline in-line with the maturing basin. There are currently 283 active oil and gas fields in the North Sea, by 2030 around 180 of those will have ceased production due to natural decline.
If we do not replace maturing oil and gas fields with new ones, the rate of production will decline much faster than we can replace them with low carbon alternatives. This means we would have to import more oil and gas at the expense of our own industry, over 200,000 workers and UK households.
The go-ahead for the exciting Acorn and Viking carbon capture projects in Aberdeenshire and Humberside is welcome news for firms that need encouragement to invest in energy production and to establish new technologies and jobs across the UK.
These projects, together with those already existing and approved, will help to decarbonise industrial clusters in England, Wales and Scotland by capturing CO2 from heavy-emitting sectors, such as refining and steel manufacturing, by transporting the carbon they produce via ships or pipelines to be permanently stored under the North Sea.
Combined, the projects could capture and store millions of tonnes of carbon per year and generate up to £100bn worth of work for UK manufacturing companies by 2050. The independent Office for Budgetary Responsibility estimates the UK needs over £1 trillion of investment from private companies to get to net zero by 2050. This is a great opportunity for the UK, not only to deliver ongoing domestic oil and gas but wider opportunities in wind, carbon storage and hydrogen, while delivering on our climate goals.
But make no mistake, the UK is in a global race for this energy capital with many companies turning their heads towards the USA as the Inflation Reduction Act turbo charges investment. But with pragmatic policy, the UK can be successful in this race – unlocking the private funding that can deliver energy security, jobs, long term wealth, and our climate goals.
The demands on HM Treasury are and will continue to be significant. We are managing debt, high inflation, and challenging borrowing environments, this means that the bedrock to success and delivering growth in the economy can only be collaboration between private and public capital.
Offshore energy companies are already scaling up the solutions and innovations we require for our future and can be seen as trusted and responsible partners to the UK. The knowledge, experience, and capital the offshore sector can bring to bear, in partnership with pragmatic and fair policy, will turn shared ambition into action, into delivery.
I remain convinced that by building on our world class oil and gas sector, the UK can deliver an energy future that provides energy security, affordability, creates highly skilled jobs, and tackles climate change.
- UK targets to store 20-30 million tonnes pa of CO2 by 2030 – meeting this target needs four clusters to be operational before 2030
- The Climate Change Committee estimate the UK will need up to 100 million tonnes of CO2 per annum being captured and stored by the 2040s
- UK has 78 billion tonnes of CO2 geological storage capacity under the seas around the UK in depleted oil and gas fields and saline aquifers
- The first Carbon Storage licence round was announced by the North Sea Transition Authority in Q3 2022, with results expected in Q4 2023, as many as 100 CO2 stores will be needed by 2050
- The UK has a target to generate 10 GW of low carbon hydrogen by 2030 which will require CCUS clusters to be commissioned and in operations.