Will Great Britain unlock offshore energy opportunities worth hundreds of billions?

With energy security and the transition to low-carbon and green sources of supply vying for attention on the global energy stage, Britain’s trade body for the offshore energy industry, Offshore Energies UK (OEUK), has urged policymakers to put supportive policies and globally competitive taxes in place to enable the UK to reap the benefits from the opportunities in the domestic offshore energy market, which has the potential to grow to £450 billion (close to $567.6 billion) by 2040.

While OEUK’s ‘2024 Business and Supply Chain Outlook’ report calls on policymakers to restore confidence in the UK with a stable energy policy and a globally competitive tax regime to avoid missing out on the lion’s share of the benefits from a domestic offshore energy market, the trade body’s industry manifesto sets forth the key steps the government can take in partnership with the industry to protect jobs and energy security, delivering cleaner and more affordable energy for Britain.

The latest report highlights that oil and gas projects could create £145 billion (around $182.85 billion) for the UK’s supply chain. In line with this, new offshore wind farms around Great Britain have the potential to generate £260 billion (nearly $327.9 billion) worth of work, new hydrogen projects £25 billion (over $31.5 billion), and fresh carbon capture and storage (CCS) technology could bring in £34 billion (almost $42.9 billion).

David Whitehouse, OEUK’s CEO, commented: “The UK has a £450bn domestic energy opportunity that could transform the economy and support jobs – but warning lights are flashing. Our report shows a homegrown energy transition can generate a £450bn domestic opportunity for UK firms by 2040 that could kickstart growth across the UK economy. But investors, firms and workers need stability, predictability and fair returns to build a low carbon future here and keep jobs in the UK.

“We are in a global race for investment, and UK energy companies need supportive long-term policies, a stable tax regime, and responsible rhetoric from all sides. Our journey to net zero and beyond depends on responsibly making the most of our oil and gas production, which is at record lows”

As OEUK’s report comes at a time when wholesale energy prices have fallen to levels last seen before the Ukraine crisis, Britain’s trade body is convinced that the industry needs restored business confidence in the UK, as the government’s Office for Budgetary Responsibility (OBR) estimates that £1.4 trillion (more than $1.76 trillion) of investment is needed to make net zero a reality.

The vast majority of this is needed from the private sector, thus, OEUK has once again reiterated its belief that when windfalls fall away, so should windfall taxes. The UK’s trade body is adamant that the existing oil and gas supply chain already has 60%-80% of the capabilities needed to develop new energy technologies. However, the current policy and political rhetoric are perceived to be the challenges standing in the way of ambitions to scale up and seize these opportunities.

“We’re facing a situation where we must import energy that could have been produced here and where we must rely on supply chain companies that could have been based here. The UK’s world class oil and gas sector has reduced emissions by 24 per cent since 2018 and we must build our low carbon future on this achievement,” added Whitehouse.

Moreover, OEUK claims that the UK offshore energy sector has the potential to benefit from a global export market worth more than £1 trillion (about $1.3 trillion) within the next 15 years, resulting in thousands of new jobs and billions in new revenue for the UK economy.

To enable this, OEUK identifies key drivers, such as harnessing the UK’s oil and gas heritage and attracting the private investment needed to maintain Britain’s existing energy industry and its workforce.