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Oil & Gas News09th Apr 2021

North Sea Transition Deal to deliver home grown transition towards government net zero targets

March 24, 2021

The UK government has today announced (Wednesday, 24 March) that it will deliver a transformational deal in partnership with the UK oil and gas industry to tackle climate change and deliver key aspects of their ten-point plan.

The deal is the first of its kind by any G7 country, setting an example of how oil and gas producing countries can move fairly towards a lower carbon future in a way which supports the economy, jobs, and energy communities across the UK.

Developed in partnership with the leading representative body for the sector, OGUK, the North Sea Transition Deal outlines over 50 government and industry actions to accelerate moves towards the government’s target of net zero emissions by 2050.

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 deal will help to:

  • Unlock up to £16bn in investment over the next decade in crucial low carbon solutions including CCUS and hydrogen
  • Support the creation of up to 40,000 new energy jobs in industrial heartlands across the UK
  • Cut UK emissions by 60 million tonnes, with 15 million tonnes of reductions from industry production by 2030 - the equivalent of annual emissions from 90% of the UK’s homes
  • Boost the world-leading infrastructure – carbon capture – the Committee on Climate Change says is necessary to tackle climate change
    • Kickstart hydrogen here in the UK, building a platform to provide an alternative for heating, heavy industry, and transport
  • Ensure energy communities like Aberdeen and Teesside can successfully transition, retaining jobs and skills and creating a more diverse and inclusive workforce
  • Reduce reliance on imported oil and gas – and be accountable for associated emissions

It comes after the sector published Roadmap 2035: a blueprint for net zero, in 2019, and was one of the first industry responses to the government’s climate change commitments.

The deal has been agreed between Business and Energy Secretary Kwasi Kwarteng on behalf of the UK Government and OGUK Chief Executive Deirdre Michie on behalf of industry.

Commenting, OGUK Chief Executive Deirdre Michie OBE said:

“The North Sea Transition Deal is a transformative partnership which will harness the expertise of the UK offshore oil and gas industry to urgently meet the country’s climate ambitions of net zero emissions by 2050.

“It will unlock billions of pounds of investment and see government and industry work together to deliver a homegrown energy transition, realising innovative low carbon solutions that can be exported globally.

“The Deal will safeguard UK energy security, providing affordable energy to millions of households, secure tens of thousands of jobs in industrial heartlands across the country and support the UK economy. It is the first deal of its kind by any G7 country and a striking example of the UK showing global leadership on climate change ahead of COP26.”

Business and Energy Secretary Kwasi Kwarteng said:

“Today, we are sending a clear message around the world that the UK will be a nation of clean energy as we build back better and greener from the pandemic.

“We will not leave oil and gas workers behind in the United Kingdom’s irreversible shift away from fossil fuels. Through this landmark sector deal, we will harness the skills, capabilities and pent-up private investment potential of the oil and gas sector to power the green industrial revolution, turning its focus to the next-generation clean technologies the UK needs to support a green economy.

“At every step on the path to net zero emissions, we will create the right conditions for new green industries to base themselves in the UK and create new high-value employment opportunities, while future-proofing existing businesses to secure the long-term viability of jobs in our industrial heartlands.”

Energy Minister Anne-Marie Trevelyan said:

“We need to urgently end our reliance on fossil fuels and through our pioneering North Sea Transition Deal we will do so without putting our economy and communities at risk.

“While the future oil and gas sector will look very different to how it does today, the industry, businesses and supply chains it supports will have a new mission to help the UK decarbonise and develop the clean technologies of the future, as we lead the green industrial revolution.”

UK Government Minister for Scotland David Duguid said:

“The oil and gas industry has already made great strides towards a greener, more sustainable future and the North Sea Transition Deal, agreed between the UK Government and industry, takes those ambitions a step further.

“The North East of Scotland has long been seen as a centre of excellence in the oil and gas industry – there’s no reason why it can’t now be seen as a global centre of excellence for energy transition.

“This is not just about making the transition from hydrocarbons to renewables. It’s about a transition of jobs, skills and expertise as well.

“The UK Government has worked consistently and intensively with the industry, and we will continue to do so, to make progress on a scientific, data and evidence-led basis.”

Chief Executive of the Oil & Gas Authority, Dr Andy Samuel said:

“This deal marks an exciting new chapter for the North Sea, confirming energy transition in action. It is the culmination of a lot of work between government, industry and the OGA. As long as oil and gas remain part of the UK’s energy mix, they must be produced more cleanly and in line with net zero.

“Our role includes monitoring and holding industry to account on its emissions reduction performance. The recent funding for a number of energy transition projects is very timely. We are happy to be supporting projects like Acorn, Hynet, Net Zero Teeside and Zero Carbon Humber, along with the Energy Transition Zone and the Global Underwater Hub.

“Our studies show how the UK Continental Shelf can provide 60% of the UK’s overall carbon reduction requirements to meet Net Zero 2050, through electrification, carbon capture and storage, hydrogen and offshore wind.”