Oil and gas turns its back on the UK’s transition

The oil and gas industry has long positioned itself as a major partner in the UK’s energy transition which has, until this point, allowed it to play a pivotal role in determining the shape and pace of the North Sea’s transition. But how many oil and gas companies are actually committed to transitioning to clean energy? And how many are continuing to pursue oil and gas for as long as it is profitable?  

New analysis by Uplift reveals that the vast majority of offshore oil and gas companies operating in the UK are not shifting investment away from fossil fuels, undermining the industry’s claims to be driving the UK’s energy transition. In fact, just seven out of 87 offshore oil and gas companies will invest anything in renewable energy by 2030. 

Of these seven companies, only two will transition their investment portfolios to ‘majority’ (more than 50%) renewable energy projects by this date. Of the seven one plans to invest in wind energy purely to power further oil and gas production.

Just seven out of 87 offshore oil and gas companies will invest anything in renewable energy by 2030. 

The analysis also shows that three quarters (74%) of offshore oil and gas companies in the UK plan to invest solely in oil and gas production between now and 2030. This is despite repeated warnings from the International Energy Agency and climate scientists that there can be no new oil and gas developments if we are to stay within safe climate limits.

Contrary to industry claims that the windfall tax on oil and gas profits is threatening their ability to fund the UK’s transition, the analysis shows the lack of renewable investment is a long standing issue rather than the result of external factors, such as changes to the oil and gas tax regime. Since 2015, only six offshore oil and gas companies have invested anything in UK renewable energy projects.

By 2030, it is predicted that renewable energy will account for almost two thirds (63%) of investment in the UK’s energy transition. However, oil and gas operators will account for just 10% of this spending, suggesting that they will be reduced to a minor player in the UK’s future energy system.

Minor players, major influence 

Despite the failure by most North Sea oil and gas companies to invest in the UK’s energy transition, the industry has been given a pivotal role in determining the shape and pace of the ageing North Sea basin’s shift away from oil and gas production.  

This is clearly exemplified by the 2021 North Sea Transition Deal, a voluntary agreement between government and the oil and gas industry, which promises to ‘unlock the UK’s net zero ambition, delivering part of a fair and equitable energy transition’ through, for example, investment in hydrogen and carbon capture, utilisation and storage (CCUS). 

However, according to this analysis, just 13% of North Sea oil and gas producers intend to invest in any ‘low carbon’ technologies – renewables, hydrogen or CCUS. In fact, fewer companies are planning to invest in low carbon technologies by 2030 than those planning to make no investment at all in the basin. 

As the North Sea continues to decline, oil and gas investment is set to fall to just 19% of overall investment in projects relating to the energy transition in the UK. In a basin where jobs supported by the oil and gas industry have more than halved over the past decade, this lack of investment has serious consequences for supply chain firms, oil and gas workers, and communities that are currently dependent on the oil and gas industry.

Policy makers urgently need to recognise that the industry’s lack of investment in the transition reduces them to minor players in the UK’s future energy system, and their influence over public policy should decline accordingly. The industry is clearly failing to deliver on its promises to transition, with most companies only interested in profiting from oil and gas for as long as the North Sea’s dwindling reserves allow. 

The Government needs to take responsibility for managing the transition out of the hands of the oil and gas industry and instead come up with a coherent plan for the basin that recognises the climate imperative of phasing out oil and gas, and crucially prioritises the needs of workers, communities and supply chain companies in the North Sea’s transition. 

To download the full PDF report click here

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