Leaders Urge UK Gov to Prioritize Homegrown Energy

A statement sent to Rigzone by industry body Offshore Energies UK (OEUK) on Wednesday announced that leaders from across industry, academia, and civic society are “urging the UK government to strengthen national resilience by prioritizing homegrown energy, from oil and gas to renewables”.

“They join manufacturers, renewables developers, offshore operators and civic groups in calling for a pragmatic approach to building out renewable energy while maintaining the homegrown oil and gas the UK needs for decades to come,” the statement, which said instability in the Middle East highlights the UK’s growing reliance on energy imports, noted.

OEUK pointed out in the statement that current projections show that, by 2030, the UK will rely on LNG from places like Qatar and the U.S. for more than a quarter of its gas and for almost half by 2035, “up from around 14 percent last year”. The industry body said LNG cargoes are traded globally and are four times more carbon intensive than homegrown gas. It added that these cargoes can be diverted away from the UK during periods of high international demand, “increasing the risk of price spikes and supply shortages”.

In the statement, OEUK highlighted that the UK is transitioning towards greater use of renewables but said the nation also has a critical demand for oil and gas, which it added provide three quarters of the UK’s total energy “and underpin critical industrial manufacturing and the electricity grid”.

“The question facing policymakers is not whether the nation will continue to use oil and gas, but where it will come from and what this means for future security, jobs, emissions and the economy,” OEUK said in the statement.

OEUK went on to note that industry is asking for reform of the Energy Profits Levy (EPL), also known as the windfall tax, and early introduction of the government’s Oil and Gas Price Mechanism (OGPM) “to stimulate investment in the UK’s domestic oil and gas production”. This would boost energy security, secure jobs, and unlock up to GBP 50 billion ($66.4 billion) of private investment and GBP 15 billion ($19.9 billion) in tax receipts over the next decade, according to OEUK.

“Conflict in the Middle East highlights again the UK’s growing challenge of where and how it gets its energy,” OEUK CEO David Whitehouse said in the statement.

“While we mustn’t lose perspective as lives are lost across that region, there are inescapable real-world consequences for our security of supply,” he added.

“This is now the second global energy shock in just four years. It underscores the risks to the UK and across wider Europe of a system that favors increasing reliance on imports – which now make up more than 40 percent of our energy in the UK. It is right that we take stock and learn lessons,” he continued.

Whitehouse went on to state that “the solution is backing homegrown energy and our people with practical policy reform”.

“Only by making the most of all forms of domestic production, from oil and gas to our world class renewables sector can we weather the challenges of today and seize the opportunities of tomorrow,” he added.

“Oil and gas still supply around 75 percent of UK energy and will still supply a fifth of demand in 2050 even with the build out of our world class renewable sector,” he said.

“The question is not whether we will continue to use oil and gas, but where it comes from and what this means for our future security, emissions and economy,” he noted.

“A secure, reliable energy system requires a partnership between government and industry. We need a pragmatic partnership that accelerates our economic and climate goals, protects jobs, and ensures we always have homegrown energy to rely on,” Whitehouse concluded.

In a statement posted on Scottish Renewables’ website on March 15, Scottish Renewables Chief Executive Claire Mack said, “now more than ever we must double down on capturing our homegrown energy potential to reduce the impact of global volatility”.

Stephen Phipson, the CEO of manufacturers association Make UK, said in a statement posted on the group’s website on March 13 that “ensuring the UK has access to its own energy reserves is now vital”.

Rigzone has contacted the UK Department for Energy Security and Net Zero (DESNZ) and HM Treasury (HMT) for comment on OEUK, Mack, and Phipson’s statements. At the time of writing, neither have responded to Rigzone.

A release posted on the UK government’s website on March 15 revealed that UK Energy Secretary Ed Miliband was setting out “an accelerated package of energy interventions to boost the UK’s energy security”. This package included the intention to bring forward the government’s next annual renewables auction to July, the release outlined.

To contact the author, email andreas.exarheas@rigzone.com