COP26 and the Energy Transition

COP26 starts this weekend in Glasgow. It is the most significant climate change meeting since the Paris Agreement was agreed in 2015 with the key aspects being discussed being each country’s Nationally Determined Contribution.

The UK’s commitment to climate change is enshrined in law in the Climate Change Act 2008 under which the UK made its voluntary commitment to reduce its greenhouse gas (GHG) levels to achieve an 100% reduction (by reference to GHG levels in 1990) by 2050 legally binding. 

Based upon the latest data available from the Office of National Statistics, some 88% of the energy used in the UK in 2019 came from fossil fuels.  It is expected that through to 2050 there will be a decline in the UK’s reliance on fossil fuels (with natural gas production dropping by up to 80%) but that fossil fuels will remain an important energy source during this time. Under the Climate Change Act 2008 such a 100% reduction can still be achieved despite the continued use of fossil fuels because it is based on the “net UK carbon account” which deducts any “carbon units” from the UK’s emission of GHGs.  This is what is commonly referred to as “Net Zero” with the shift from an energy sector based largely on fossil fuels to a low or zero carbon energy system is the “Energy Transition”.

In advance of CoP26 the UK has set out its roadmap for the Energy Transition through to 2032 in a White Paper which estimates that it can reduce GHG emissions by 230MtCO2e by, amongst other things:

• quadrupling the UK’s offshore wind generating capacity to 40GW;
• supporting the development of carbon capture, usage and storage in four industrial geographic clusters with an aim of capturing 10Mt of CO2 per year by 2030;
• progressing plans for at least one large-scale nuclear project by the end of the current Parliament in 2024
• developing 5GW of low-carbon hydrogen production capacity by 2030; and
• pioneering hydrogen heating trials (with a Hydrogen Neighbourhood by 2023 and a Hydrogen Village by 2023)

With fossil fuels being expected to form an important energy source, the offshore oil and gas sector and the UK government agreed earlier this year the North Sea Transition Deal which is closely aligned with the Energy White Paper and is based upon five key outcomes:

1. Supply decarbonisation (by 50% in 2030 against a 2018 baseline);
2. Carbon Capture, usage and Storage (with the oil and gas sector investing £2 to 3 billion to construct infrastructure to meet the White Paper’s target of 10Mt/year of carbon capture)
3. Hydrogen (with sector investment in R&D and offshore green hydrogen production)
4. Supply chain transformation (with a target of 50% local content and 30% locally sourced technology in new energy projects)
5. People & Skills (by supporting 40,000 supply chain jobs) 

Energy and the oil and gas sector will play a crucial role in the UK’s target of Net Zero by 2050.  CoP26 has dedicated Thursday, 4 November 2021 to addressing matters of energy.  It is expected that these discussions will revolve around a ban on the use of coal, a set carbon price, climate financing for developing countries and ending fossil fuel subsidies.

We will be exploring some of the North Sea Transition Deal’s key outcomes and the possible technologies to achieve these in more detail in future blogs over the coming weeks.