‘Misguided’ North Sea oil and gas dash risks impacting offshore wind targets
Competition over limited supply chain resources will disproportionately affect renewables, experts warn
The Conservative government’s renewed support for oil and gas extraction in the North Sea may come at the expense of the UK’s offshore wind industry, further hampering any chance of the country reaching its 2050 net zero emissions targets.
The government has said 899 oil and gas locations are being offered for exploration, with as many as 100 licences expected to be awarded by 12 January.
The decision comes despite climate scientists and energy experts warning that no new fossil fuel projects should be undertaken anywhere in the world due to the worsening climate emergency.
In addition to the enormous climate-altering emissions these projects will lock-in for decades, renewable projects could be severely disadvantaged.
Currently the UK is aiming to build 50 gigawatts of offshore wind capacity by 2030, but the surge in fossil fuel industry activity due to the government’s energy policies will spur competition over limited supply chain resources, according to non-profit think tank the Institute for Energy Economics and Financial Analysis (IEEFA).
The organisation has warned that stimulating both offshore wind and oil and gas sectors will increase costs which will disproportionately affect the offshore wind sector.
"The potential crowding out of offshore wind developers for people and assets risks delaying projects, and could hamper the UK’s ability to achieve energy security and meet its legally-binding net-zero target", the organisation said.
This could leave the public facing higher bills for longer. "Any delayed roll-out of renewable power generation such as offshore wind will continue to expose UK consumers to volatile energy prices and energy supply uncertainty," the IEEFA said.
Arjun Flora, director of energy finance studies, Europe, at IEEFA said: “Remaining oil and gas reserves in the North Sea are insignificant compared to the UK’s long-term energy security needs. Providing a lifeline to the oil and gas sector in the North Sea will be a costly mistake and goes against the aims of the British Energy Security Strategy, as well as the UK’s goal of reaching net-zero by 2050.”
“The government should avoid at all costs creating a situation where the oil and gas industry, which can no longer fulfil the UK’s energy demand, cannibalises supply chain resources that are urgently needed to secure the country’s future security of supply.”
The British Energy Security Strategy estimates that there are 15 years of oil and seven years of gas remaining in the UK reserves, based on 2022 consumption data.
However, the IEEFA said the figures could include “yet to find” reserves, or highly uncertain reserves that have not been properly explored or tested. The North Sea Transition Authority estimates much lower figures, almost half the BESS estimates.
Andrew Reid, a guest contributor at the IEEFA, said: “Meeting the UK’s offshore wind capacity will require £70bn in capital investment through 2030, fuelling demand for turbines, installation and commissioning vessels, port infrastructure, cable, foundations, substations, and personnel. The offshore wind industry is expected to create an employment boom, with its employed personnel reaching 97,000 by 2030 – a 214 per cent increase from 2022.”
“The cost of electricity produced by gas-fired power plants in the UK last summer was nine times more expensive than offshore wind power, which shows that currently there is a weaker economic case for continued fossil fuel power generation. Yet, O&G companies have the resources to outbid the lower-margin offshore wind industry for critical supply chain components.
"The government must urgently act to avoid this in order to protect consumers and stay on path to meet its renewable power generation and decarbonisation goals.”
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