Oil and Gas in Scotland: experts on how to make the most of an uncertain future

ROCKETING Fuel costs, the climate emergency and the Ukraine crisis have put Scotland’s oil and gas industry back in the spotlight, with heated debates over how best to manage the transition to net zero by 2045.

Many climate advocates believe that at least no new oil and gas fields should be developed – while critics argue that it makes no ecological sense to import more fossil fuels to compensate for the North Sea shutdown during the transition period.

The threat to Europe’s supply of fossil fuels from Russia posed by the Ukraine crisis also underscores the importance of security of supply.

READ MORE: David Pratt: The dramatic events of the Russian invasion of Ukraine that shocked the world

There is also the question of what will happen if Scotland’s last remaining nuclear power station at Torness closes as expected in 2028. As the renewable energy sector makes impressive strides, will it be fast enough to keep the country’s lights on?

Here, the Sunday National talks to two energy specialists about both the problems and the solutions.

Energy poverty, the Ukraine crisis and the net-zero target make it urgent for the UK and Scottish governments to develop integrated energy policies, says Professor Alex Kemp (below), who has criticized the failure so far.

“The integration is missing and now you have these huge gas prices,” said Professor Kemp of the University of Aberdeen. “We need an integrated energy policy to take into account the progress towards renewable energy, but at the same time we need to take into account what is happening. Reducing consumption of oil and gas requires a lot of effort and help for poor consumers. The social security system needs to be improved to cope with growing fuel poverty, defined as spending on fuel exceeding 10% of disposable income.”

He pointed out that energy bills are set to rise even more than many people realize – as base charges for electricity will rise by 82% along with the increase in the price per unit consumed.

“Why that is is somewhat unclear, but energy regulator Ofgem says it will happen from April,” he said.

Professor Kemp is also concerned about the impact of the Ukraine crisis on Russian gas and oil supplies to mainland Europe. While the UK doesn’t import much from Russia, mainland Europe is heavily dependent on Russian oil and gas, and any supply disruption could push up prices across the board.

For this reason, Scotland and Britain as a whole should consider carefully whether to cut off gas supplies from the North Sea too quickly, he warned.

“There is a risk of a big gas scramble,” Professor Kemp said. “If we had further contracts for supplies from UK waters to the UK, that would give us additional security of supply.”

While countries like Germany and France have 20 days of gas storage, the UK only has two or three days – a fact that nearly saw consumers cut off during the Beast from the East in March 2018.

‘At the end of winter the stocks are depleted and if something problematic happens the impact can be much worse,’ Professor Kemp said. “In March 2018 it was questionable whether we would have to cut off customers entirely because we had very little stock. There was debate about whether the government should step in and urge companies to build more new storage, but the companies didn’t want to do it and the government finally said, ‘okay, it would cost a lot of money’. Well, now we may regret that we don’t have more storage space. Again, it boils down to the lack of an integrated policy.”

With regard to the nuclear energy supply, Professor Kemp named the “extremely high costs” as one of the problems.

“There’s a lot of talk about small, modular nuclear power plants, which obviously could be a lot cheaper and faster to build, but that remains to be seen,” he said.

The grid pricing system also needs to be revised, as large wind farms and power stations in Scotland are currently penalized by having to pay distance-based tariffs to use the national electricity grid, unlike, for example, energy producers in southern England.

‘The large gas-fired power station at Peterhead has been running well below capacity for a number of years and this is because transmission charges to market are much higher,’ said Professor Kemp.

According to Professor Paul de Leeuw, director of the Energy Transition Institute at Robert Gordon University, the energy system in Scotland and the UK needs to be “rewired and rerouted” if net zero targets are to be met.

The National:

While welcoming the recent award of licenses by the Crown Estate Scotland to build wind farms in the North Sea, Professor de Leeuw warned that the transition to net zero will take time. It will require careful management of the “energy trilemma,” he said, which means balancing affordability for customers with energy security and the climate emergency.

“The aim is to get Scotland and the UK to net zero as quickly as possible and the recent ScotWind licenses are a really big statement of intent,” he said. “Scotland is particularly well placed to generate electricity from wind and offshore wind in particular. This is a tremendous gift to the nation and we must use it wisely.

“The ScotWind licensing round and future licensing rounds are a real opportunity to position Scotland and the UK as one of the global hubs for offshore wind power. We have the opportunity to do something extraordinary by developing this new world-class offshore wind industry and leveraging the highly transferrable and exportable capabilities of the oil and gas industry.”

While ScotWind will help Scotland decarbonise faster, he noted that the granting of the licenses is only the first step in developing a lower-carbon energy mix.

“Wind is typically interruptible and we need to maintain a base load of electricity for consumers so that it is always available,” Professor de Leeuw said. “Currently, that comes from a combination of gas, coal and nuclear power generation. With over 40% of UK electricity generation currently coming from gas fired power stations, access to natural gas is a key part of the equation during the energy transition.”

“Currently almost 50% of all UK natural gas comes from domestic production in the North Sea, with the rest being imported via pipelines from Europe or shipped to the UK from around the world.

“With over two million homes in Scotland currently using natural gas for heating and the gas on our doorstep in the North Sea has lower emissions than most imported gas, it would make sense to continue using this gas until alternatives are available.

He added: “As more wind is generated from remote offshore locations, the UK electricity grid needs to be modified to allow wind farms to deliver cheaper, lower-emission energy to customers across the UK. With the wind industry projected to grow 400% over the next decade, it is vital that a solution is found that provides a fairer and more transparent mechanism for power generation and system charging across the country.”

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