UK ‘may miss £450bn offshore energy opportunity’

The latest report from Offshore Energies UK (OEUK) calls on UK policymakers to “restore confidence in the UK as a place to make a fair return and kickstart economic growth.”

The OEUK report said that “without a stable energy policy and a globally competitive tax regime” the UK will “miss out on the lion’s share” of the benefits from a domestic offshore energy market that could grow to £450 billion by 2040.

OEUK’s 2024 Business and Supply Chain Outlook report shows oil and gas projects could create £145 billion for the UK’s supply chain, together with new offshore wind farms around the UK generating £260 billion worth of work, new hydrogen projects £25 billion and fresh carbon capture and storage (CCS) technology bringing in £34 billion.

“Right across the UK, the existing oil and gas supply chain already has 60%-80% of the capabilities needed to develop these new energy technologies,” said OEUK.

“But current policy and political rhetoric present serious challenges to these firms’ ambitions to scale up and seize these opportunities.

“With the right conditions, the UK offshore energy sector could benefit from a global export market worth more than £1 trillion within the next 15 years – generating thousands of new jobs and billions in new revenue for the UK economy.

“However, success depends on harnessing the UK’s oil and gas heritage and attracting the private investment needed to maintain the UK’s existing energy industry and its highly skilled workforce.

“To reap the benefits of a homegrown transition and unlock investment in the UK, OEUK is urging policymakers to introduce supportive policies and globally competitive taxes.

“OEUK’s industry manifesto outlines the key steps government can take in partnership with industry to protect jobs and energy security and deliver cleaner and more affordable energy for the UK.

“The report comes as wholesale energy prices fall to levels last seen before the invasion of Ukraine.

“OEUK has always said that when windfalls fall away, so should windfall taxes.

“The industry needs restored business confidence in the UK, as the Government’s Office for Budgetary Responsibility (OBR) says that £1.4 trillion of investment is needed to make net zero a reality – the vast majority of which is needed from the private sector.”

OEUK CEO David Whitehouse said: “The UK has a £450bn domestic energy opportunity that could transform the economy and support jobs – but warning lights are flashing.

“Our report shows a homegrown energy transition can generate a £450bn domestic opportunity for UK firms by 2040 that could kickstart growth across the UK economy.

“But investors, firms and workers need stability, predictability and fair returns to build a low carbon future here and keep jobs in the UK.

“We are in a global race for investment, and UK energy companies need supportive long-term policies, a stable tax regime, and responsible rhetoric from all sides.

“Our journey to net zero and beyond depends on responsibly making the most of our oil and gas production, which is at record lows.

“We’re facing a situation where we must import energy that could have been produced here and where we must rely on supply chain companies that could have been based here.

“The UK’s world class oil and gas sector has reduced emissions by 24 per cent since 2018 and we must build our low carbon future on this achievement.”