New climate change plan needed before financial boost for Scotland's declining oil & gas industry is final, say MPs

The highlight of the deal involves the creation of new centres of excellence, one of which has just opened near Aberdeen. It is believed it would deliver up to £110 billion in North Sea revenues between now and 2035.

But the committee said that adapting to low carbon was "one of the main challenges" facing the oil and gas sector and that before finalising the sector deal ministers should ensure the industry brings forward "a more detailed proposal" on how this will be achieved.

Carbon capture, usage and storage technology (CCUS) can capture up to 90% of CO2 emissions produced from the use of fossil fuels in electricity generation and industrial processes, thereby preventing the carbon dioxide from entering the atmosphere.

Professor Corienne Le Quere, member of the Committee on Climate Change, told the committee that for “the cost-effective path” to meet emission targets needs the technology of carbon capture and storage.

 And the MPs say that before the oil and gas sector could be "more ambitious" in this area.  And they say that  before a sector deal is sealed, the industry should bring forward a "more detailed proposal" on how the three centres will support the development of CCUS technology and how their success will be measured.

But Friends of the Earth Scotland said the committee had proposed "the weakest possible conditions" for tackling climate change saying that all they have asked for is for operations to become "a bit more efficient".

"This industry will make some vague promises and the committee will feel it has achieved something but it is trivial compared to the real problem," warned Dr Richard Dixon director of Friends of the Earth Scotland.

“This is an utterly complacent report which slavishly supports the oil and gas industry’s aim of getting every last drop of oil out of the North Sea while assuming that eye-wateringly expensive technology will save the industry from its own carbon emissions.

Scottish Development International produced a promotional video last year for Scotland's oil and gas sector

“Climate change is an existential crisis for human civilisation and this report could have marked a turning point by acknowledging that we need to leave most of the fossil fuels we know about where they are.

"Instead it fully sanctions the industry to continue to fry the planet. The oil industry must be laughing all the way to the bank but all of us will feel the climate consequences of this political cowardice."

The report is the result of the committee's examination of the challenges facing the oil and gas sector and how they can be tackled, and ways to secure the future of oil and gas in Scotland as reserves decline.

READ MORE: North Sea gas discovery hailed as possibly the biggest for 11 years

While the oil and gas industry has generated some £334 billion in revenues since the start of the 1970s, these have been in decline.

The committee stressed that the oil and gas industry "urgently needs" the sector deal pointing out that Scotland is at the forefront of the global oil and gas industry, contributing £9.2bn to the Scottish economy in 2017 and supports 135,000 jobs in Scotland.

The MPs argue it is also central to the UK’s energy security, with it being forecast that two-thirds of the UK’s primary energy needs will be met by oil and gas until at least 2035.

The committee said: "Whilst we acknowledge environmental concerns about the (wider) MER (maximising economic recovery) strategy, oil and gas looks likely to form a substantial part of the UK’s energy mix for at least the next 15 years. As such, we believe it makes sense to meet as much of this need as possible from domestic sources."

But the report acknowledges that this will come at a cost.

According to a 2015 study in the scientific journal Nature, an estimated third of oil reserves, half of gas reserves and more than 80% of known coal reserves should remain unused in order to meet global temperature targets under the Paris Agreement.

And Friends of the Earth has recommended they should reassess the MER policy against its legal commitments under the Paris Agreement and the Climate Change Act 2008, and propose an alternative strategy for the UK Continental Shelf which would be in line with it.

READ MORE: Edinburgh oil firm highlights profitability of North Sea production

The Government’s figures for CO2 emissions by fuel type show total emissions from oil and gas in 2017 were 333.9 metric tons of carbon dioxide equivalent, accounting for more than 91% of the UK’s total.

Oil and Gas UK has argued that “in the foreseeable future, oil and gas is going to play a key part in the energy mix, representing two thirds of primary energy in the UK in 2035 and so "maximising domestic production was important" because it would reduce reliance on fuel imports which can be more carbon intensive.

Oil and Gas which is jointly heading the strategy which aims to “double the productive life of the basin through maximising economic recovery and doubling the UK’s share of the global goods and services market says the billions in revenue will benefit companies and the workforce in Scotland.

One of the three centres of excellence proposed focuses on developing technology to support an energy transition to a lower carbon economy and would involve the industry and government investing £50m each.

An £88m underwater innovation hub would lead on research and development.

A third centre in Newburgh, which opened earlier this month, will prioritise cost-effective decommissioning of over 100 platforms forecast for removal over the next decade.

Scottish affairs committee chairman Pete Wishart said: “Scotland should be enormously proud of its globally recognised oil and gas industry. However, the industry is going through a period of immense change as it prepares for a challenging future, and the Government urgently needs to step up and support the industry.

"My committee’s report sets out a pathway for the future of the industry; a sector deal that would support the industry’s past, present and future.

“There is potentially another 30 years of oil and gas production in the North Sea but it’s important the sector uses this time to ensure the sector’s future as production starts to slow.”