North Sea energy sector requires 'urgent investment' to reach net-zero
Investment into net-zero technologies such as floating offshore wind and clean hydrogen could capture up to £125bn in annual benefits from the North Sea energy sector, but a new report has warned that jobs in the area could fall by at least 20% without incentivising policies.
New analysis by OGTC and Offshore Renewable Energy Catapult, published today (30 November), outlines that new policy that attracts investment into the North Sea energy sector could support 232,000 jobs as part of the net-zero target for 2050. This would deliver a 66% increase on current levels.
Investment into technologies such as floating offshore wind, clean hydrogen and carbon capture and storage (CCS) would deliver annual benefits of £125bn to the UK and form the basis of an economic recovery, by boosting returns by 200% compared to current levels.
This would require more than £400bn in front-loaded investment over the next 30 years, the report states.
OGTC’s Colette Cohen OBE said: “These detailed scenarios paint a picture of what the UK’s offshore energy system could look like by 2050. None are definitive, but they highlight the need to drive investment and innovation today.
“There are tremendous opportunities for the UK, but we need strong alignment and urgent action from industry, governments and regulators to realise these benefits.”
The report warns that failure to support the already struggling sector could result in the UK becoming a buyer, rather than supplier, of green energy and technology.
The Scottish Government’s Expenditure and Revenue Scotland (GERS) report for 2019-20 shows that the nation’s share of North Sea energy tax receipts fell by almost 50% over a 12-month period to £724m. This was attributed to a decline in production and the closure of certain plants.
The new report warns that North Sea sector jobs could fall by 20% “in the coming years” unless investment is funnelled into clean technologies. Focusing on the selection of technology could also reduce energy costs for businesses and households, collectively, by £154bn by 2050.
Energy Minister Kwasi Kwarteng MP said: “I welcome this report and its ambitious vision to help transition the North Sea offshore oil and gas sector towards a Net Zero future. Protecting highly skilled jobs in the oil and gas industry is important to our net-zero aspirations, as we need the same skills, businesses and infrastructure to underpin net-zero solutions.
“That’s why we have committed to supporting the energy transition with a transformational North Sea Transition Deal and I look forward to working alongside industry to deliver on our world-leading target to achieve net-zero greenhouse gas emissions by 2050.”
The Government is aiming to support more clean technologies on the road to net-zero. Ministers recently confirmed that the fourth round of the CfD scheme will open in late 2021 and will aim to double the 5.8GW of renewable capacity procured in the previous round. Up to 12GW of renewables are being targeted to assist with the nation’s net-zero emissions target for 2050.
The number of technologies supported by the scheme will also be expanded in the latest round, with offshore wind, onshore wind, solar, tidal and floating offshore wind projects all eligible to bid. It marks the first time that floating offshore has been eligible for the scheme and the first time since 2015 that onshore wind and solar have been included.
As for CCS, the Prime Minister’s Ten Point Plan confirms an intention for the UK to become a “world-leader” in CCS technology and will target the removal of 10MT of carbon dioxide by 2030, equivalent to all emissions of the industrial Humber today.
An additional £200m will create two carbon capture clusters by the mid-2020s, with another two set to be created by 2030. In total, £1bn has been committed, which will support 50,000 jobs in the UK’s industrial clusters.