Sarah Kimpton, Energy Transition Director, DNV Energy Systems, UK & Ireland
While government may see a thriving oil and gas industry in the North Sea as an obstacle to a decarbonised future, it should be instead viewed as the sector that underpins the financial and technical foundation of what is to come.
One of the key challenges facing the UK’s energy sector has always been trying to balance the energy trilemma – security, sustainability and affordability. Yet in the race to decarbonise, the industry is voicing a growing concern that policy choices intended to support the transition may inadvertently undermine it.
DNV’s latest UK Energy Transition Outlook report tells a tale of three milestones, plotting the trajectory of the UK’s decarbonisation journey against key government targets: Clean Power 2030, 2035 Nationally Determined Contribution (NDC) and the net zero by 2050 goal.
While it concludes that the UK is expected to fall short of the mid-century deadline, missing net zero by 18%, the analysis shows substantial progress in decarbonisation across the next 25 years. This includes strong growth in solar, onshore wind and offshore wind capacity, which are expected to nearly double to 90GW by the end of the decade.
However, as ambitions to reduce the UK’s emissions and ultimately achieve net zero grow stronger, we risk missing the forest for the trees.
DNV’s data shows that our primary energy supply is expected to shift to low-carbon sources as the associated technologies scale up, but fossil fuels will remain an essential part of the mix, accounting for around a third (34%) of the UK’s energy in 2050. The country will need around 16 billion barrels of oil equivalent between now and mid-century to keep the energy system balanced and support reliability as renewables continue to expand.
The question then is not whether we will need these molecules, but where they should come from and what that will mean for the trilemma’s pillars.
Of the 16 billion barrels of oil equivalent needed to bridge the gap, more than half of this supply could come from reserves in the North Sea. However, recent policy decisions, namely the announcement of the North Sea Future Plan, which will support existing oil and gas fields for their lifespan but will not allow for the granting of new licenses, will curtail the amount that can be extracted from UK waters.
Therefore, we will be in a position where we need to import from overseas. This shift could mark a profound change in the fabric of the UK’s energy system, weakening the security of supply and exposing consumers to greater fluctuations in price volatility.
It would also, paradoxically, increase emissions.
DNV conducted a benchmarking study of the carbon intensity of 60 major global natural gas producers and found that North Sea gas, particularly from the Norwegian and UK sectors, ranks among the lowest-carbon sources available when compared to the output of other nations.
In contrast, imported liquefied natural gas (LNG) will carry substantially higher emissions, driven by the energy-intensive processes of liquefaction, long-distance shipping and regasification. Reducing domestic production will not remove the UK’s need for gas; the demand will persist regardless. This is particularly the case as DNV’s forecasts indicate that 50% of UK homes will still be using natural gas by 2050. Instead, the shortfall would simply be met by higher-emitting imports, increasing overall emissions at a time when the priority should be driving them down.
Directing investment towards responsibly produced North Sea energy, a homegrown supply, can support, rather than detract from, the wider transition, while supporting local jobs. Profits and revenue generated from domestic production can then be channelled into accelerating low-carbon deployment, including financing offshore wind, hydrogen, CCS and the transferrable skills required to deliver them at scale.
The North Sea will be critical to keeping the UK’s energy trilemma in balance, but the challenge now rests in aligning policy with reality, so that the UK can decarbonise quickly, without compromising the resilience of the system that underpins it.
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