A stepping stone or an underwhelming plan to reach net zero? Industry responds to new energy plan

The Government’s new net zero plan has been described, by the UK’s leading hydrogen trade association, as a ‘stepping stone’ to a robust UK energy system, while the Energy Industry Council (EIC) called the Powering Up Britain Plan ‘underwhelming’, citing a lack of clarity on project timelines as a key concern.

Mixed industry response as oil and gas sector is overlooked in new net zero plan

Amanda Lyne, Chair of the UK HFCA, said today’s announcement on the energy security plan would help to build momentum in the crucial journey to net zero 2050.

“It is always encouraging to see steps forward in existing measures and investments, and this package certainly contains some good news, such as the announcement of shortlisted projects for the Net Zero Hydrogen Fund,” she said.

“It highlights the government’s recognition of the importance of investment and innovation in the UK’s energy networks to reach net zero in time.

While welcoming the confirmation of many measures already being pursued in order to accelerate the hydrogen economy Ms Lyne also called for ‘more to be done to develop a truly thriving hydrogen economy in the UK’ saying: “We now need the Government, and indeed the whole of the energy space, to remove barriers in regulation and standards, accelerate support to allow hydrogen projects to scale-up, and – crucially – to explore what can be done to stimulate demand for hydrogen technologies.”

No timelines. No clarity

Less impressed by the updated strategy, the EIC called for more comprehensive measures noting a lack of timeline for the projects detailed in the government policy, including carbon capture and suggesting it does little to encourage businesses to stay in the UK.

“Our impression is that this underwhelming in terms of scale and clarity and does not appear to add anything new. The lack of clarity is causing uncertainty for supply chain businesses across the energy industries,” said Neil Golding, the EIC’s Head of Market Intelligence.

“There appears to be very little new in the announcements made today, more a rebadging of previous announcements. The supply chain is continually waiting for the new pipelines of projects to develop, but while we have headlines, we always seem to fall short on setting timescales and clear objectives. This means that we are failing to seed and root our supply chain in the UK.”

“We urge the government to provide more detailed guidance on when carbon capture and other projects will be implemented which will provide greater certainty for the supply chain and encourage investment in the industry,” said Mr Golding.

The vital role of hydrocarbons

“The announcement fails to acknowledge the significant contribution of the oil and gas supply chain to the UK’s energy security and economy, as well as its role in the transition to cleaner energy sources,” MR Goldign continued. “The EIC welcomes an open dialogue with the UK Government to discuss how we can work together to develop more robust and sustainable policies for the energy sector.”

The plan includes reaffirming of a previous commitment to Carbon Capture Usage and Storage, the launch of a £160m fund to support port infrastructure projects for floating offshore wind, the backing of green hydrogen production projects and £380m investment in EV charging points.

Vysus Group’s SVP Commercial, Malcolm Cameron, said: “We are acutely aware of the challenges associated with achieving our net-zero ambitions in the UK. We need to ensure investors have confidence in the UK energy sector if we are to have any chance of speeding up the energy transition and closing the gaps to meet our global targets.”

He added: “While we would have to say these measures do not go far enough, anything that the government can implement to accelerate a cost-effective, balanced transition to a lower carbon economy through clean and sustainable technologies whilst acknowledging the role hydrocarbons still have to play in our energy mix, is to be welcomed.”

Oil and gas pivotal to successful transition

The government made no reference to an anticipated reduction of the Energy Profits Levy, which have already reduced investments in the North Sea.

Finbar Kelly, global commercial manager at Norco Group Limited, an EIC member, said: “Although we acknowledge the importance for a net zero and greener future for generations to come, we do realise the importance and significance the oil and gas sector to these goals are and its imperative the government realises this too.

“The money ploughed into renewable projects and technologies by offshore operators is simply enormous.

“If we do not support the oil and gas industry, we will lose it, the renewable projects will be delayed, and we will be buying fuels from abroad.”

John Kent, Chief Energy Transition Officer at energy services provider Kent agreed, saying: “The world is addicted to energy, and when that energy supply is disrupted, as we’ve seen in the past year, everyone pays the price. For the foreseeable future oil and gas will need to be part of the solution as we transition to a renewable future. Measures to decarbonise how oil and gas are produced are key to any net zero plan.

However John also highlighted the strong UK renewables performance: “The mess the government has made of the outward positioning of their climate policy should not overlook the fact that the UK is still one of the world leaders in renewable energy sources, particularly offshore wind, hydrogen and committing to carbon capture technology.

“As well as the additional investment in their energy security plan, they have promised to reform the planning process of energy infrastructure, specifically citing solar and offshore wind, to speed up the process and attract investment. For those involved in making a renewable energy future a reality, this is a critical piece of the puzzle and must not be overlooked.”