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NEWS & INSIGHTS | article

Energy Transition Zone to strengthen north east position as a global integrated energy cluster

24 January 2020

Opportunity North East (ONE) has set out its ambition to help create a world leading Energy Transition Zone (ETZ) to accelerate the delivery of net zero solutions and secure a strong economic future built on offshore wind, hydrogen, and carbon capture usage and storage (CCUS), alongside oil and gas.

ONE announced plans to work with regional and industry partners, including Aberdeen City Council and Aberdeen Harbour Board, to create an Energy Transition Zone in Aberdeen, to accelerate the region’s ambition to be at the forefront of energy related research, manufacturing, technology, operations and support activities that will help deliver the UK and Scottish net zero goals.

The region’s combination of on and offshore infrastructure, energy companies, a global supply chain, track record of research and development, and a highly-skilled workforce mean that Aberdeen can be at the forefront of making energy transition ambitions a reality. Having played a major role in oil and gas over the last 50 years the north east of Scotland has the experience, expertise and capability to deliver large and complex projects and lead the UK’s transition to an integrated, modern day energy system.

Industry body OGUK predicts that UK energy sector capital investment will have to double to circa £50 billion per annum to decarbonise the UK economy. The region has already seen an increase in pace and scale of investment in recent years and is home to a growing integrated energy cluster focused on low carbon. This creates a strong position from which to build.

The ETZ will provide the physical infrastructure and collaborative environment to fast track investment, particularly in the development and deployment of offshore wind, hydrogen and CCUS – areas where the region has established strengths.

The ETZ will leverage Aberdeen Harbour Board’s £350m investment to create a unique offering of combined marine and onshore support. In becoming the largest harbour by berthage in the UK, the extensive quay lengths, expansive laydown area and deep water channel of the new South Harbour facility will transform the functionality of the port, providing a commercial gateway to offshore infrastructure, accommodating large scale renewable industry activity and supporting a broad range of onshore industrial opportunities within the ETZ.

Creating a global energy transition cluster is also about connecting academic and R&D capability with companies to drive the innovation essential to develop low carbon solutions. The ETZ will provide a focal point for academic and industry research, test and demonstration building on the established energy-related research excellence of the University of Aberdeen and Robert Gordon University and supporting the ambitions of the OGTC’s Net Zero Solutions Centre.

Sir Ian Wood KT GBE, Chair of Opportunity North East, said: “Urgent action supported by large scale investment is required if we’re to meet Scottish and UK Government net zero targets by 2045 and 2050. This region, with the backing of government and industry, from operators through the supply chain, is committed to delivering solutions. Our region has made an invaluable contribution to the UK’s energy requirements over the last 50 years and we can now add to this with a significant contribution to the net zero objective.

“This project aligns with both Governments’ focus on place based economic growth and the plans for a ‘Transformational Sector Deal’ for the oil and gas industry, which will focus on facilitating and catalysing activities and projects to create a net zero solutions energy industry.

“There is a huge opportunity through the rapid transfer of oil and gas experience, assets and skills to accelerate the delivery of low carbon solutions as well as more carbon efficient oil and gas production. The ETZ is a transformational project and has a vital role to play in catalysing the transition of Aberdeen from an oil and gas capital to a global integrated energy cluster. This will help anchor a broad energy supply chain, create and secure high value jobs, drive export growth and help deliver the UK and Scotland’s net zero carbon goals.”

Councillor Jenny Laing, Co Leader of Aberdeen City Council said: “The recommendations from the Economic Policy Panel report in November 2019 were clear around the scale of challenge and opportunity around energy transition, and Aberdeen’s future role. In response, the Council’s City Growth & Resources Committee agreed to develop a place-based Net Zero Transition Plan and a prioritised Strategic Infrastructure Plan. The potential to develop a world leading Energy Transition Zone is an exciting development opportunity for the city and wider region.

The skills, expertise and impact of hosting a global industry here in the city region provides a foundation and the credentials from which to respond to the transition to net zero. I have always argued that the right infrastructure is in place to support the regional economic ambition we have.

This proposal builds on the infrastructure investment in the Aberdeen City Region Deal, and we look forward to collaborating with ONE on the development of the business case for the zone, and with wider stakeholders including the UK Government, Scottish Government and their agencies to harness the skills and jobs that are here and provide opportunities for local people to access new jobs in the wider energy sector.”

Scotland’s Minister for Energy, Paul Wheelhouse said: “The oil and gas industry has a key role to play in a sustainable, secure and inclusive energy transition and we want to work with the industry to ensure that vision is realised and to see the 105,000 people whose jobs are supported by the sector have a sustainable future in the net zero emission economy we need to deliver.

“Initiatives like the Energy Transition Zone (ETZ) could play a pivotal role in making that transition possible, by exploring how to develop renewable technologies related to technologies such as offshore wind, Carbon Capture Utilisation and Storage (CCUS) and deployment of hydrogen and derivatives of hydrogen in our energy system, as well as increased investment in energy efficiency. All these opportunities can extensively utilise the undoubted skills and ingenuity of those working in the oil and gas sector and its supply chain. The development of low carbon technologies such as CCUS is viewed by experts such as the UK Committee on Climate Change and International Energy Agency, as being essential to achieving Scottish, UK and international climate emissions targets.

“The ETZ will help support new jobs, develop and diversify markets for the supply chain in the City and Shire, and help Aberdeen transition from being Europe’s oil and gas capital to being recognised as a truly global energy city for the 21st Century and beyond.”

Today’s announcement has received endorsement from a wide range of industry and regional stakeholders and the next stage is to move the concept forward with industry and partners. Aberdeen could play a pivotal role in delivering energy transition solutions for Scotland and the UK.

