SCOTLAND’S oil and gas industry has warned it “has been compounded by the triple whammy of Covid-19, low oil price and low gas price” – which puts its ambition to transition away from fossil fuels at risk.
The sector, which has committed to transforming its industries to carbon net zero by 2050, has told MSPs that low prices for its products will hamper the overhaul – and stressed that capital Government funding to shake up infrastructure to support going green will be needed.
Campaigners have warned that the industry is “reaching for new excuses for its decades of failure to act on climate change”.
The Scottish Government has committed to becoming carbon net zero by 2045, five years ahead of the UK target – and ministers have committed to drawing up a green economic recovery from the Covid-19 crisis.
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In evidence to Holyrood’s Environment, Climate Change and Land Reform Committee, Oil and Gas UK, which represents the offshore industry, suggests the sector “can support a green recovery in Scotland”.
But the organisation warns that “the industry was already fragile from the previous downturn which has been compounded by the ‘triple whammy’ of Covid-19, low oil price and low gas price”.
It adds: “It is anticipated that the oil and gas industry may take longer to recover than other parts of the economy if low commodity prices continue.”
In July, Oil and Gas UK said more than 7,500 jobs have already been lost in the northeast as a result of coronavirus and up to 30,000 positions may be at risk.
Oil and Gas UK has stressed that the industry will require financial support from both the Scottish and UK governments in order to transform its work to a net-zero sector.
Due to restrictions amid the pandemic, offshore manning levels have been reduced – meaning that “a significant amount of activity has been stopped and projects are being cancelled or postponed into 2021 and beyond”.
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In June, the Scottish Government announced a £62 million energy transition fund to help support a green economic recovery form the pandemic.
But Oil and Gas UK is calling on politicians “to recognise the essential contribution of domestically produced oil and gas to UK energy security” and “acknowledge the key role the industry will play through the application of its skills and experience to the delivery of the net zero ambitions”.
Discussions are taking place between the sector and the UK Government, which Oil and Gas UK said “could help unlock the full potential of this industry to support a green recovery”.
The new Scottish National Investment Bank is set to play a role in harnessing the country’s ambitions to become carbon neutral by 2045.
Economy Secretary Fiona Hyslop said the bank, which is set to launch by the end of the year, will be tasked with “driving green development” and “can help deliver our vision of a globally competitive, sustainable and fairer economy”.
Katy Heidenreich, Oil and Gas UK’s operations director, said: “Oil and Gas UK is spearheading and supporting a number of self-help initiatives aimed at helping our industry recover from the triple threat of Covid-19, the dramatic crash in oil price and the lowest gas prices for 14 years.
“Working closely with government and regulators, we’re focusing on areas throughout the oil and gas life cycle from exploration to decommissioning where we can boost competitiveness, unlock planned work programmes and stimulate activity for our world-class but fragile supply chain.”
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Friends of the Earth Scotland has called for assurances that funding to help aid the recovery from Covid-19 does not go to industries that are harvesting fossil fuels. Dr Richard Dixon, the organisation’s director, said: “It is no surprise that the fossil fuel industry is reaching for new excuses for its decades of failure to act on climate change.
“Fossil fuels drive the climate crisis and the industry has shown time and time again it does not serve the interests of people or planet. The oil and gas industry is being disingenuous with its claims about reducing the impact of extracting fossil fuels without any acknowledgement of the far greater impacts of actually burning billions of barrels of oil and gas. The only honest zero-carbon strategy is a rapid, well-planned conversion of the offshore industry away from fossil fuels and towards renewable energy and energy efficiency.”
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He added: “Thousands of offshore workers have already lost their jobs with more facing redundancy, supply chain companies are struggling to cope with the industry’s volatility while the reckless pursuit of every last drop of oil and gas speeds climate breakdown ever closer. Scotland must learn the lessons of the past and ensure that none of the recovery money goes to new fossil fuel developments or fanciful technologies like carbon capture or fossil hydrogen.
“If the Scottish and UK governments were to invest in a just transition, we could build secure and sustainable jobs in a 100% renewable energy system that prioritises workers and communities instead of corporate interests.
“By mapping out the skills that are needed for a zero-carbon economy and then providing those training opportunities we can give people all the skills they need to flourish as we transition beyond fossil fuels.”
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