Climate change: North Sea oil companies like Shell and BP are getting into renewable energy and the industry accepts fundamental change is needed to combat climate change – Deirdre Michie

You will no doubt have heard that Scotland took an important step towards reaching its climate goals last week when Crown Estate Scotland announced the successful bidders in the major windfarm investment project, ScotWind.

The project will see 17 new offshore wind projects created off the coast of Scotland and it is set to massively boost the nation’s economy with opportunities to create a major supply chain sector. You might have been surprised to learn that among the successful bidders were traditional oil and gas giants like Shell and BP.

The oil and gas industry has faced some criticism as Scotland seeks to cut its carbon emissions. Yet, its businesses are working hard to change from within, by diversifying their energy sources and creating a broader, cleaner and more affordable energy mix.

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Oil and gas companies are not just paying lip service to green issues. Take the ScotWind project as an example; the successful bidders will pay a combined £700 million in fees that will be put towards public spending, with Shell and BP paying £86 million and £85.9 million respectively to develop offshore wind farms.

Oil and gas companies are putting their money where their mouth is and playing a vital role in building a more sustainable future.

If the oil and gas industry in Scotland is given the right support in its efforts to diversify, thousands of businesses, workers and families who depend on the sector will be protected and the invaluable offshore skills that the nation has built up over decades in the energy business will be put to good use.

There is a lot at stake and we have got to make sure that we get the energy transition right, so as not to jeopardise the livelihoods of the 71,500 people across Scotland who depend on the industry.

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The marine engineering skills of North Sea oil workers can also be used on offshore renewable energy schemes (Picture: Andrew Milligan/PA)The marine engineering skills of North Sea oil workers can also be used on offshore renewable energy schemes (Picture: Andrew Milligan/PA)
The marine engineering skills of North Sea oil workers can also be used on offshore renewable energy schemes (Picture: Andrew Milligan/PA)

In the meantime, the reality is that Scotland remains very reliant on oil and gas for its energy supply. Our research shows that oil and gas provides 78 per cent of Scotland’s total energy, which is actually higher than the UK average of 73 per cent.

We are fuelling cars, heating homes, keeping the economy running while ensuring we help to support Scotland’s security of supply. This is no mean feat. The energy industry is facing enormous challenges as we grapple with supply issues on a global scale and respond to escalating oil and gas prices, while seeking to support the energy transition.

ScotWind was not the only major news story for the industry as the price of Brent crude oil hit $88 a barrel last week. Inflation is affecting all parts of the economy, right down to the end users, as the nation feels the pinch of higher energy bills.

Scotland’s oil and gas industry is doing all that it can to help alleviate the pressure on end users and keep the power running, despite all the supply issues we are facing.

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The energy transition is well underway and we are diversifying our energy mix to include cleaner sources, but it is a challenging process – one that needs to be done quickly but carefully.

Oil and gas make up a major chunk of the economy with whole communities in Scotland, such as Aberdeen, highly reliant on the industry. We must do right by our oil and gas workers and ensure they aren’t left high and dry, but instead see their crucial skills acknowledged and respected and retained as the industry evolves.

This is a business imperative too; these workers have expertise and experience of working in offshore environments and managing technologies that will prove highly valuable in delivering a cleaner energy mix.

So, while we have to move rapidly, we must not put an early end to an industry we will need for some time to come. It is critical that the energy transition is homegrown and boosts, rather than undermines, Scotland’s economy. That’s why developments like ScotWind and the North Sea Transition Deal are so important.

The oil and gas industry accepts that fundamental changes need to be made in order to meet national climate goals and this sector was in fact one of the first to proactively set ambitious targets for cutting its carbon emissions through investment in cleaner production and driving forward new energy technologies, such as carbon capture and storage, or decommissioning projects.

Our committed intent is clear, and we have a lot to offer in terms of bringing solutions. It’s vital that we are included in helping to drive the energy transition forward.

We all must work together on the route forward that makes environmental and economic sense, and also ensures that Scotland has a reliable energy supply that we can all depend on.

It’s been a challenging few months for the industry and I’d personally like to thank everyone involved in the sector for their resilience and commitment to doing the right thing.

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Our oil and gas community needs everyone’s positive support as they invest in Scotland’s cleaner energy future.

The United Nations' COP26 climate change conference at the end of last year was an inspiring example of the international community coming together to find ways to tackle the climate crisis.

Let’s come together domestically too and support Scotland’s oil and gas industry in their efforts to help deliver the cleaner energy transition that we all need.

Deirdre Michie is chief executive of OGUK, the leading representative body for the UK’s offshore oil and gas industry

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