Michelle Handforth, Chief Executive, Aberdeen Harbour Board, said: “Aberdeen Harbour Board’s £350m investment in its South Harbour expansion is part of a wider strategy; aimed primarily at transforming the port into one of the most sustainable and energy efficient facilities in the UK, but also in providing innovative support to our customer base, as they adopt a leading role in the delivery of net-zero solutions.

“ONE’s Energy Transition Zone ambition, therefore, is a truly exciting one. It is closely aligned with the Harbour’s aspirations, bringing intense focus to bear on the challenges that face us all, and in developing Aberdeen as a leading new-energy hub in global terms.”

Deirdre Michie, Chief Executive, OGUK, said: “The development of an Energy Transition Zone is an exciting opportunity to further demonstrate our industry in action to support a net zero future, bringing together our world-class skills, infrastructure and capability at the heart of the North East region.

“Roadmap 2035 shows we are already playing an active role in the transition to a more diverse energy mix, with all of our members across the UK focused on delivering oil and gas and reducing their carbon footprint, while many are also investing in renewables, developing new technologies and bringing new solutions to market.

“With this focus here in the North East and across the UK we can continue to meet much of the country’s oil and gas needs from domestic resources, progressively reducing emissions and developing economy-wide decarbonisation technologies – and the Energy Transition Zone will undoubtedly accelerate these aims.”

Andy Samuel, Chief Executive, Oil & Gas Authority, said: “The OGA strongly supports the establishment of this Energy Transition Zone, which should help anchor the region as a hotbed for energy innovation. We’re blessed with offshore engineering excellence, infrastructure, subsurface expertise and a world-class supply chain. There is great potential to integrate these with other offshore energy opportunities including renewables, carbon capture and storage and hydrogen as we must all rapidly deliver on Net Zero.”

Colette Cohen OBE, CEO of the Oil & Gas Technology Centre, said: “The Oil & Gas Technology Centre, in partnership with industry, recently launched a new Net Zero Solution Centre to accelerate the development and deployment of technologies that will move the dial on carbon reduction and enable the UK Continental Shelf to become the world’s first net zero oil and gas basin.

“The Energy Transition Zone concept is aligned with our ambition and can create an innovative, entrepreneurial place to incubate new ideas, help start-ups commercialise their technologies and larger companies develop and grow.

“We look forward to working closely with Opportunity North East and other regional partners to realise the full potential of this exciting new project, ensuring the North East of Scotland plays a central role in helping to deliver the UK and Scotland’s vision for a net zero economy.”

Andrew Jamieson, Chief Executive of the Offshore Renewable Energy Catapult, said: “Aberdeen’s long experience of operating offshore greatly strengthens the UK’s world-leading offshore renewable energy industries. Decarbonisation and the drive for Net Zero are imperatives that present huge opportunities for innovative companies to develop the products and services to meet the challenges of delivering clean energy, and ORE Catapult warmly welcomes the New Energy Transition Zone. We look forward to supporting many of the companies that will base themselves in its thriving, supportive environment.”

Allan McQuade, Director of Place at Scottish Enterprise, said: “Aberdeen is renowned globally for its energy expertise and as we transition to a low carbon economy the Energy Transition Zone project is exciting. It will harness innovation in the birthplace of the oil and gas industry in Scotland and bring together partners, academic experts and industry to help contribute to our net zero targets. With COP26 taking place later this year and hosted in Scotland there is no doubt that projects like the transition zone will be one of many that truly highlight our ambition to work towards turning the challenge of climate change into an opportunity.”

Professor John Harper, Principal, Robert Gordon University (RGU), said: “This is an exciting initiative which will provide the North-east with a significant opportunity to be at the forefront of future energy developments, while playing an important role in helping the country to achieve its target of net-zero carbon emissions.

“The university’s significant engagement with the energy industry over 40 years continues to evolve to reflect the changing needs of the sector. The industry’s Roadmap 2035, which was developed with support from RGU’s Energy Transition Institute, demonstrates a shift to harness the industry’s capabilities across a wider energy spectrum to meet the UK and Scottish net zero carbon emissions goals.

“The Energy Transition Zone will significantly help to achieve these ambitions, increasing economic development potential, both regionally and nationally, through demand-led research, commercialisation opportunities, and business creation and growth.”

Professor George Boyne, Principal, University of Aberdeen, said: “As a University we welcome these exciting plans for a new Energy Transition Zone and look forward to working with Opportunity North East and other partners to ensure the region continues to be a leading player in the global energy industry for decades to come.

“Today’s announcement aligns with the University’s own plans for a Centre for Energy Transition, which will seek to embrace the opportunities that lie ahead in a low-carbon future through interdisciplinary research and teaching, along with support for start-ups and spin-outs.

“Our aim is to work with industry at all levels to support the shift to sustainable energy and plans for an Energy Transition Zone that will foster innovation and provide opportunities for collaboration is good news for industry in the north-east of Scotland, and for the University.”

Russell Borthwick, Chief Executive, Aberdeen & Grampian Chamber of Commerce, said: “Aberdeen is known worldwide as a city region that’s entrepreneurial, dynamic and innovative; a place that likes to get things done. Having been a global leader in the oil and gas sector for over half a century, we’re now utilising our incredible skills and research strengths to develop new energy technologies.

“Establishing an Energy Transition Zone is an important step in allowing Europe’s oil and gas capital to fully utilise the expertise, transferable skills and supply chain that exists here in order to make a significant contribution to the creation of a net zero carbon economy.”

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