March 25, 2023
Offshore Energies UK (OEUK) has responded to reports of potential announcements to boost the UK’s reliance on its own homegrown energy from the North Sea, including oil, gas, offshore wind and hydrogen as well as new carbon capture technologies.
OEUK has said after a spring budget pitched on growth, with billions of pounds of private investment in the energy sector at stake, it hopes anticipated announcements will encourage growth, boost jobs, cut emissions and protect UK energy security. Decisions made now will be critical to the long- term success of the UK’s transition to a cleaner economy, maintaining energy security, and supporting 200,000 jobs across the country.
OEUK’s Business Outlook Report, being published on 28 March, shows the North Sea could power the UK for decades, but a mix of windfall taxes and political uncertainty is driving away the billions of pounds of investments needed to maintain oil and gas production now and create low carbon energy in the future, it says.
Today 76% of the UK’s energy needs are met by oil and gas; and will remain a key part of the UK energy mix for decades to come.
The report shows that businesses are being deterred from investing in the UK by the windfall tax and uncertainty – over 90% of OEUK operator members are cutting back investment. This undermines UK energy security, 200,000 skilled jobs in the sector, and the skills and people necessary for a successful transition.
The UK spent £117 billion on imported oil and gas in 2022. If the lack of investment is not addressed, the UK will continue to see imports of oil and gas increase, with value lost to the UK economy and skilled jobs exported overseas.
The Office for Budget Responsibility forecasts the UK’s transition to net zero will cost £1.4 trillion, the majority of which needs to come from private company investment.
To unlock that capital, OEUK has said it is vital that government offers investors fiscal predictability and regulatory certainty to make the UK an attractive place to invest for the long-term. We need the government to take a far-sighted approach focused on reducing investment risk if we are to build a secure, affordable, low carbon energy market in the UK whilst maintaining energy security.
David Whitehouse, CEO Offshore Energies UK, comments: ‘We have been calling for some time for new measures to turbocharge investment in clean energy that maintains energy security, as the US and other countries are doing, which we have no time to waste on.
‘After a Spring Budget pitched on growth, with billions of pounds of investment in the energy sector at stake, we hope the Government’s anticipated energy day will encourage growth, boost jobs, cut emissions and protect our energy security. Giving clear support to the UK’s expanding offshore energy industry will be a good start.
‘Windfall taxes have damaged the confidence of companies to invest in the long-term energy security of the UK, which relies on oil and gas for 76% of its energy. When prices drop, it is fair that the windfall tax should fall away.
‘Oil and gas will play an important part of the UK’s energy needs. A successful energy transition needs to attract investment in our domestic oil and gas sector. If not, UK energy import bills exceeding £100bn will become a regular event – that’s money flowing out of UK homes and businesses to support the jobs, industries, and economies of other countries. The whole of the UK will be all the poorer for it.
‘If this tax is changed, as conditions and prices have changed, that would be a positive move that would go some way to start rebuilding confidence and the business cases companies need to invest in the UK energy industry and in new technologies such as offshore wind, hydrogen and carbon capture, and our workforce of over 200,000 decent people around the country. We look forward to what government and all parties may say with a positive and constructive approach.’