The UK government said on Wednesday that it plans to overhaul the North Sea as part of a mission to become a clean energy superpower.
The Department of Energy Security and Net Zero (DESNZ) has launched a consultation on transitioning the basin from oil and gas to clean power, with a plan to boost offshore industries such as hydrogen, carbon capture and wind.
A plank of the North Sea transformation will be a £55.7m investment in facilities at the Port of Cromarty Firth to enable the development of new floating offshore wind farms.
Dan McGrail, chief executive of RenewableUK, said: “Offshore wind is at the very heart of the government’s mission to reach clean power by 2030 and net zero by 2050, and the industry also offers the UK one of its biggest opportunities for job creation, industrial regeneration and economic growth.”
© Supplied by LinkedInClimate groups Greenpeace and the Green Alliance broadly welcomed plans to regenerate the North Sea.
Heather Plumpton, head of research at independent think tank and charity Green Alliance, said: “There can be no safe future whilst we continue to extract oil and gas, so it’s good to see the UK government stepping up and leading with today’s new vision for the North Sea.”
Mel Evans, climate team leader at Greenpeace UK, added: “Our over-reliance on volatile and expensive fossil fuels is the reason our energy bills have remained so high in recent years.
“The only way forward for a secure future means ending our reliance on oil and gas. The government clearly recognises that creating a renewable energy system can provide this country and its energy workers with economic opportunities and stable, future-proofed jobs.”
End to new oil and gas licences
However, the energy industry was split around whether the confirmation that government will end new licences for oil and gas will benefit the basin.
While Plumpton called it “the responsible approach for a mature basin”, others disagreed, arguing that new fields are compatible with climate ambitions.
Russell Borthwick, chief executive at Aberdeen & Grampian Chamber of Commerce, raised concerns that the UK will rely heavily on imports given the country is expected to use oil and gas to meet a fifth of energy needs to 2050.
“Just last week the Climate Change Committee predicted that emissions from domestic production will fall a further 40% between now and 2040, even with new North Sea fields,” he said.
Windfall tax to sunset in 2030
As part of its overhaul, the government said it will end the Energy Profits Levy (EPL), a tax on oil and gas profits that was instituted due to high industry profits during the energy crisis, in 2030.
Also called the windfall tax, the 78% rate on operators has been highly unpopular with companies in the North Sea.
Chancellor Rachel Reeves previously announced the 2030 end date for the tax in last year’s Autumn Budget.
The decision to confirm an end date on the sunset clause for the windfall tax came as a relief to oil and gas companies operating in the North Sea.
Kwasi Kwarteng, the former chancellor and one of the architects of the windfall tax, speculated last year that it may not be phased out at all.
© Victoria Jones/PA WireDavid Whitehouse, chief executive of offshore trade association Offshore Energies UK, said the consultation on the tax regime and energy transition will respond to high oil and gas prices will help to “give certainty to investors” and provide a “stable investment environment”.
“The UK offshore energy industry, including its oil and gas sector, is responsible for thousands of jobs across Scotland and the UK, and today the government has committed to meaningful consultation on the long-term future of our North Sea,” he said.
The government anticipates that the changes will help the UK maintain energy security by protecting consumers from spikes in fossil fuel prices.
Energy Secretary Ed Miliband said: “The North Sea will be at the heart of Britain’s energy future.
“Oil and gas production will continue to play an important role and, as the world embraces the drive to clean energy, the North Sea can power our Plan for Change and clean energy future in the decades ahead.”
The consultation will explore how to use existing infrastructure and assets in the North Sea to deploy new cleaner technologies.
Unite general secretary Sharon Graham said: “Unite has been calling for the government to produce a concrete plan with real jobs for the transition of North Sea workers since it was elected. This consultation could be a step in the right direction, but it must be more than a talking shop.”
The energy department also said that industry will be consulted on how best to manage existing oil fields as part of the consultation.
Stuart Payne, chief executive of the North Sea Transition Authority, was on board with the move: “As I’ve said many times, the North Sea is the crown jewel in the UK’s energy system and can continue to play a pivotal role in a prosperous future through the energy transition.”
‘Constant attacks’
Robin Allan, chairman of Brindex, highlighted that North Sea businesses can create a world-leading hub for carbon capture and storage by utilising existing skills.
But he warned that this would require investment “from the very same businesses who will exit the North Sea if these policies persist”.
“The energy secretary’s constant attacks on our unsubsidised industry is putting thousands of people out of work, costing the UK billions in tax revenue and stunting economic growth,” he said.
The energy department promised that the consultation “gives certainty” over the lifespan of oil and gas projects by ensuring that existing fields will be maintained. It said the consultation will put North Sea workers, businesses and supply chains “at the heart” of the UK’s clean energy future.
Dhara Vyas, CEO, Energy UK said the consultation offers a “positive step toward a just transition for offshore workers”.
“The North Sea has been an engine of economic growth and energy security for the UK, but it’s critical to ensure pathways are available for offshore workers to transition to the low carbon industries of the future.”
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