Energy Transition Report 2018

TR & NSITION ENERGY

ENERGY TRANSITION OUTLOOK 2018

Feedstock Finally, another common use of both oil and gas is to provide feedstock, or raw materials for industrial processes to create end-use products. Industrial processes using oil and gas create a host of fuels, lubricants, fertilisers, plastics, paint, clothing, electrical boards and goods from fossil fuel feedstock. Many of these will be challenging to replace due to the physical properties of oil and gas. For example, even in the most conservative outlook for fossil fuel use, the IEA’s sustainable development scenario predicts increased use of oil and liquids in industry and for petrochemicals from 2016 to 2040 worldwide (17.4 to 21.6 million boe per day). 8 For the UK, non-energy uses of oil and gas constitute 7 mtoe, around 5% of total current UK energy demand. Overall, current technological development, although rapid, is very unlikely to reduce UK demand for oil and gas more than around 50–60 mtoe. This would leave demand at between 90–100 mtoe and well above projected production levels expected under Vision 2035. Longer-term technology drivers It is difficult to second-guess longer termtechnological developments before they have been tested in a commercial environment. In the energy sector in particular, it is unlikely that one particular technology will be totally superior and eclipse all others. In addition, there is likely to be an important value in maintaining market resilience and the option of switching between sources. Finally, the best perceived solution is not always the one which gains popular approval among consumers. Carbon Capture and Storage It is widely recognised that carbon capture, usage and storage (CCUS) is an essential element for meeting long-term climate change policy objectives. Globally, it is expected that CCUS projects will need to deliver 14% of the total cumulative emission reductions required if the Paris agreement is to be achieved. CCUS is an existing and proven technology. There are currently 21 active, large-scale CCS facilities with a capacity to capture 37 million tonnes of CO 2 per year. 9 The Carbon Capture, Usage and Storage Cost Reduction Task Force Report highlighted the clear potential for using this technology in the UK to enable further decarbonisation. This includes the potential use of decommissioned oil and gas assets in the North Sea. Potential development of up to five strategic clusters would provide the UK the opportunity to become a global technology leader in this area, leveraging existing expertise from the oil and gas sector.

8 IEA — World Energy Outlook 2017 9 Global CCS Institute — The Global Status of CCS 2017

10