A lack of realism in the debate around energy is leaving Scotland behind, writes Jon Fitzpatrick, Executive Chairman of Gneiss Energy.
Having just returned from the Gulf, I can affirm first-hand what we all already know – the economies of the world still run on gas and oil.
I could not agree more that Scotland and the UK need to transition towards renewables – however that transition takes time.
So, although Scotland now generates more than its annual electricity demand from renewables – we are still a long way away from having a decarbonised economy.
And no matter how much Ed Miliband says ‘the solution is more renewables’ – the simple fact is we will remain dependent on hydrocarbons for some decades to come.
At present more than 80 percent of the homes we live in depend on gas (with most of the rural remainder dependent on fuel oil), whilst in industry, more than half of all final energy demand is for heat – which largely comes from gas.
Ditto road transport, which still largely runs on hydrocarbons.
To put this in context, the International Energy Authority calculated that, in 2023, electricity accounted for only 21 percent of total final energy consumption in the UK, whilst the majority of our final energy demand is still met by fossil fuels, primarily natural gas (29 percent) and oil products (42 percent) used for heating and transport.
And unfortunately for us – a lot of that gas comes from the gulf.
Of course, the solution is to wean ourselves off hydrocarbons – my own car is electric, so I am definitely not opposed to the idea!
However, energy infrastructure takes time – and one of my frustrations is the idea we can do this overnight.
If, as the EIA numbers suggest, we are only about a fifth of the way along the decarbonisation road (and these have been the easy miles!) – we still have a long way to go, with tens of gigawatts of electricity to come online.
It takes at least a decade to build an offshore wind farm – start to finish – and large-scale transmission infrastructure the same – with many local communities strongly opposed.
As a way point, the UK Government has set a Clean Power 2030 target (which, to be accurate, should be ‘Clean Electricity 2030’) – which we might, with a very fair wind, meet.
But even if we do achieve this, we will only be, at best, 25 percent of the way towards a fully electrified economy – which will require all of our homes, industry and transportation to run on electricity.
That will require an absolutely vast uptick in the amount of renewable energy generation in the UK during the 2030s and 2040s – at least three times the installed capacity we have to date.
Hydrogen, carbon capture and small scale nuclear are often touted as the solution, but all are hugely dependent on public finance support and are always ‘just around the corner’ (ie no time soon!).
And whilst solar power and battery storage might do a lot of the lifting – we will still need many large-scale, multi-gigawatt energy projects to come online.
A lot of this is expected to come from offshore wind – most of it in Scotland – but in just the last few months, the 2GW West of Orkney Windfarm has been put on ice, and now Ocean Winds is to terminate its ScotWind lease option for the 500MW Arven South project off Shetland.
At the moment, private capital cannot make the case to invest without a clear market, and these schemes would not be live ‘til the mid-2030s as best – so even today, gaps in our future electricity pipeline are appearing, with full electrification by 2040, or even 2050, becoming a pipe dream.
This is not to be negative – it is to be realistic. Just because Ed Miliband says ‘we are accelerating our transition to renewables’ won’t make it so. Economics, planning, infrastructure, finance and science – plus the facts on the ground – all tell us otherwise.
Unreasoned debate
Which makes the debate around gas in particular so frustrating.
To follow the evidence above, gas will be part of the energy mix for many years to come.
Yet for more than a decade we have been running down our own North Sea industry while importing increasing amounts of gas from our nearest neighbour Norway, and LNG from the USA and Qatar.
LNG, by its very nature, has to be compressed and transported around the world – and that brings with it higher CO2, and also methane emissions. It is less environmentally sound and, clearly, less strategically secure.
No one is disputing that the North Sea is a declining basin. Yet our Norway neighbours continue to invest in exploration and are making new finds – which they can then sell to us!
Continuing to invest in our own reserves in the North Sea makes sense.
Not because it will make our gas bills cheaper (it probably won’t) and not because it is infinite (it’s clearly not).
But because it will be an important part of the UK energy mix for many years to come.
In that period – domestic investment will support North Sea oil workers in the decades ahead and will bring much needed revenue to the Treasury in a time of extraordinary global upheaval.
Plus, it will offer a more just transition for offshore workers into a renewables industry which, with the very best will in the world, will still take many years to arrive.
Finally, it will offer a buffer against global shocks, so when your central heating goes on, you’ll be assured that at least some of the gas in your home has come directly from the North Sea, rather than half-way around the world.
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