Energy Transition Outlook 2021

ENERGY TRANSITION OUTLOOK 2021

For its part, industry has now approved the Methane Action Plan and has signed up to the Methane Guiding Principles. Action is already resulting in emissions reduction in 2020 and in the OGUK near-term forecast. Under the NSTD, some progress is being made to support electrification of assets.

Investor requirements with respect to climate-related disclosures will also increasingly have an impact. • More work is needed to ensure the energy transition will support local economies and jobs Increased investment associated with the NSTD, and more widely across the energy

• Government is making rapid progress in developing market structures for carbon capture and hydrogen market design

sector, will have its greatest impact where it can make the most of the UK’s existing supply chain. This means building on existing advantages and expertise derived from oil and gas projects and moving quickly to develop competences in newmarket segments as they emerge.

40,000 jobs To be created via the NSTD

The concept of industrial clusters for both CCUS and hydrogen is now well established both in the UK and, increasingly, across the rest of the world. Government has also set out a process for allocating support to the initial phases via the CCUS Infrastructure Fund and has now decided on two “Track 1” clusters.

5 Phase 1 cluster projects considered for approval

The economic regulation framework for CCUS and the development of business models for power generation, industrial capture and hydrogen are being clarified. Meanwhile the publication of the Hydrogen Strategy in September 2021 was a major milestone highlighting its potential to serve 20-35 percent of UK energy consumption. • Upscaling of investment is required across the whole energy sector to achieve net zero The Climate Change Committee estimates energy sector investment needs to increase

substantially from current levels. Most of this consists of the additional investment required to simultaneously decarbonise the economy while also maintaining reliable supply. The revision of the government Green Book with respect to policy appraisal should provide an impetus in this respect, along with the addition of a UK taxonomy.. Further amendment of the fiscal treatment of energy sector investment may also be helpful.

£50 billion Annual energy sector investment

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