The UK oil and gas industry has agreed a deal with the government called the North Sea Transition Deal. The industry and government have pledged to invest together up to £16 billion by 2030 to reduce climate change emissions. The UK deal intends to help oil and gas companies achieve those reductions through the implementation of hydrogen and carbon capture projects.
The amount of £3 billion has been assigned to replace fossil fuel-based power supplies on oil and gas platforms with lower carbon alternatives. Up to £3 billion would go for carbon capture usage and storage. Another £10 billion would help hydrogen production. The investments are planned to go for innovation and new infrastructure required to meet GHG emissions reduction targets.
The UK government has set a legally binding target to become net zero by 2050. The country wants to reduce emissions by 47 million tons towards 2030. This is a 17% cut of what needs to be done to meet the 2050 target.
UK Deal Includes Carbon Capture Objectives
The objectives of the deal are:
- reductions in offshore production emissions of 10% by 2025; 25% by 2027; and 50% by 2030, against a 2018 baseline. That is to meet the sector’s aim of creating a net zero basin by 2050
- investment of up to £14 – 16 billion by 2030 in new energy technologies. They would be supported by business models to enable CCUS and hydrogen at scale
- a voluntary industry target of 50% local UK content across the lifecycle for all related new energy technology projects by 2030
- a 60 metric tons reduction in GHG emissions, including 15 metric tons through the progressive decarbonisation of UK Continental Shelf (UKCS) production over the period to 2030
- support for up to 40,000 direct and indirect supply chain jobs in decarbonising UKCS production and the CCUS and hydrogen sectors
One senior executive with a North Sea-focused operator commented on the deal: “Despite the fanfare surrounding this deal, in reality we are yet to see any real detail about how it will support the industry in the near-term or help to incentivise investment in the longer-term.”
Some experts in the oil and gas sector expressed some concerns. They claim that a better opportunity would be to ban new North Sea oil and gas exploration licensing. The alternative would be to create a nationwide program of retraining, reskilling and investment in renewables and green infrastructure. However, according to experts, a complete ban is very unlikely.
The North Sea Transition Deal is a commitment to decarbonize the industry via carbon capture and hydrogen projects. A clear program will need to follow this development, so that all stakeholders are happy – those pushing for more UK carbon capture and divestment, as well as the existing oil and gas industry and the jobs and it represents.