This month we mark a milestone as the UK welcomes world leaders to Glasgow for Cop26. This is a once-in-a-generation opportunity for us to showcase the positive contribution the oil and gas industry can make to the energy transition. We are fully behind the UK government’s hosting of Cop26 and we see this as an opportunity to present our work to all governments and international partners in this important year of action.
Under the UK’s presidency, Cop26 brings together the largest international conference ever hosted by the UK government and comes at a pivotal moment for coordinated action on climate change as the world begins to recover from the pandemic.
Amid growing awareness of the climate emergency and on the journey to net zero, the offshore oil and gas industry is changing.
The sector recently agreed the North Sea Transition Deal with the UK government, setting out the blueprint for a just transition that ensures that high-skilled oil and gas workers – as well as workers across the supply chain – will not be left behind on the road to carbon neutrality. As well as setting out a 50 per cent reduction in offshore production emissions by 2030, the deal will also stimulate investment of up to £16bn in essential new technologies, such as carbon capture and the use of hydrogen at scale. These will both play a critical role in helping other energy-intensive industries – such as those that manufacture glass, cement and steel – to reduce their emissions drastically.
Carbon capture technology – which sees CO2 emissions separated from other gases produced during industrial processes and injected into rock formations deep underground for permanent storage – is another key area of work for our sector, with projects already under way.
Despite some false starts in the past, the energy sector is now committed to new technologies, with Aberdeen, once referred to as the “oil capital of Europe”, set to be at the centre of that new reality. Indeed, the Aberdeen Energy Transition Zone (ETZ) is currently being developed at the city’s South Harbour and is expected to directly support 2,500 green jobs by 2030, alongside a further 10,000 transition-related jobs. Earlier this year, the Scottish government announced £26m of funding for the development, matching the money already pledged by the UK Treasury.
“The vision for the North Sea is as an integrated energy sector,” says Deirdre Michie, chief executive of OGUK. “We will continue to see offshore oil and gas platforms, although there will be less of them. We’ll see offshore floating wind, and the development of carbon capture and storage solutions. I think the North Sea has a really strong role to play here.
“There is a massive opportunity for the oil and gas sector and for Scotland to take the lead. It won’t be easy – this is not going to happen overnight and it’s really challenging.
“We need to find a balance between where we are today and where we want to be,” Michie continues. “We need to ensure that the skills and expertise that we have in the industry transfer into these emerging sectors. We could see those jobs going elsewhere if we don’t move quickly enough.
“That’s what the North Sea Transition Deal is trying to drive forward, making sure there is a clarity around the steps that need to be taken so that we can implement them at pace.”
While fully committed to the government’s emissions targets, producers are acutely aware that, in the transition to net zero, the interests of the workers, families and communities that rely on the industry should be kept in the foreground. Many will need to be reskilled and upskilled to prepare for the jobs of the future, and preparation will be needed to equip people with the right skills for the right roles. The sector also knows that fossil fuels will continue to meet a large part of the country’s energy demands in the years ahead, and even beyond the net zero target year.
“The [UK] Climate Change Committee needs us to deliver net zero by 2050 and says that we will continue to need oil and gas, albeit in a declining context,” Michie says. “Currently, oil and gas supplies 73 per cent of the UK’s energy. That figure will still be around a fifth in 2050 and beyond.”
Indeed, Michie believes that far from being part of the problem, the industry can help lead the way to net zero, drawing on decades of energy expertise to help develop cleaner forms of energy and boost the required investment in technology and innovation.
But doesn’t allowing new oil drilling undermine the UK’s attempts to show leadership in the run-up to Cop26?
“You show leadership by recognising that we have to have a managed transition,” Michie says. “That we’ve got to do it in a way that is planned, that must move at pace, but that also addresses the fact that we’re still going to need oil and gas in the future.”
Our industry contributed £19.44bn in gross value added in 2021 and has supported the UK economy further by paying £350bn worth of taxes over the lifetime of the North Sea basin. Our companies and people are making the energy transition happen through accelerating crucial greener technologies, like hydrogen and carbon capture, while driving down emissions for the oil and gas we’re going to continue to need. It is essential that the sector’s role in the transition to net zero is highlighted at the summit.
But the rapid decarbonisation needed to minimise the worst impacts of climate change will mean moving quickly. Publishing its report earlier this month, the Intergovernmental Panel on Climate Change (IPCC) said the world would have just a few short years to act to prevent warming going above 1.5°C.
The warnings about the future impact of climate change are stark.
“I represent companies and people who are committed to doing a good job in an oil and gas context,” says Michie. “But also, we’ve got families and friends who are all concerned about climate change and want to do their bit and want to see the sector doing its bit. We’re very passionate as a sector about demonstrating what we’re doing and the role we are playing in the green transition.”
Jenny Stanning is external relations director at OGUK