Illustration; Source: North Sea Transition Authority (NSTA)

UK sees North Sea as ‘vital cog’ in its decarbonization and net zero journey

The United Kingdom is burning the midnight oil to tackle the double whammy of energy security and sustainability. To this end, Britain has set several wheels in motion to curb its emissions footprint and enable investments in a new wave of projects, which will come online to ensure the security of supply. The UK’s regulator North Sea Transition Authority (NSTA) has highlighted the key role the North Sea basin has in helping the country to reach its net zero goals.

Illustration; Source: North Sea Transition Authority (NSTA)

Aberdeen hosted the North Sea Transition Forum on Wednesday, November 29, 2023, to enable the setting of the strategic direction for the oil and gas sector, as government, regulators, and industry chiefs gathered to discuss the outlook for investment in the North Sea, following several “strong votes of confidence in the basin,” according to the NSTA.

During the event, the industry’s progress on lowering emissions was noted as “encouraging,” having recorded three consecutive years of reductions. However, bold action is still believed to be needed to ensure key targets are met. This forum was hosted by the North Sea Transition Authority and attended by the UK’s Minister of State for Energy Security and Net Zero, the Scottish government, and industry representatives.

Stuart Payne, NSTA Chief Executive and co-chair of the forum, commented: “The North Sea, with its diverse energy systems, sustains hundreds of thousands of skilled jobs and is a vital cog in the UK’s drive to net zero.

“The basin has shown resilience in uncertain times by continuing to attract billions of pounds of investment in projects which support the UK’s energy security alongside a wide range of activities that will both reduce emissions and accelerate the transition – including offshore wind and carbon storage.”   

The forum was held only a week after a new report from the North Seas Energy Cooperation (NSEC) called for “immediate action” on developing new port infrastructure and upgrading existing port facilities as the study behind the report found the joint offshore wind target of the nine NSEC countries for 2030 was unlikely to be met otherwise.

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Furthermore, the attendees were informed that seven new projects, valued at almost £4 billion (nearly $5.1 billion) and capable of producing 370 million barrels of oil and gas, had been given the go-ahead by regulators and investors in 2023. Since the previous meeting in June, 27 new licenses have been awarded as part of the 33rd licensing round, with more to follow in the coming months. For the NSTA, this is “a clear sign” of the North Sea’s enduring appeal.

In addition, 21 licenses were awarded in the UK’s first-ever carbon storage licensing round, adding to the six already in existence, and work is proceeding at pace to ensure the first injection takes place as soon as possible. Based on the UK regulator’s data, the North Sea’s investment case has been further buoyed by measures in the UK government’s Autumn Statement which is expected to bring long-term stability and predictability to oil and gas taxation. 

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Moreover, the forum attendees got updates on the North Sea Transition Deal, agreed in March 2021 to support the sector as it transitions to net zero and safeguard Britain’s supply chain. This deal committed the industry to halving emissions from its operations by 2030 and spending £16 billion on carbon storage, hydrogen, and platform electrification projects.

The recent Emissions Monitoring Report shows that the industry cut its production emissions by 24% between 2018 and 2022, but needs to do more to achieve the 2030 target, which is crucial to retaining public support for the sector long term. The NSTA recently launched a consultation on a draft plan aimed at encouraging industry to go further and faster on emissions reduction, which closed on November 30.

This forum comes after many pointed out the knock-on damaging impact of the Energy Profits Levy and other economic factors. Recently, Offshore Energies UK (OEUK) underlined that the tax hike, which led to North Sea oil and gas operators paying a 75% headline tax rate, affected decommissioning progress. This is due to the cost of shutting down old installations not being treated as an allowable expense.