Energy Transition Report 2018

TR & NSITION ENERGY

ENERGY TRANSITION OUTLOOK 2018

The carbon intensity (the ratio of emissions released to unit production) of offshore UKCS oil and gas production has been trending downwards since 2006. This is due to improved operational management, tighter regulations, increased production efficiency, innovative design ideas for new platforms and the decommissioning of older more carbon intensive installations offshore installations. Offshore oil and gas facilities which will face much stronger incentives to reduce carbon costs during Phase IV if the UK remains in the scheme after Brexit or a similar UK-based scheme, aligned to the EU ETS, is introduced. Government strategy must underpin the Vision 2035 objectives As discussed above, UK oil and gas demand will not fall below the level of UK production in the 2035-40 timeframe, even if alternative technologies are exploited to the maximum extent. Continuing MER UK is consistent with the UK’s climate change legislation and targets, in accord with fulfilling the energy needed for economic growth for the UK. Likewise, the potential for developing CCUS and the hydrogen economy based on oil and gas industry expertise has the potential to make the UK a global leader.

Vision 2035 and Improved Indigenous Oil and Gas Production is Consistent with the Paris Agreement

300

250

200

150

Mtoe per year

100

50

0

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

UK Oil & Gas Demand

Foreacst UKCS Production

Vision 2035 Production

Government policy should continue to explicitly support a positive environment for oil and gas investment in order for the UK to achieve MER UK, reduce imports and continue to benefit from the many advantages an indigenous industry brings. The fiscal regime must continue to incentivise investors to produce, to the benefit of industry, government, and taxpayers.

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