Landmark North Sea deal to protect jobs in green energy transition
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High-skilled oil and gas workers and the supply chain will not be left behind in the transition to a low carbon future, the UK government vowed as a landmark North Sea Transition Deal is agreed with industry.
The sector deal between the UK government and oil and gas industry will support workers, businesses, and the supply chain through this transition by harnessing the industry’s existing capabilities, infrastructure and private investment potential to exploit new and emerging technologies such as hydrogen production, carbon capture usage and storage, offshore wind and decommissioning.
Through the deal, the oil and gas sector, government and trade unions will work together over the next decade and beyond to deliver the skills, innovation and new infrastructure required to decarbonise North Sea production.
Not only will the deal support existing companies to decarbonise in preparation for a net zero future by 2050, but it will also create the right business environment to attract new industrial sectors to base themselves in the UK, develop new export opportunities for British business, and secure new high-value jobs for the long-term.
Key commitments in the North Sea Transition Deal include-
The sector setting early targets to reduce emissions by 10 per cent by 2025 and 25 per cent by 2027 and has committed to cut emissions by 50 per cent 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 per cent 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
An orderly transition is crucial to maintaining our energy security of supply, supporting high-value jobs, and safeguarding the expertise necessary to achieve a lower carbon future.
The UK government will therefore introduce a new climate compatibility checkpoint before each future oil and gas licensing round to ensure licences awarded are aligned with wider climate objectives, including net-zero emissions by 2050, and the UK’s diverse energy supply.
This checkpoint will use the latest evidence, looking at domestic demand for oil and gas, the sector’s projected production levels, the increasing prevalence of clean technologies such as offshore wind and carbon capture, and the sector’s continued progress against its ambitious emissions reduction targets.
In a further move to support the shift to green technology and renewable energy in the UK and around the world, the UK government has announced it will no longer provide support for the fossil fuel energy sector overseas from March 31.
This follows the Prime Minister’s commitment to end taxpayer support for fossil fuels projects overseas as soon as possible at the Climate Ambition Summit last December and the decision on the date to end this comes after consultation with industry.
This will include UK Export Finance support, international aid funding, and trade promotion for new crude oil, natural gas and thermal coal projects - with very limited exceptions.
Business and Energy Secretary Kwasi Kwarteng said: "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.
"The offshore oil and gas industry has been a major British industrial success story. For decades, the sector has strengthened our energy security, generated significant tax revenue to fund our public services, and supported hundreds of thousands of jobs across the UK.
"From the Shetland Islands and Aberdeen, to Teesside and the Humber, the industry is critical to the health of local economies.
UK government Minister for Scotland and Banff and Buchan MPDavid 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."