The UK has set its cap on pursuing energy security alongside decarbonisation to lay the groundwork for its transition to net-zero by 2050. While several things have been ticked off the list of items needed for this transformation into a green superpower, a lot of ground is still left to cover. In line with this, a new report from Britain’s representative body for the offshore energy industry, Offshore Energies UK (OEUK), outlines that the country’s total offshore energy spend could reach £200 billion (around $249.7 billion) this decade.
Within its Economic Report 2023, OEUK underlines that the UK needs to “supercharge homegrown offshore energy” to deliver its growth and net-zero targets. The report pinpoints the actions policymakers are required to take in partnership with businesses to get the needed investment moving and tackle the energy challenges facing the nation and its households.
The findings from this report estimate that Britain could dish out £200 billion by 2030 for oil and gas, offshore wind, carbon capture and storage (CCS), and low-carbon hydrogen. This entails £80 billion (over $99.8 billion) in offshore wind, of which OEUK members are helping to develop 13 GW of the offshore wind pipeline capacity by 2030. These projects alone require almost £30 billion (more than $37.4 billion) of private investment.
Furthermore, members of Offshore Energies UK are also developing the UK’s first wave of carbon capture and hydrogen cluster projects with a possible spend of up to £20 billion (nearly $25 billion). In addition, OEUK has in its sights approximately £35 billion (around $43.7 billion) of potential oil and gas capital investment over the next ten years, of which about half will go on projects in existing fields and half on new fields. This is part of wider oil and gas expenditure that could be £90 billion (almost $112.4 billion) through to 2030.
However, about half of the £200 billion investment – £100 billion (close to $124.9 billion) – is waiting on final investment decisions (FIDs) from businesses that need renewed certainty to sign off. In light of this, the report underscores that the UK needs to unlock £100 billion of private sector investment, so that, its supply chain and skilled workforce can build “key projects to safeguard today’s energy security” and the renewable infrastructure to get Britain to net-zero by 2050.
To unlock these funds, Offshore Energies UK has pinpointed concerted policy support, a stable and globally competitive tax regime, and improved planning and regulatory timelines as “critical.” In lieu of this, the report details the key moves necessary across all areas of the energy mix to make the UK globally competitive.
As a result, OEUK is calling for pragmatic policy across all political parties ahead of the next general election race to safeguard energy security and the homegrown jobs and supply chains needed to build the low-carbon future. This comes as the Energy Bill returns to the House of Commons for debate this week.
David Whitehouse, CEO of Offshore Energies UK, commented: “Parliaments may thrive on opposition and argument, but we know big engineering projects only succeed through collaboration. The transition to net-zero will be the biggest engineering project this country has ever seen. We need consensus to support the very industries and workers whose skills are vital for building our energy future.
“In recent months we have felt the direct impact of underinvestment in homegrown energy on job security for our workers, the competitiveness of our firms internationally and our future energy bills. Our report shows that with the right frameworks in place, this industry can make long-term investments to help the UK tackle these challenges head-on.”
The UK is in the process of mulling over whether to head for the exit from a multilateral energy treaty – known as the Energy Charter Treaty – if a much stronger focus on promoting clean, affordable energy, such as carbon capture, utilisation and storage as well as hydrogen and other renewables, are not incorporated within the treaty’s framework.
Many are demanding an immediate withdrawal from what they see as a “climate-wrecking” energy treaty, as eleven countries including Germany, France, the Netherlands, and Ireland have decided to exit the treaty, with the European Commission proposing a coordinated EU withdrawal in July.
With this in mind, a new poll was conducted between 25 and 26 August 2023 in the UK by Yonder Consulting on behalf of Global Justice Now. The results show that less than one in ten (9 per cent) believe Britain should remain in the Energy Charter Treaty.
Whitehouse further added: “The UK mustn’t just become a good place to do energy business, it must become irresistible. Our Economic Report shows that as the global race for energy investment accelerates, the UK must compete by making the most of its diverse homegrown industry, from oil and gas to offshore wind, hydrogen and carbon capture. Globally, this is the lesson other countries have learnt. We must not get left behind.
“Our sector recognises that our energy mix must change and shares the UK’s climate goal ambitions. As we look to successfully manage the shift to a lower carbon world there is no simple choice between oil and gas and renewables, we need both as we cut emissions and decarbonise the economy. Many of the companies investing in opportunities like carbon capture, hydrogen, and offshore wind will require the cash flow from a stable and predictable oil and gas business to fund these opportunities.”
Moreover, the independent Office for Budgetary Responsibility (OBR) forecasts that £1.4 trillion (about $1.75 trillion) is needed to get to net-zero, with £1 trillion (almost $1.25 trillion) required from the private sector, as the UK faces an accelerating global energy investment race. OEUK explains that President Biden’s Inflation Reduction Act (IRA) and ambitious plans across Asia and the EU are all attracting investment and talent from around the world, thus, the UK “must not be left behind.” Therefore, private investment is seen as critical in this endeavour.
“Today the offshore oil and gas industry supports around 220,000 jobs and in 2022 generated almost £30 bn in GVA, representing around 1.5 per cent of the total UK economy. This is the bedrock of expertise on which we can build future energy infrastructure for the benefit of everyone in the UK,” concluded Whitehouse.