Today sees the publication of Scottish Government’s long awaited energy strategy.
Of course the awarding of future exploration and operating licences is a matter reserved to Westminster, but recent negative commentary about future oil and gas activities from a Scottish coalition government including the Green Party has been acting as a major barrier to sector confidence and investment in the North Sea.
We all want to get to the same net zero destination and no one in denial about the direction of travel but a transition is, by definition, a change of state over time. This is one of the most complex challenges we have faced in our history and it doesn’t lend itself to a simple, ‘Who’s good, who’s bad? Who’s green, who’s not?’ approach. To characterise it in this way is overly simplistic.
To meet our ambitious targets, we must harness the expertise, knowledge, financial capital and infrastructure of our world-class oil and gas industry and supply chain. Doing so will allow us to move to net zero through investment in and development of offshore wind, carbon capture utilisation and storage and hydrogen technologies powered by energy businesses operating in the North Sea.
The fact is that approximately 73% of our national energy needs today are met by oil & gas. Consumer demand cannot be switched off overnight. By 2050, the International Energy Agency projects that global demand will fall by 80%, but even then there is currently no
future scenario where there is not a requirement for some oil and gas. Meantime, it continues to be required for people to travel, heat and power their homes and for the manufacture of many everyday goods.
We have a clear choice. To produce as much of our required supply as possible domestically, with full control over the regulatory environment in which it is extracted, protecting and creating high value jobs. Or to import an increasing amount of our energy, with the heavier carbon toll and supply risks that shipping it from other parts of the world carries. The latter option makes little economic sense, and even less environmental sense.
A recent survey undertaken by True North tells us that only 9% of people disagree with the need for the use of gas as part of our energy mix up to 2050. And 85% are in support of the UK aiming to meet most of its oil and gas needs from domestic production rather than relying on imports.
The recently published economic case for independence includes plans for a fund which would deliver up to £20billion of investment within the first decade adding that the money for this would come from oil revenues. Yes, oil revenues. The sector which has contributed around £360bn in tax to the exchequer over the last 50 years. So surely Scotland’s energy strategy will seek to safeguard this.
Scotland’s First Minister was recently quoted as saying “I grew up in the 1980s during de-industrialisation – when a Tory government failed to plan for it, and left communities and individuals on the scrap heap. The legacy of that is still with us. We mustn’t repeat those mistakes”.
We’ll hear today whether the current government in Scotland has learned those lessons. Surely they won’t want the North-east of Scotland to become the next Lanarkshire or South Yorkshire on their watch?
The RGU Making the Switch report shows that, currently in the North-east, 45,000 people are directly employed in the offshore energy sector. It looks at four future scenarios and the worst of these, "regional decline", sees this figure fall by an eye-watering 17,000 by 2030. And that doesn’t include the resultant loss of induced employment. That is the price of getting this wrong.
The £500m Just Transition Fund is very welcome but is akin to poking a finger in the dyke to hold back the tidal wave of economic damage that would result from a premature end to North Sea operations.
On behalf of its members, for the past twelve months the Chamber has been engaging with policy makers from all parties to help them understand that oil and gas are not dirty words and will be a part of our energy mix to 2050 and beyond as accepted by the UK Climate Change Committee.
Have those in power at Holyrood been listening? We’ll find out later today...