Energy Transition – Continuing to keep the lights on

The Scottish Government’s announcement on 12 June of a £62million support package to help deliver a net zero future was warmly welcomed across the Energy sector. Not only does this respond to and show real commitment and support to meeting Scotland’s ambitious climate change targets, it also demonstrates its recognition of the importance of investing in the Energy sector at a time where the Oil & Gas industry faces the reality of longer term challenges.

Oil & Gas has most recently suffered from the double economic impacts of COVID-19 and crashes in commodity prices, both very sudden and deeply damaging with potentially long lasting implications.

The biggest existential threat and crisis facing the oil industry, however has always been climate change. Long before COVID-19 struck and with roots going back many years, the drive for energy transition was gathering momentum and moving further and further up the agenda – pushed into the public conscious by street protests, demonstrations and political debate.

Now, it is widely thought that the oil industry may permanently change because of the commitment and heightened attention to climate change and as a result of the ongoing pandemic. This is reflected in updated policies recently published by European run companies like Shell and BP who, with their own publicly profiled net-zero targets, appear to have shown very clear intent that in the long run, they will be investing less in oil & gas and more in cleaner energies.

The Scottish Government’s multi-million Energy Transition Fund is therefore extremely timely, but it also highlights progressive activities and initiatives that have been underway for a considerable time already. It reflects on the hard work being delivered by bodies and agencies such as Opportunity North East, Scottish Enterprise, The Oil & Gas Authority, The Oil & Gas Technology Centre, Subsea UK, and other highly innovative groups such as Pale Blue Dot and H2 Aberdeen.

The Energy sector, particularly in the North East of Scotland has been grappling with a maturing basin, the prospect of a declining oil & gas industry and its impact on employment and the wider economy. The initiatives outlined by the Scottish Government will make an impact and will stimulate further activity, benefiting the wider Scottish Energy sector and supply chain.

This is already being experienced by some, including AAB, who have provided support and developed our expertise in some of the initiatives outlined: The Global Underwater Hub, a new Energy Transition Zone, a Net Zero Solution Centre, Acorn Hydrogen and CCS (Carbon Capture & Storage) and the Aberdeen Hydrogen Hub, not to mention others such as the Aberdeen Renewable Energy Group.

The creativity, knowledge, expertise and resilience in the Scottish Energy sector is a significant global export and is something that as a nation we should take more pride in and look to enhance. Finding new and different ways of tackling the Energy Transition challenge through innovation and inventiveness will always create new job opportunities and better solutions than those available today.

If you have any queries please do not hesitate to get in contact with Alasdair Green, Partner and Head of Energy, and Callum Gray, Corporate Finance Partner, or your usual AAB contact.