‘Crucial Role’ of Oil and Gas Industry in meeting UK Net Zero targets

Sep 05 2019

Oil and Gas UK has published a blueprint setting out five key themes requiring industry, government and regulator action to ensure the sector can continue to provide secure energy supply, support net-zero and remain a vital contributor to the UK economy.

The report identifies several pathways that oil and gas companies can follow to contribute towards the drive towards net zero carbon emissions in the UK.

This ranges from helping to maintain indigenous oil and gas production at a lower emissions intensity (thereby helping to provide energy security by displacing international imports) to incremental investments in alternative energy sources.

Pathway 3 involves supporting and deploying emissions mitigating technologies including CCUS.

Alongside actions to reduce the emissions intensity of oil and gas production, the report says the industry is well placed to support the reduction of emissions produced from the use of oil and gas — which constitute a much greater proportion of emissions in the UK.

“The UK oil and gas industry has the technical and commercial capabilities, skills and resources to support the development and implementation of CCUS and hydrogen capacity at scale.”

“CCUS will be crucial to achieving net-zero emissions. The Committee on Climate Change (CCC) report envisages that CCUS will be critical in achieving the net-zero objective, and forecasts that the UK will need to capture and store up to 175 million tonnes of CO2 per annum by 2050 (nearly half of current total UK CO2 emissions).”

“Taking an integrated approach to the development of CCUS infrastructure at scale, beyond the proposed initial clusters, will be essential. At the time of writing, the Department for Business, Energy and Industrial Strategy (BEIS) is consulting on the most appropriate business models for the development of CCUS and of industry.”

UK is in a unique position to lead in the development of CCUS, says the report, owing to its geographic location, geological storage potential and experienced supply chain. Furthermore, oil and gas company assets, expertise and investment will be central in implementing this technology.

“While initial costs required to implement CCUS in power generation, heavy industry and other sectors are high, a government-supported programme of investment rolled out across the UK will advance its development. This approach has been crucial in other lowcarbon energy sources, such as wind power.”

“With an estimated 10,000 CCUS projects required to be online around the world by 2070 to limit global warming to 2°C, the global CCUS industry is forecast to be worth in the order of £100 billion per year by 2050. This compares with 18 operational projects, five under construction and 20 in the early stages of development at present.”

“The level of required investment presents diversification opportunities for both operators and supply chain companies. Whilst CCUS projects are still typically sub-commercial, as technologies develop, carbon prices increase and business models evolve, CCUS may become investible on its own merits, supporting a range of increasingly diversified business portfolios.”

The report also identifies hydrogen as forming a central element of the next phase of decarbonisation in the UK, while acknowledging that the production of hydrogen through methane reformation needs to be combined with CCUS to be a net-zero source of energy.

What Oil & Gas companies can do

Oil and gas companies have already supported the implementation of CCUS at 18 sites around the world, capturing many million tonnes of CO2. OGUK member companies are active in all the current UK cluster projects on an individual basis and through the Oil and Gas Climate Initiative (OGCI).

Oil and gas companies can work with governments and regulators to develop a commercial, regulatory and technical framework which will allow the required assets to be made available for transport and storage of carbon, and to provide a reliable storage service to projects that capture CO2.

A positive investment framework and long-term commitment are required including:

• infrastructure liability, measurement, reporting and verification

• amendments to EU/UK legislation

• recognition that decarbonised gas is key to meeting UK industrial and domestic heat requirements

• further supportive legislation to develop a UK hydrogen industry.


Oil and Gas UK

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