Associate Feature: Scotland’s opportunity to realise the full potential of the energy transition
Scotland can be proud of its great heritage and central role in this evolving industry – with the most recent snapshot showing the oil and gas sector supports 90,000 jobs in Scotland of 214,000 across the UK and generates £16bn in additional value in economies right across the country. Over the lifetime of the basin, the sector has paid over £400bn in production tax to HM Treasury and, in 22/23 alone, the sector will pay £8bn in corporation tax and a further £7bn in the first 12 months of the energy profit levy.
Of course, the industry is much more than a spreadsheet and it should always be remembered that – through economic, political and pandemic turmoil – thousands of workers living offshore across the North Sea, and many thousands more supporting them onshore, powered our lives, supplying nearly half the nation’s gas, plus oil equivalent to more than 80% of the UK’s needs.
Back in 2019, we were one of the first industrial sectors to throw our weight behind net zero and publish our long-term plans for getting there. However, as we race to reach net zero by 2045 in Scotland, we must remember that – for the time being – the resources of the North Sea remain critical to meeting our energy needs.
While much of the public debate focuses on electricity production, this accounts for only 22% of our total energy use. Domestic use (mainly heating) and transport remain our largest energy consumption sources (29% and 33%, respectively). Transport is almost entirely fuelled by oil products (94%), and more than 80% of UK homes rely on gas for heating.
Energy and Innovation
While oil and gas will remain part of our energy mix for some years to come, the offshore energy industry is driving innovation to build the low-carbon energy infrastructure for the UK’s future. This includes technologies as diverse as floating wind turbines, facilities for the mass production of hydrogen and systems for capturing waste CO2 and then burying it, securely, deep under the seabed in empty oil and gas wells. Our most recent Economic Report found that the UK has the capacity to permanently store 78 billion metric tons of CO2 – roughly equivalent to two centuries of UK emissions.
And we can see this transition to new energies happening now. Almost 44% of ScotWind capacity (60% of floating wind capacity) is backed by companies that would traditionally have been viewed as oil and gas businesses. This is an example of energy integration in action and demonstrates how the transfer of skills, capabilities and capital from the oil and gas sector will be a central part of the growth in offshore wind capacity.
As Scotland becomes home to a new generation of offshore power generation, we are working hard to support our supply chain organisations to move into this ever-expanding sector – helping them to innovate, win contracts, create new employment and export their products and expertise around the world. So far, the Offshore Wind Growth Partnership initiative has supported over 130 projects through funding of almost £13m, with the intention of investing up to £250m. And in February OEUK is proud to bring back Share Fair to Aberdeen – an event that showcases upcoming opportunities to supply chain companies, allowing operators and energy investors to increase their awareness of the expertise, innovative products and specialised services offered by suppliers across the UK.
Scotland now has an opportunity to realise the full potential of the energy transition and truly reap the rewards of our industrial heritage and experience. To support this we need an integrated energy strategy that recognises our current and future needs, provides clarity for the industry and puts skills and communities at its heart, so that together we can realise our shared ambition of delivering net zero.
Jenny Stanning is responsible for leading OEUK’s external affairs, events and membership teams. In this role her responsibilities include working with Governments, Parliaments, industry leaders, business and industry organisations and regulatory bodies to ensure that members’ interests are well represented.
This article is sponsored by OEUK.
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