Net zero is the unchanging target which we’re heading for. How we get there is still up for debate, and that depends on a variety of factors, including incentives, investment, taxation, and regulation – which help energy businesses feel equipped to focus on greener activities and solutions.
The latest Energy Transition Survey – which canvasses the views of the north east’s energy industry every six months – shows we’re making progress, but it also suggests that we may have lost some momentum in recent months.
The industry is working towards a future where greener activities start to outweigh more carbon intensive ones, but based on the latest findings, it’s clear that more support is needed from all corners to maintain focus on the long-term objective of net-zero.
So, what does the latest survey tell us?
Confidence levels amongst UKCS operators have dipped, with a prevailing feeling that international activity is more fruitful than focusing on work closer to home.
Businesses continue to predict a shift in their portfolio mix to a higher proportion of non-oil and gas content by the end of the decade - expecting, on average, the share of their business outside of oil and gas to jump to 45 per cent by 2030.
However, when asked today what portion of business activities are currently in oil and gas, the figure was 73 per cent - a notable increase since the last survey suggesting that in the short term, attentions are turning back to oil and gas as a more stable source of profitable activity.
We’ve also found that 71 per cent of businesses agreed that energy transition credentials were critical to long term success, down from 82 per cent six months ago. More are undecided, and more disagree how important strong transition credentials are.
The journey to net-zero is exactly that – a journey. At times we’re going to move quicker, and at times slower. The dips in confidence and reduction in focus on transition activities and credentials can be explained to an extent.
This is likely to be a result of renewed price stability in oil and gas, an emphasis on energy security, and an acceptance that fossil fuels are a present-day necessity on the path to a greener future. However, it is a striking statistic, and a retrenchment which policy makers should be aware of.
Where do we go from here?
What businesses do now across the three ESG strands of environment, social and governance will determine the talent they attract, the customers they serve, the profits they make, and ultimately the impact they will have on society.
We continue to see that graduates who are considering a career in the sector wish to see proof that a business has a well-developed Environmental, Social and Governance (ESG) strategy. Without proof of change, there is a risk that talented young people enter other professions and delay the transition further.
Aside from bringing through the talent we need to help us transition, investing in ESG has knock on impact for all areas for a business - it helps attract inward investment, it garners the support of government, it attracts attention from the local community, and it gives businesses a role in something much bigger and important - protecting the planet and developing the economy.
While successfully managing the here and now is always critical, so is looking at the medium to long-term strategy with a net zero lens and identifying opportunities to make changes in your business and in our markets, to help both companies and the UK economy grow through the transition.
Keeping both eyes firmly on the future and the goal of net-zero – underpinned by strong ESG actions - will allow those operating across the UKCS to prosper as major players on the global stage and continue the region’s long tradition as an energy powerhouse.
