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The UK government has announced a North Sea Transition Deal with industry,
aiming to support high-skilled oil and gas workers and the supply chain
in the transition to a low carbon future.
The sector deal between the UK government and oil and gas industry will
support workers, businesses, and the supply chain through this transition
by harnessing the industry’s existing capabilities, infrastructure and
private investment potential to exploit new and emerging technologies such
as offshore wind, hydrogen production, Carbon Capture Usage and Storage,
and decommissioning.
Through the deal, the oil and gas sector, largely based in Scotland and
the North East, government and trade unions will work together over the
next decade and beyond with the aim to deliver the skills, innovations
and new infrastructure required to decarbonise North Sea production.
Extracting oil and gas on the UK Continental Shelf is directly responsible
for around 3.5% of the UK’s greenhouse gas emissions. Through the package
of measures, the Deal is expected to cut pollution by up to 60 million
tonnes by 2030 including 15 million tonnes from oil and gas production
on the UK Continental Shelf - the equivalent of annual emissions from 90%
of the UK’s homes - while supporting up to 40,000 jobs across the supply
chain.
Key
commitments in the North Sea Transition Deal include:
- the sector setting
early targets to reduce emissions by 10% by 2025 and 25% by 2027 and has
committed to cut emissions by 50% by 2030
- joint government and
oil and gas sector investment of up to £16 billion by 2030 to reduce carbon
emissions. This includes up to £3 billion to replace fossil fuel-based
power supplies on oil and gas platforms with renewable energy, up to £3
billion on Carbon Capture Usage and Storage, and up to £10 billion for
hydrogen production
- by 2030, the sector
will voluntarily commit to ensuring that 50% of its offshore decommissioning
and new energy technology projects will be provided by local businesses,
helping to anchor jobs to the UK
- the appointment of
an Industry Supply Chain Champion who will support the coordination of
local growth and job opportunities with other sectors, such as Carbon Capture
Usage and Storage and offshore wind
The UK government
will introduce a new Climate Compatibility Checkpoint before each future
oil and gas licensing round to ensure licences awarded are aligned with
wider climate objectives, including net-zero emissions by 2050, and the
UK’s diverse energy supply. This Checkpoint will use the latest evidence,
looking at domestic demand for oil and gas, the sector’s projected production
levels, the increasing prevalence of clean technologies such as offshore
wind and carbon capture, and the sector’s continued progress against its
ambitious emissions reduction targets.
The
UK government said it is vital that any future licenses are granted to
industry only on the basis that they are compatible with the UK’s climate
change objectives. A dynamic checkpoint enables the assessment of ongoing
domestic need for oil and gas, while expecting action from the sector on
decarbonisation. If the evidence suggests that a future licensing round
would undermine the UK’s climate goals or delivery of Net Zero, it will
not go ahead. The UK government will design and implement the checkpoint
by the end of 2021 through extensive engagement with a wide range of stakeholders.
In
a further move to support the shift to green technology and renewable energy
in the UK and around the world, the UK government has announced it will
no longer provide support for the fossil fuel energy sector overseas from
31 March 2021. This follows the Prime Minister’s commitment to end taxpayer
support for fossil fuels projects overseas as soon as possible at the Climate
Ambition Summit last December and the decision on the date to end this
comes after consultation with industry. This will include UK Export Finance
support, international aid funding, and trade promotion for new crude oil,
natural gas and thermal coal projects - with very limited exceptions.
The
government is already committed to a 40 GW offshore wind target, which
is expected to unleash around £20 billion of private investment in renewable
energy by 2030, creating 60,000 new jobs and generating economic growth
in areas such as north east of England, Yorkshire and the Humber, East
Anglia and Scotland. An estimated 60% of spending on UK offshore wind will
also be invested back into the economy by 2030.
To
aid the transition to a green economy, the package follows the recent budget
in which the Chancellor committed to funding that targets the oil and gas
sector and supports businesses to develop green energy. This includes up
to £27 million for the Aberdeen Energy Transition Zone to transform the
area into a green energy hub, and up to £5 million additional funding for
the Global Underwater Hub based in Aberdeen to open-up opportunities for
the city to become a global hub for underwater engineering, including in
offshore wind and hydrogen.
