Energy report urges government backing for ‘transformational’ net zero projects

Russell Borthwick, Chief Executive of Aberdeen & Grampian Chamber Of Commerce.

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POLITICIANS are being urged to back two major net zero projects to deliver an energy transition that will protect and grow jobs in Scotland.

A new report has revealed that companies in the Scottish energy industry think that almost half (47%) of their operations will be outside of oil and gas within just eight years, by 2030.

However, Energy Transition 35 – produced by Aberdeen & Grampian Chamber of Commerce alongside KPMG and ETZ – shows that the number of companies who expect to be involved in vital carbon capture and storage activities has fallen from 45% to 23%.

The UK will require five carbon capture and storage schemes to hit its climate targets and the report calls on the UK Government to move immediately to give the green light to the Scottish Cluster, which has St Fergus at its heart. This was overlooked in favour of two English schemes last year, despite Scotland’s significant supply chain and infrastructure advantages.

The report also suggests that First Minister Nicola Sturgeon could fulfil her ambition of transforming the North-east into the ‘Net Zero capital of Europe’ by delivering, alongside Westminster, green freeport status for the region.

Energy Transition 35 reveals that sector confidence has now rebounded from the lows of the pandemic. It shows that 84% of companies in the sector believe their revenues will rise in the year ahead, up from 35% in 2020.

And it suggests that seven out of ten companies (71%) will grow core staff headcount over the next three years, up from 52% in 2021.

Recruitment is therefore becoming a concern for an increasing number of firms, as is the political environment amid ongoing discussions around a possible windfall tax.

The report calls for fiscal stability for the sector to allow firms to invest – and with only 28% saying that they believed financial support for the energy transition was visible, the report asks both governments to deliver greater clarity of vision and purpose around the funds announced to date.

It also proposes the creation of a new Scottish offshore wind directorate to inject pace into the delivery of ScotWind through what is, at present, a complex, multi-agency delivery route.

Russell Borthwick, Chief Executive of Aberdeen & Grampian Chamber of Commerce, said: “This long-running survey – one of the Chamber’s flagship pieces of research – has followed Scotland’s energy sector through good times and bad, but never in its 35 editions has so much changed so quickly.”

“It shows the energy transition is in action, but we need the UK and Scottish governments to step-up and back the transformational schemes that would shift the dial on our move to a lower carbon future.” 

“Westminster needs to accelerate carbon capture at the scale this country will need to meet its carbon reduction targets. The Scottish Cluster including St Fergus must be backed.” 

“We also need the Scottish Government to back the North-east’s bid for a green freeport. During a recent visit, First Minister Nicola Sturgeon said she wants this region to become the Net Zero Capital of Europe. She now has a chance, via a compelling collaborative freeport bid, to plant that flag firmly in the ground.”

Martin Findlay, Office Senior Partner of KPMG UK in Aberdeen, said: “The oil & gas industry is in a strong position, with confidence high despite ongoing discussions around a possible windfall tax. Producers and companies throughout the supply chain remain committed to the transition but individually they must remain focused on the long-term objective. That is the only way firms will succeed, workforces will grow, and the planet will thrive.”

“Keeping both eyes firmly on the future will allow Aberdeen to prosper as a major player on the global energy stage and continue its long tradition as a powerhouse for the local and UK economy. The test facing firms now is how firmly to keep the pedal pressed to the floor on the journey to net-zero.”

Maggie McGinlay, Chief Executive of Energy Transition Zone, said: “The results highlight a range of positive trends emerging that provide cause for optimism. The vast majority of respondents recognise that embedding green energy credentials in their business model is critical to their long-term success and most companies are actively transitioning to new energies.” 

“Whilst the Scottish and UK Governments have set out a wide range of welcome measures designed to support accelerated diversification toward new energies, there is still some uncertainty as to how this support can be accessed so this report is valuable in highlighting the need for greater clarity of vision and purpose from our policymakers in this regard.”

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