Offshore Energies UK (OEUK) has called on the government to supercharge the UK’s homegrown offshore energy to ensure energy security and hit net zero by 2050.
Releasing its Economic Report 2023, it detailed how offshore energy spend could hit £200bn this decade across offshore wind, oil and gas, carbon capture and storage (CCS), and low carbon hydrogen. However, around £100bn in private sector investment is needed to build key projects, with businesses waiting on renewed certainty from government to help them drive forwards progress and make Final Investment Decisions.
Going sector by sector, OEUK forecast around £80bn investment in offshore wind, with the UK home to almost 14GW already and its members working on delivering a further 13GW more by 2030. Successfully hitting targets could support 100,000 direct and indirect jobs by 2030, but there are notable challenges to process, including how long it takes to move from license award to delivery.
This means the government needs to take steps to streamline and cut the permitting and regulatory process time in half. If the time it takes to go from proposal to operation can be pushed down to five years, then the UK could still hit its ambition for 50GW of capacity by 2030. Steps are also needed to transform the supply chain by investing early in yards, ports and companies, ensuring that it can bid competitively for and win high value work.
Hydrogen, meanwhile, has the potential to bring in around 12,000 jobs by 2030 and leverage £11bn in private investment. Realising the opportunities it presents will call for government putting in place a funding mechanism able to address both near and long-term supply, minimising costs to consumers and offering certainty to investors. It also will call for the hydrogen strategy to be updated, addressing both demand and supply, on a path to developing a mature hydrogen market in the UK.
CCS could deliver 50,000 jobs by 2030. It is also particularly appealing given how 90% of the offshore oil and gas workforce do have skills that are directly transferable. Robust long-term business models are needed from government to make CCS an investable technology, while efforts must be taken to develop the foundations for a self-sustaining CCS sector beyond the initial clusters.
Finally, the offshore oil and gas industry supported 220,000 jobs as of 2022 and generated £30bn in GVA. Considered the “bedrock of expertise” on which the UK can build future energy infrastructure, OEUK emphasised the importance of harnessing the experience within to maximise the opportunities from the energy transition. Furthermore, with 70% of the offshore energy supply chain demand coming from oil and gas, it will be important to maintain a baseload of this work while waiting for new energy opportunities to arise.
Insufficient oil and gas activity over the short-term poses the threat of what the OEUK called “capital flight”. This is where companies shift assets to more competitive areas overseas, consequently placing long-term supply chain capacity in the UK at risk.
