Economic Report 2018

ECONOMIC REPORT 2018

The UK Energy System – The Transition is Well Under Way Energy provision in the UK has already undergone significant change. Carbon emissions have been successfully reduced by 43 per cent compared with the levels prevailing in 1990. Much of this reduction has been achieved in the power generation sector through the substitution of natural gas for coal and increased use of renewable energy. Further reductions in emissions, required by the UK Climate Change Act 2008 and Carbon Budgets, imply more rapid progress in the transportation and heating sectors. As set out in the chart below, these segments form a very significant part of UK energy demand and are still highly dependent on oil and gas.

Figure 8: UK Domestic Energy Flow

Hydro, Wind & Solar Bioenergy †

Coal ‡

Crude Oil & Petroleum Products

Nuclear

Natural Gas

Domestic Imports

40

15.1

50.9

5.8

12.9

1.9

95.2

45.1

0

1.6

3.5

6.5

Energy industry use and losses

PRIMARY SUPPLY 278.6

15

Exports Marine bunkering Stock change

Transformation and conversion losses

78.5

35.8

TRANSPORT DOMESTIC INDUSTRY SERVICES MISCELLANEOUS

Petroleum 8.8

Petroleum 55.1

Petroleum 2.5

Petroleum 4.3

Petroleum 0.7

Gas

4.4

Gas

0

Gas

25.5

Gas

8.7

Gas

4

Coal

0.05

Coal

0

Coal

0.6

Coal

1.3

Coal

0.02

Bioenergy 1.7

Bioenergy

1

Bioenergy 2.2

Bioenergy 1.2

Bioenergy 0.07

Electricity 6.7

Electricity 0.4

Electricity 9.1

Electricity

8

Electricity 1.7

Other

0.2

Other

0

Other

0.3

Other

0.7

Other

0.1

FINAL CONSUMPTION 149.1 ∆

*all values in million tonnes of oil equivalent (mtoe) † Includes geothermal and solar heat ‡ Includes manufactured fuels, benzole, tars, coke oven gas and blast furnace gas ∆ Total does not equal sum of the sources due to statistical difference, stock changes, marine bunkering and rounding

Source: BEIS

Indigenous supplies from UKCS production accounted for 60 per cent of total UK oil and gas demand in 2017 (65 per cent of oil demand and 54 per cent of gas demand) and will be crucial to meet the expected needs of the economy over the next 20 years and avoid over-dependence on imports. Meanwhile, as we approach the end of this period and look forward to 2050 and beyond, the contribution of the oil and gas industry must evolve to reflect the needs of the low-carbon economy.

18