Oil and Gas UK (OGUK), the leading trade association for the United Kingdom offshore oil and gas industry, has called for increased investment in new oil and gas fields in the light of the UK’s ambitious goals to reach Net Zero carbon emissions by 2050. Current business gas prices in the UK are rising steeply as winter grows ever nearer, and experts say that business gas costs may continue to rise due to increased demand from consumers and the phasing out of traditional energy sources.
More people have stayed at home for longer periods due to the COVID-19 lockdowns and associated restrictions, which in turn has led to an increase in demand for residential gas and other forms of energy. Reports from OGUK say that gas outputs from the North Sea have been in long-term decline, resulting in ever-greater pressure to import supplies from other countries.
OGUK proposes this as the reason for suggesting additional investment in local gas fields to enhance domestic production. Although gas produces fewer CO2 emissions compared to other fossil fuels such as coal, the UK will struggle to meet its 2050 goal if it continues to rely on it.
Among all countries in Europe, the UK is one of the largest consumers of gas. According to the latest report from OGUK, approximately 23 million homes rely on gas for central heating and hot water. This accounts for 85% of households.
Businesses also rely on gas to provide power and heating, and gas is also used to ensure that 35% of the UK’s electricity needs are met. Increased power demands caused by lockdowns and the effects of climate change worldwide are why current business gas prices in the UK are going up.
Around 73% of the UK’s total energy still comes from gas and oil, and production from the UK Continental Shelf meets only 70% of this overall demand.
Renewable sources are increasingly being used in energy production, and these met 42% of electricity demand in 2020. However, electricity still only accounts for 20% of the total energy use of the UK.
The shortfall in electricity produced has been due to lower wind speeds and higher demand in the first quarter of 2021 and was met with an increase of 6.8% in energy generation using gas.
The same report also states that North Sea oil and gas remain essential for the manufacturing of both international and domestic products. It is used in the production of clothes, medicines, smartphones, vehicles, and the paving and surfacing of roads.
OGUK Chief Executive Deirdre Michie said that oil and gas had provided approximately three-quarters of the total energy used in the UK in 2020. The country will continue to rely on gas to provide heating, energy, and help with daily needs and essentials for the foreseeable future. Michie also reiterated that approximately 85% of UK homes still use gas for heating, and the prices of imported gas are set to reach a record high in 2020.
UK Gov’s Hydrogen Plan Pushes Through
A new strategy published by the UK Government states that the country’s hydrogen economy has the potential to support 100,000 jobs and could have a total worth to the economy of as much as £13 billion by 2050.
Kwasi Kwarteng, the UK’s business and energy secretary, said that the Government is working with industry leaders to provide the required 5 gigawatts of low-carbon hydrogen by 2030. The accumulated energy will be used across the economy.
According to Kwarteng, if successful, the project would be able to produce hydrogen equivalent to the amount of gas consumed by over 3 million households each year.
Kwarteng added that the new low-carbon hydrogen could help provide clean energy that will power everyday lives and the economy. Various industries will be able to use the generated power, with many small- to large-scale industries set to benefit from the programme.
However, the demand for the energy supply from hydrogen to power heating is still expected to be relatively low by 2030.
In a statement accompanying the publication of the strategy, authorities said that 20% to 35% of the UK’s energy consumption could be powered by hydrogen by 2050. In the medium term, the UK’s hydrogen energy economy could unlock investment of around £4 billion, supporting the creation of more than 9,000 jobs by the year 2030.
Supporting the ‘twin track’ approach to different technologies is one of the key strands of the Government’s strategy. This includes the production of both green and blue hydrogen, and further details are set to be released in 2022.
Hydrogen can be produced in many ways, which is why the International Energy Agency has described it as a “versatile energy carrier”.
Electrolysis is one of the methods used to produce hydrogen. In this method, an electric current is passed through water, thereby separating hydrogen and oxygen. If the electricity used in this process comes from a renewable source, it is qualified as “green hydrogen”. This type of hydrogen is expensive to produce at the moment.
‘Blue hydrogen’ is produced using the same process but utilises a fossil fuel, natural gas, while the CO2 emissions generated are captured and stored. There is currently much debate surrounding the production of blue hydrogen, with some saying the effects could be worse for the environment than burning coal.
The response in the UK to the Government’s hydrogen strategy is mixed. Some say that it has provided a welcome clarity for businesses who wish to consider hydrogen energy in their plans. Some have been more sceptical, citing that the overall strategy doesn’t focus sufficiently firmly enough on developing the UK as the world-leading green energy supplier.
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