The UK was the first major economy in the world to pass laws in 2019 to end its contribution to global warming by 2050. Pioneering the way for other major economies to follow in our footsteps driving prosperity by seizing the economic opportunities of becoming a greener economy.
‘The UK kick-started the Industrial Revolution, which was responsible for economic growth across the globe but also for increasing emissions…. we’re leading the world yet again in becoming the first major economy to pass new laws to reduce emissions to net zero by 2050 while remaining committed to growing the economy – putting clean growth at the heart of our modern Industrial Strategy’. Energy and Clean Growth Minister Chris Skidmore.
In this article, I will be discussing the UKs ambitious plan of achieving net zero in 2050 and how this affects some parts of the wider energy industry.
What opportunity does Net Zero give the UKs manufacturing & engineering industry?
The United Kingdom has been estimated to have over a third of Europe’s total offshore wind resource, which is equivalent to three times the electricity needs of the nation at current rates of electricity consumption (In 2010 peak winter demand was 59.3 GW, in summer it drops to about 45 GW).
The UK can export power via subsea power connectors, which will bring in additional revenues whilst supporting our economy to grow.
The UKs net zero industrial strategy could see the number of “green collar jobs” grow to 2 million and the value of exports from the low carbon economy grow to £170 billion a year by 2030.
The UK’s making headway and currently stands as the world’s sixth largest producer of wind power with 10,911 wind turbines and a total installed capacity of 24 gigawatts of onshore and 10.4 gigawatts of offshore capacity. With the UK targeting 40 GW of installed capacity by 2030, with 10 GW already operational. Offshore wind will make a major contribution to its economywide 2050 net-zero target. In the first half of 2020, offshore wind provided 14 percent of the U.K.’s electricity, compared to 12 percent for onshore wind.
As of Friday 4th December 2020, Denmark ended state-approved exploration in the North Sea, with the aim of phasing out all extraction by 2050. If Denmark’s leading role in constructing the world’s first offshore windfarm in 1991 which was generally considered as ludicrous by the electricity industry is anything to go by. Then I would watch UK policy closely on new exploration and production over the next 10 years. This decision by Denmark to initially lead on offshore wind, undoubtedly helped spark the UKs interest in the industry and its potential to become a major leader in offshore wind.
What part does Oil & Gas have to play in achieving net-zero?
The UK offshore oil and gas industry contributes around 51 per cent of UK gas which is used for a large proportion of our electricity production and which heats the vast majority of our homes. They also produce a major proportion of the oil – 74 per cent of the UK’s need – that fuels our cars and is used in the manufacture of a huge proportion of the items we use in our daily lives.. from contact lenses and toothbrushes to the lightweight cases on our mobile phones.
Whilst in my opinion we have not hit global peak oil yet, the UKs diversification out of exploration & production is well under way. As the UK continues to develop it’s renewable energy industry (Wind, Solar, Hydro, Tidal, Geothermal and Biomass) highly paid skilled workers will be in demand.
What will be the Oil & Gas industries contribution to net zero?.. its human capital.
Whether it’s through redundancy, lack of foresight or the fact that three quarters of millennials would prefer a job in the green economy over any other.. people will leave the Oil & Gas industry behind as opportunities grow and businesses transform.
In volatile times with the global pandemic and Brexit looming, the green economy is almost certainly one of the best opportunities for the UK to become a global technology and manufacturing leader.
Christopher Arbid is the energy and renewables practice lead at New Street Consulting Group. If you’d like to discuss how we can help you achieve your potential, please get in touch.