Viaro Energy: “Britain Needs to Develop a Coherent Net-Zero Strategy to Compete On the World Stage”

The UK government has recently awarded 27 North Sea licences, designed to reduce dependency on ‘hostile foreign regimes.’ As the CEO of a North Sea oil and gas provider, I welcome this move to bring greater structure to the process. In order to drive the energy transition, and at a time of increased energy insecurity with the geopolitical turbulence in the Middle East and Ukraine, I would urge the Government to be even more forward looking, however.

To stay competitive, the UK needs to ensure a reliable domestic energy source. This must go hand-in-hand with a net-zero transition and the development of greener energy. Data published by the Climate Change Committee showed the UK will continue to rely on oil and gas to help meet its energy needs even after the intended net-zero target is reached in 2050.

Through our partnerships, Viaro’s portfolio contributes to 9% of daily UK gas production. In the North Sea, the average life of a field is ten years. These are not huge fields, and many are coming to the end of their lives. This means that licences should be granted until 2035 at least, by calculating the life of the field and development time.

To ensure continued investment, companies such as Viaro need to have visibility across production for some years, so that we can make responsible plans to extract from current oil and gas fields with maximum efficiency, while also investing in renewables.

Other nations are already ahead of us in this race. Take the case of the United States. It has unveiled $369bn-worth of subsidies to smooth the path to a green transition. The EU also has a raft of net-zero policies and subsidies. In order to compete on the world stage, Britain also needs a coherent policy to transition from fossil fuels. Piecemeal licence extensions year by year – or, indeed, the Labour Party’s pledge to stop licences being issued altogether, will not achieve this.

Instead, we must make significant investment into building up both manufacturing and storage capacity for clean energy, and diversifying the energy supply chain. This means taking an inclusive approach to traditional oil and gas producers, instead of using punitive measures to limit production. Energy companies are keen to work with the Government to achieve the energy transition, but the right framework must be in place to make this commercially viable.

In the US, for instance, there are now particularly generous financial incentives for carbon capture, utilisation and storage (CCUS) and zero-emission hydrogen production, part of existing core competencies integrated in the business models of energy producers.

This does not just make the transition more palatable for the oil and gas sector. It is the only realistic response to the fact that we need to rely on fossil fuels until we build up capacity for a major shift to renewables. Just recently, reports came out about Germany sustaining a $16bn debt resulting from Siemens Energy’s faulty wind turbines. Earlier this year, large Danish wind energy producer Orsted A/S announced $2.3bn losses and a halved stock price.

It is clear that considerable investments in energy research and innovation are required so we can develop the right green technology to be widely implemented at affordable costs across the entire value chain. The energy transition is ultimately a technological revolution, and it is one that can be shaped by all the participants involved. But we must learn to walk before we run. And that means that our immediate efforts need to be focused on improving efficiency and reducing emissions while we innovate and develop sustainable sources.

The Government needs to work with energy companies to produce a supportive framework for business, encouraging investment in renewable sources. This means granting longer North Sea licences so that we can work to a realistic timetable towards greener energy.

If Britain wants to keep up with the main economic powers, it will need to reexamine its approach to net-zero and come up with a coherent strategy that plays to its own strengths, on its own scale – with existing UK energy companies at its core.