This 40th edition of the Energy Transition Survey makes for sobering reading. Those responding expressed reduced confidence in the future of the UK Continental Shelf (UKCS), and more are now predicting a reduction in revenues over the next year, alongside pressures on profitability.
Uncertainty has weighed heavy on those operating in the sector, with many fiscal and regulatory changes over the past few years. These results pre-date the Autumn Budget, but they do reflect concern caused by July’s windfall tax announcements. While there may be some relief that the Chancellor has listened to the industry’s concerns about the impact of further changes to tax reliefs, we have already seen several companies announcing a suspension of activities or a total withdrawal from the UKCS.
Whilst the push for renewables continues across the globe, the 2024 Statistical Review of World Energy reported that global fossil fuels actually grew to meet the rising demand for energy. Additionally, the United Nations Annual Emissions Gap noted global warming of more than 3 degrees Celsius by the end of the century based on current policies.
Against this complex backdrop, there is little evidence that the transition is gathering speed for North-east businesses. Respondents are reporting a slight decrease in renewables as part of their total business mix; a concerning fact which is true of UK and overseas streams.
Recruitment continues to be a challenge. The market for skilled tradesmen and senior technical staff is tightening, likely due to an ageing workforce and a reduction in sector related STEM courses at UK universities, as highlighted in previous surveys. It is critical that we maintain the skilled workforce that is needed to support the energy transition.
Despite these challenges and consistent with past editions, the majority of companies remain optimistic about the long-term future of Aberdeen and its place at the centre of the UK transition. Over half of respondents are extremely confident in the resilience of the region too. Those that gave full narrative responses spoke of the talent and experience in this region and nodded to the potential for offshore wind in coming years.
I have often pondered on the dichotomy of responses we see here – downbeat about the UKCS, recruitment and revenue generation, yet so sure of the long-term future of Aberdeen. I personally believe it signifies a region that fully understands its own potential.
The recent confirmation of the location of GB Energy in Aberdeen, alongside the announcement of the North Sea Transition Taskforce, needs to be seen as a significant opportunity. It can only enhance the view that the region will continue to be the hub of the energy sector in the UK. These developments could potentially accelerate the energy transition skills in Aberdeen and secure the region’s future. The region has a fantastic opportunity to actively contribute to the narrative of transition in these critical years.
According to the Treasury, the UK needs around £1.4trillion of investment to reach net zero by 2050 with most of this money coming from the private sector. The public sector has a key role to play, through new institutions like the National Wealth Fund and GB Energy; de-risking investments in newer technologies like hydrogen and CCS, as well as attracting the supply-chain investments needed to build the new energy infrastructure we need. The next few years are critical in turning local grit and long-term optimism into action.