Economic Report 2020

Investing in our energy future Energy demand is a critical driver in supporting continued economic growth, particularly in developing economies. Meeting this demand in a secure and affordable way requires continued investment across a diverse range of energy sources. Alongside this, the energy sector accounts for the largest source of global emissions and significant investment will be required to meet climate ambitions worldwide. Global energy investments are forecast to fall by around 18 per cent this year due to the current economic environment, from over $1.6 trillion to around $1.3 trillion. 13 This has a cascading impact on the oil and gas sector, with upstream investments expected to decrease by 40 per cent to $300 billion this year compared to 2019, the consequences of which will be felt most severely by our supply chain. Despite an anticipated 1.8 per cent per year reduction in oil demand and 0.6 per cent per year for gas, the IEA estimates in its Sustainable Development Scenario that almost $68 trillion of total energy investment will be required over the next two decades. This is consistent with the European Union who also estimate that achieving

by 2050 11 – with half of this being through integration across the energy landscape, including hydrocarbon production, hydrogen production, CCUS and wind power. This integration and expansion will require massive investment but can also deliver real value to the UK over and above emissions reduction. It will require a concerted effort from both operators and supply chain alike as the whole sector pivots to deliver this exciting agenda. The OGTC estimates that around £430 billion of investment in offshore energy integration could unlock a cumulative £2.5 trillion of value and support around 200,000 jobs in the future. 12 This emergent technology relies on theproven track recordof our energy supply chain companies to bring new concepts to the market. OGUK is continuing to work closely with the UK Government on proposals for a transformational North Sea Transition Deal, which will help unlock the full contribution the industry can make to achieving net zero and the wider economic benefits.

11 https://www.ogauthority.co.uk/media/6625/ukcs_energy_integration_phase-ii_report_website-version-final.pdf 12 https://www.theogtc.com/media/3875/closing-the-gap-summary-report.pdf 13 https://www.iea.org/articles/investment-estimates-for-2020-continue-to-point-to-a-record-slump-in-spending

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