The Conference of Parties meeting (COP26) hosted by the UK in Glasgow begins in less than two weeks. This latest edition of the OGUK Energy Transition Outlook reflects on the enormous changes in the energy economy over the last 18 months that form the background to the conference. The report also looks forward to some of the practical and policy steps needed to deliver a carbon neutral economy in the UK by 2050.
The objectives of the COP26 conference are to:
• Secure global net zero by mid-century and keep 1.5 degrees within reach
• Adapt to protect communities and natural habitats
• Mobilise finance to support delivery
• Work together to deliver the goals through collaboration between governments, businesses and civil society
The UK oil and gas sector is committed to all of these objectives. Through Roadmap 2035 and now, as part of the North Sea Transition Deal (NSTD) agreed with government in March 2021, there is a clear vision for the future.
The Deal will accelerate the energy transition towards new technologies, cutting emissions even as the sector to continues to supply ongoing oil and gas requirements. New activities will grow the supply chain and stimulate jobs and opportunities for communities across the UK. A specific objective is to maximise the contribution of the sector in getting carbon capture and hydrogen production up and running quickly. This will, in turn, support other UK industries as they transition to net zero.
By 2050 or sooner, households and businesses will have access to a mix of net zero energy sources to heat our homes, power our electricity and operate our industries. With the right support and careful planning, the engine driving all of this will be homegrown UK energy producers. It means that people from Liverpool to Hull and from Shetland to Southampton could see big benefits in achieving net zero, levelling up jobs and economic prosperity as well as successful delivery of our climate goals.
In its 2021 Energy Transition Outlook, OGUK estimates that emissions from the production, transport and processing of oil and gas in the UK fell to the equivalent of 17.1m tonnes of CO2 in 2020. This compares with the 2018 figure of 18.9m tonnes (5 percent of the UK’s national emissions).
- Direct emissions from the UK oil and gas sector are being driven down with a 2 million tonne cut in emissions during 2020, of which OGUK estimates that around half can be attributed to operators’ actions.
- The UKCS is proactively reducing methane emissions. In 2019 these were 42,000 tonnes and close to 0.2 per cent of total natural gas production. OGUK members are aligned with the World Bank Zero Routine Flaring objective and OGUK has become a signatory of the global Methane Guiding Principles (see Appendix).
- Current volatile market conditions underline the need for diverse sources of oil and gas and ongoing development of indigenous resources. Without additional investment, the proportion of anticipated oil and gas demand supplied from local resources could fall to around one third by 2027.
- The landmark North Sea Transition Deal agreed with government in March 2021 is an important enabler for the Energy Transition and signals global leadership as well as being an opportunity for the oil and gas supply chain.
- UK oil and gas companies are now leading in renewable and alternative energy investment opportunities including offshore wind. Investor requirements with respect to Environment, Social and Governance (ESG) criteria are now being embedded in the sector and driving strategic change