REIMAGININGANETZERONORTHSEAAnIntegratedEnergyVisionfor20501REIMAGININGANETZERONORTHSEAANINTEGRATEDENERGYVISIONFOR20503CONTENTSForewords3ExecutiveSummary7ReimaginingtheUK’sEnergySector10ThePowerofanIntegratedPlan12Emerging,Progressive,Transformational14AtaGlance16InDepth18JobsandEconomy26EnablingAffordability28Technologyfor205030AMassiveOpportunityfortheUK32Methodology34Acknowledgements36INVESTINGNOWFOR2050–ANDBEYONDTheUKoffshoreenergysectorhasreachedapivotalmoment,awatershedinourindustrialhistory.Weareatathresholdwhentheexperienceandexpertiseforgedoverthelast50yearsmustbeusedinpartnershipwithtransformationallow-carbontechnologiestomeetthechallenges–andgrasptheopportunities–presentedbytheUK’scommitmenttonetzero.AreimaginedNorthSea,anintegratednetzeroenergysystem,canleadthisglobaldrivetodeliverthecommitmentsoftheParisAgreement.Upto£416bninvestmentisrequiredoverthenext30years,butthiscreatesafantasticbusinessopportunitythatby2050couldpotentiallycontribute£125bnperyeartotheUKeconomy,whilesupportingmorethan230,000jobs.Deliveryofatransformationofthismagnitude,buildingontheskillsandcapabilitiesalreadypresentacrosstheUKenergysector,willnotonlyhelpdeliverthenetzerogoalbutreinventournationforasustainablefuture–creatingasectorwithtechnology,skills,servicesandaninnovativeecosystemwhichwillbeagloballeaderandexporterinthenetzeroeconomy.Therearechallengestodeliveringthisintegratedenergyvision.Thisreportoutlinesthreepossiblescenarios.Theyarenotdefinitive,howevertheyclearlyshowthesizeofthepotentialprizeand,importantly,therisksofinaction:thepotentiallossofjobs;thelossoftransferableskills,andthelossofourcompetitivepositionglobally.Thisisatimeforaction,foraclearstrategyandforcross-sectorcollaboration.WearepleasedtopresentthisreportfromtheNetZeroTechnologyCentreandORECatapultwhich,inadditiontoourownanalysis,hasbenefitedfromsignificantinputfromarangeofcross-sectorenergyorganisations.Wehopethisreportwillbeacatalystforactionandstimulatesurgentinvestmenttomakesurethatwe,asanation,seizetheopportunitytoleadtheworldwiththedevelopmentoftechnologiesforanetzeroenergyfuture.ProfessorDameAnneGloverCBENon-ExecutiveDirectorORECatapultMartinGilbertChairNetZeroTechnologyCentre54ASHAREDVISIONFORTHEUK’SENERGYINDUSTRIESTheinnovationrequiredtodeliveranaffordablenetzeroenergyfutureisatransformationalopportunityfortheoffshoreoilandgasandrenewableenergysectors.NowisthetimetofocusonthesynergiesbetweenthesetwosectorstoreimaginetheNorthSea.Weareexcitedthatourorganisationsareattheheartofthischange,alongsideindustry,governmentandacademia.Thepotentialforinvestmentincleantechnologytodrivegreeneconomicgrowth,highvaluejobsandglobalexportopportunitiesisequallyexciting.Thecreationofanintegratednetzerooffshoreenergysystemrequireshundredsofbillionsofpoundsofinvestment,butcangeneratetrillionsinvalue.Itcandeliveraffordableenergyforhomesandbusinessesincommunitiesacrossthecountry,aswellasmaximisingopportunitiesforexportofservices,electricityandhydrogen,whilstminimisingrelianceonimports.Itcancapitaliseonourcombinedskills,expertiseandcapabilities,generatingsubstantialeconomicvaluewhilefulfillingournetzeroambitions.Thisreportidentifiesmajorinnovationopportunities,butalsotheimpactoffailingtoact.TheNorthSeaenergyindustriescanbeworld-beatinginthisnetzeroeconomy,withadiversifiedsupplychainthatmeetsUKenergydemandwhilesimultaneouslyprovidingnext-generationtechnologieshereintheUKandinmarketsaroundtheworld.Earlyinvestmentiscrucialtosustainandcreatejobs,securetechnologyleadership,drivedownemissionsandcapitaliseonexportopportunities.FAILURETOACTNOWWILLRESULTINSIGNIFICANTJOBLOSSESOVERTHENEXTDECADEANDSERIOUSLYUNDERMINEOURCOMPETITIVENESSThisUKis,andcancontinuetobeaglobalenergyleader.1.THECOUNTRYCANBEASUPPLIEROFENERGY,RATHERTHANABUYER2.WITHINVESTMENTNOW,THEUKCANBEAWORLDLEADERINTHEDEVELOPMENTANDEXPORTOFNETZEROENERGYTECHNOLOGIES3.WECANRETAINOURCOMPETITIVEPOSITIONINENERGYSKILLS,CAPABILITYANDJOBSThefournationsoftheUnitedKingdommustdeliverasmuchofourenergydemandaspossiblefromourindigenousresources,notjustintheNorthSeabutacrosstheUK.Withappropriateinvestmentatpace,wecanleverageandcapitaliseuponourexistingcapabilitiestobethesupplierofnextgeneration,netzeroenergytechnologies.Thiswillensurethatwecreatenewjobsandavibrant,competitivesupplychaindeliveringinnovativesolutionsathomeandinternationally.Thisreportoutlinesthreepotentialscenariostodeliverthisopportunity,toreimaginetheNorthSeaandbuildonourstrongenergyfoundations.Eachscenariorequiresclearintent,supportivepolicies,investmentatpaceandstrongalignmenttounlockourvastpotentialoverthenext30yearsandbeyond.Eachscenario,however,isvastlydifferentandvariesnotonlyinenergymix,butalsointhelevelofsocialandeconomicimpact.WHATTHESESCENARIOSMAKECLEARHOWEVER,ISTHATWEMUSTACTANDINVESTNOWOTHERWISETHEOPPORTUNITYTOREALISEANYOFTHESEBENEFITSCOULDBELOSTTheNetZeroTechnologyCentreandORECatapultareexcitedtosharethisvisionforthefuture;tooutlineourambitiontoworkincollaborationwithindustry,governmentandacademiatodeliverinnovativetechnologiestodrivedowncostsfortheconsumer.Let’sseizethemoment.EARLYINVESTMENTISCRUCIALTOSUSTAINANDCREATEJOBS,SECURETECHNOLOGYLEADERSHIP,DRIVEDOWNEMISSIONSANDCAPITALISEONEXPORTColetteCohenOBECEONetZeroTechnologyCentreAndrewJamiesonChiefExecutiveORECatapult7REIMAGININGANETZERONORTHSEAAnIntegratedEnergyVisionfor20506NETZERONORTHSEA:ANINTEGRATEDENERGYVISIONFOR2050TheUKoffshoreenergysectorfacesafundamentalchallenge:howbesttobuildonthehard-wontechnologicaladvancesofthelast50yearstomeethead-ontheimperativeofreachingnetzeroby2050.Widespreadchangeisbeingdictatedbyclimatescienceanddemandedbysociety.TheUK’soffshorewindindustryisalreadyattheheartoftheglobaldrivetowardsnetzeroandouroilandgasindustry,asafurthercrucialelementofthenationaleconomy,standsreadytoactaspartofapositiveandsustainableresponse.Contributionswillcomefromeverypartoftheoffshoreenergysystem.Theoilandgassectorhasatrackrecordofdeliveryinoneoftheworld’sharshestmarineenvironments,ahistoryoftechnologicalinnovation,andisaneconomicandjobspowerhouse.Hydrocarbonproductionwillcontinuefordecades–thisisessentialinprovidingasafe,secureenergysupplytopowerindustry,heathomesandenabletravel–howevercarbonemissionsmustbeeliminated.Theoilandgassectorstandsreadytoactinpartnershipwithallothersectorsoftheenergyindustry.Theoffshorewindsectorhasproventobeoneofthestand-outindustrialsuccessesofrecentyears,withtheUKleadingtheworldinthedeploymentoffixed-bottomoffshorewind,pioneeringfloatingwindanddrivingcostsdownfurtherandfasterthananyonethoughtpossiblejustafewyearsago.Willingpartnersandenergyinnovators–withtheirinherentvisionandinvention–areequallyasimportantandincludeblueandgreenhydrogen,carboncaptureandstorage(CCS)andmarinerenewables,alongwithearlier-stagetechnologies.Thesizeofthechallengeaheadissurpassedonlybytheopportunitiesthatwillcomewithsuccess.Therewardsofreachingorexceedingnetzeroby2050willextendtoencompassUKmanufacturing,long-termjobcreation,energysecurity,investmentandinnovation.Benefitswillalsorippleoutwardtoencompassaglobaladvantageandleadershippositioninnewinternationalmarkets.THESIZEOFTHECHALLENGEISSURPASSEDONLYBYTHEPOTENTIALREWARDSOFSUCCESSConceptshownisillustrativeSource:WoodMackenzie,LuxResearchIndustrialClusterPetrochemicalclusterHydrogenpowerplantDomesticsupplyFPSOPowerplantwithCO2storageHydrogenproductionwithCO2captureEnergystorageSmallpoolsreusableproductionsystemplatformCO2injectionfacilityWindwithbuiltinelectrolysers(greenhydrogen)WindpoweringhydrogenproductionfacilityExportinterconnectorEnergyhubsubstationsCO2injectionfacilityPOWERCABLEOIL/GASPIPELINEHYDROGENPIPELINECO2PIPELINECO2directaircaptureCO2utilisationElectrolyserplant(greenhydrogen)OffshoreoperationscontrolcenterRepurposedpipelineCO2transportHydrogentransportGreenhydrogenproductionfacilityEnergystorageSubseadevelopmentSubseafactorySurfaceproductionsystemFloatingwind9THEBENEFITSAwiderangeofindustries,extendingbeyondtraditionalsilosandtowardsabroader,moreintegratedoffshoreenergysector,arereadytotakepart.Smallandmediumsizedenterprisesarepoisedtocontribute,researchanddevelopmentwillberampedup,andportsandcommunitiesaroundtheUKwillbenefitfrominvestmentandemployment.Excellenceacrossengineering,design,manufactureandinstallationprovidesafoundationforthenecessarychange.Technologydevelopmentandinnovationarecriticaltodeliveringaffordablesolutionsforboththerealisationofthenetzerogoalandtheincreasedvalueassociatedwithnecessarycostreductions.Rewardsforsuccessarehuge:asmanyas232,000directandindirectjobs,totaleconomicimpactofupto£125bnperyearandpotentialcumulativeinvestmentof£416bnby2050,dependingontheexactpathchosen.Inaction,bycontrast,risksadownturninoffshoreenergysectoremploymentbetweennowand2035,duetopotentiallossofemploymentinoilandgasandslowprogressinoffshorerenewables.Withoutacceleratingactionandinvestment,theUKwillnotonlyexperiencenetjoblosses,butalsoalossofgloballeadershipintheemergingnetzeroenergyarenaandfailuretomeetitsnetzerotargets.Itisimportanttonotethatourscenariosarefocusedondomesticmarkets.However,newmarketsrepresentsubstantialaddedopportunities–particularlytostrengthengrowthinapost-Brexiteconomy.Examplesincludetheexportofgreenhydrogentomeetananticipatedsurgeinglobaldemand,electricityinterconnectionoutsidetheUK,andcarbonsequestrationforEuropeanneighbours.ThesearetremendousopportunitiesfortheUK,butifweareslowtoact,wecouldlosethousandsofjobs,billionsofpoundsofinwardinvestmentandvastexportopportunities.Therearealreadymanyoverseaschallengers,vyingtosecureleadershipinenergytransitionsolutions.Itiscriticalthatweaccelerateprogress–dramatically–toembracetheseopportunitiesandretainourpositionasagloballeaderinenergy.NEXTSTEPSThisreportisdesignedtosparkaction.Theopportunitiesthatcomewithrespondingtothenetzerochallengewillrequiredecisionsintheimmediatetermonprogressivepolicies,aswellasoninvestmentandfundingstreams.Achievingthe2050target,andtappingintothehugeeconomicbenefitsthatsuccesscancreate,willnecessitateremovalofbarriers,newtechnologicalinnovation,andtheformationofnewpartnershipsandalliances.Thethreescenariosinthisreportaredesignedtoprovideaclearframeworktoinformalloftheabove,toofferanoutlineofwhatisbothpossibleandrequired,andtoclearlyillustratethepotentialopportunitywiththerightlevelofbothpublicandprivatesectorengagement.TheoffshoreenergysectorsareseekingcloseragreementandunderstandingwithregulatorsandgovernmentsatboththeUKanddevolvedlevel,establishingclearerandwherepossiblefundedforwardpathsthatwillallowinnovatorsandthesupplychaintograsptheopportunitiespresentedbymeetingthechallengeofnetzero.CoordinatedactionwillfurtherensuretheUKkeepspacewithglobalcompetitorswhileprotectinghard-wonjobsandexpertise.AreimaginedNorthSeaawaits.THEREISNOCHOICEBUTTOACTNOWTHEVISIONThisreportoutlinesthreescenariosdesignedtocreateazerocarbonNorthSeaenergyindustry–Emerging,ProgressiveandTransformational.Eachrepresentsonepotentialpathto2050,albeitwithvaryingdegreesofassociatedbenefit.Theyshouldnot,however,bereadastheonlyoptionsavailable;thereisspacetooperateflexiblyacrossscenarios-nothingcanberuledout.Theydohoweverprovideaguidingvision,atemplatethatwillbenefitindustry,stakeholdersandgovernmentastheypreparetocommittoaclearandactionablestrategy,anddeliveramoreintegratedenergymixdrivenbyconsumerdemand.Theendgoalofnetzerowillleadtheway,withflexibilityandcommitmentworkinghandinhandwithtechnologyinnovation.However,theeconomicandsocialimpactsmustbeweighedalongsidetheenvironmental,anddueemphasisgiventoeconomicrecoveryandfuturenationalprosperity.Theoffshoreenergysectoralreadypossessesmanyofthetechnologiesrequired,albeitatvaryingscalesofmaturity,cost-effectivenessandscale.Thereisahugeopportunitytobeinnovativeacrosstheemergingenergysolutions,frombothfixedandfloatingoffshorewind,carboncapture,utilisationandstorage(CCUS)andblueandgreenhydrogen,whilealsodeliveringimprovedefficiencyandcarbonfootprintreductioninexistingoilandgasoperations.Storage,interconnectionandnetworkswillmultiplytheadvantages,whileonshoreinitiativesandtheongoingdevelopmentofmarinerenewableswillalsocomplementwiderambitions.Understandingtheongoingroleofhydrocarbonsisalsoessential.Theoffshoreenergyindustryisbuildingthisstrategyfor2050basedonacompletepictureoftheUKemissionsfootprint,usinganalysisfromtheUKCommitteeonClimateChange(CCC).Itincludesafullynetzerocontributionfromdomesticgasand/oroilratherthanrelianceonimports.CREATINGAZEROCARBONNORTHSEAENERGYINDUSTRY1110REIMAGININGTHEUK’SENERGYSECTOREconomy£125bnUpto£125bnperyearintotaleconomicactivityintheUKenergyoffshoresectorby2050,dependingonthepathselectedAnintegratedenergyvisionfortheUKNorthSeawillenableinvestmentbyoperators,developersandthesupplychainininfrastructureandcriticaltechnologies,whilesimultaneouslyallowingregionsandeducatorstoplanfortheskillsoftomorrow.Therightactions,adoptednow,willnotonlyestablishawell-markedpathtowardsnetzero,itwillopenthedoortotheopportunitiesofareimaginedNorthSeaandthefullrangeofbenefitsfromapositive,justtransformation.Jobs232,000232,000offshoreenergyjobsarepossibleby2050,upfrom140,000directandindirecttoday;theseverityofthepredictedemploymentdownturnthisdecadecanbeconsiderablyreducedReducedcostsInnovationcandriveincreasedaffordabilityacrossanumberoftechnologiesandultimatelyreducethecostofenergytoconsumersinthenetzeroworldOffshorewindCommitmenttosignificantexpansionoffloatingandfixedoffshorewind,combinedwithanticipatedcostsavings,willboostenergysecurity,reducedependenceonimportedenergyandincreasedproductionofgreenhydrogenTechnologyCritically,areimaginedNorthSeawilldriveblueandgreenhydrogenproductionatscaleandcreateasignificantroleformarinerenewables,whiledrivingimprovementstostorage,networksandinterconnectionContinuityUKhydrocarbonswillcontinuetofulfilnecessaryUKenergydemandthroughnetzerodomesticproduction,reducingrelianceonimportsandreducingemissionsthroughtechnologiessuchaselectrificationCarboncaptureCost-effective,widespreaddeploymentofcarboncaptureandstoragewillenablethebroadestrangeoftechnologiesandindustriestocontributetothezero-emissionsvisionExportsTheopportunitiesofnetzerowillmultiplybeyondUKborders:greenhydrogenasacommodity,carbonsequestrationasaservice,thetransferofhard-wonskillsandexpertisetonewmarkets2050:OFFSHOREWINDTechnologicaladvances,particularlyinfloatingwind,areexpectedtodrivedowncosts,increaseefficienciesandincreasetheareasavailableforpotentialdevelopmentallaroundourcoastline.Deploymentofbetween60GWand150GWby2050–tobothsupplyelectricityfordomesticconsumptionandexport,andpowergreenhydrogenproduction–iscentraltothenetzeroNorthSea,dependingonthepathchosen,butbenefitscouldpotentiallyextendfurther.Thesectorcangenerateupto£1trillionineconomicimpactacrosstheUKoverthenext30years,whileaccelerateddeploymentfrom2026toreachanambitioustargetof49GWby2030–aboveandbeyondwhatiscurrentlymappedandincludingsignificantexpansionoffloatingwind–couldpotentiallyoffsetanticipatedjoblossesintheoilandgassector.2050:OIL&GASInvestmentcanacceleratedecarbonisationofoilandgasproductionwhileincreasingoperationalefficiencyacrosswhatwillremaina£15bnsectorthrough2050(measuredintermsofUKemploymentandproductiontomeetdomesticdemand).Electrificationandintegrationwithrenewableswillbecritical,coupledwithtechnologiesthatwilldelivernetzeroproductionemissionsfromthesector.TheUKistransitioningtobecomereliantonrenewableenergysourcesratherthanhydrocarbons,howeveroilandgasisstillrequiredandworld-leadingskillsandinnovativeorganisationscanservicethisindustryinitsmissiontodecarbonise.2050:HYDROGENHydrogenoffersasubstantialeconomicopportunityfortheUKbasedonabundantrenewableenergy,supplychainexpertiseandhugeexportmarketpotential,withEurope’shydrogenmarketanticipatedtogrowto£105bnby2050.Bluehydrogencanbecomeacriticalintermediatesolutionaswetransitiontonetzero.Itwillbeanimportantbridgetogreenhydrogenandathalfthecost,willhelpbuildahydrogeneconomyandcreatedemand.Withoutthis,harnessingthefullpotentialofgreenhydrogencouldbeatrisk.Actionandinvestmentingreenhydrogenisrequirednowaspartofalong-termstrategy.Wemustdevelopthebestmostaffordablesolutionsinareasincludingelectrolysercatalysts,saltwaterelectrolysisandcombinedrenewables/productionfacilities.Bydoingso,wecanreplicate,forgreenhydrogen,thesuccesscreatedinreducingthecostofoffshorewind.2050:CARBONCAPTURE&STORAGE(CCS)WidespreaddeploymentofCCSwilldecarboniseoilandgasandbluehydrogenandenablethedevelopmentofanetzeroNorthSea.Thesegmentisacrucialcomponentinfuturedomestichydrocarbongeneration,asacarbonsinkforindustrialdecarbonisation,andwillopenthedoortotheUKbecomingbothaworldleaderinthesectorandakeyEuropeanlocationforsequestration.Earlyadoptionwilldovetailwithdemandforbluehydrogenintheneartermandsetthestageforlarge-scaleproductionofgreenhydrogeninthemediumterm.THEPOWEROFANINTEGRATEDPLANOurintegratedenergyvisionisbuiltonfourmainpillars–offshorewind,oilandgas,hydrogenandCCS–allinterdependentandinteractingtoachievethemid-centurygoal.Thisisnottoignoresectorssuchasmarinerenewables,complementaryonshoretechnologiesincludingwindandsolar,andtheneedforexpandedstorage,improvednetworksandupgradedinfrastructure.TheNorthSeaenergysystemcanachievethebiggestrewards,however,withcoordinatedactionacrossallfronts,withequalpartsleadershipandvisionfromthecorecontributors.12131514Allthreeachievenetzeroby2050,howeverinvestingnowtopursueTransformationalwillgeneratethehighestgrowthinjobs,andthegreatestrewardsfortheUKeconomy.However,nomatterthescenario,nonewillbesuccessfulinisolationandassuch,aredesignedtosupportandcontributetowiderUKeffortsasoutlinedbytheCCC’smodellingofothersegmentsoftheeconomy.Theseincludeplannedemissions-savingpathwaysacrossthebuildingsector,heating,fromindustrialprocesses,andinallsegmentsoftransport.Overlappingtechnologieswillbeofparticularvalueinthenetzerobigpicture,particularlyCCSandhydrogen-bothblueandgreen-whichisapotentialfuelfortransport,heatingandindustry.ItisalsoimportanttonotethattheEmerging,ProgressiveandTransformationalscenariosarefocusedondomesticmarkets;newmarketsrepresentaddedopportunity–forinstancetheexportofwind-poweredgreenhydrogentomeetanticipatedsignificantglobaldemand,electricityinterconnectionoutsidetheUK,andcarbonsequestrationforEuropeanneighbours.ThisisanenormousopportunityfortheUKtopositionitselfasaleadingexporterofnetzeroenergytechnologyandknowhow,andembracethesocial,economicandenvironmentalbenefitsthatcomehandinhand.Theskillsandexpertisedevelopedtomeetdomesticchallenges,honedinthesearchforinnovationandaffordablesolutions,willofferfurthereconomicopportunitiesbeyondtheUKmarket.Allofthescenariosarebasedon60%UKcontentinoffshorewindandhydrogen,and70-75%inoilandgasandCCS,whichisessentialifweasanationaretounlockthepotentialofnext-generationenergydevelopment.TheyarealsobasedonthebeliefthattheUKwillbegreatlyenhancedifweembracetheintegratedenergyvisionatpace:drivingaclearhydrogenstrategy,rampingupoffshoreandfloatingwindandcapitalisingonourindigenousoilandgasassetsviainnovativetechnologiesincludingelectrificationandCCS.TheEmerging,ProgressiveandTransformationalscenariosarefurthermorerootedinambition:todecarboniseourowncountrywhileopeningthedoortodeliveryofservicesandtechnologiestoexportmarketsasaglobalnetzeroleader;toprovideaffordableenergyforconsumersandbusinessesbyreducingthecostofcriticaltechnology;toenableourfuturepathwaythroughcoordinated,cross-industryaction.EMERGINGPROGRESSIVETRANSFORMATIONALOurthreescenarios–Emerging,ProgressiveandTransformational–havebeenselectedtoillustratearangeofoptionsfor2050andbuildontheFurtherAmbitionScenarioasoutlinedbytheCommitteeforClimateChange(CCC)inits2019report‘NetZero:theUK’scontributiontostoppingglobalwarming’.Anumberofoutcomesarereflectedbasedonvaryingcontributions,anddegreesofmaturityandcostreductions,acrossblueandgreenhydrogen,domesticandimportedhydrocarbons,CCS,offshorewindandotherrenewables.EmergingisbuiltaroundsignificantcontributionsfromgasandbluehydrogenwithwindandCCSplayingasupportingrole,whileunderProgressivetheenergymixalsofeaturesgas,alongwithblueandgreenhydrogenandalargercontributionfromoffshorewind.UndertheTransformationalscenario,greenhydrogenandwindtakealeadingrolewithareducedcontributionfromgasandloweredrequirementforCCS.Thepotentialupsidesfromourscenariosareclear:232,000directandindirectjobs,totalannualeconomicimpactofupto£125bnandpotentialcumulativeinvestmentof£416bnby2050,dependingontheexactpathchosen.1716289TWh140270TWhElectricity195TWh75TWhGreenBlueMTCO2/year32TWh640Twh700Twh027TWhElectricityOilGasMTCO2/year113MTCO2/year270TWh555TWhOilGas380TWhElectricity101TWhHydrogen17TWhBlue253TWhGreen81MTCO2/year270TWh333TWhOilGas380TWhElectricity340TWhHydrogenEMERGING2050PROGRESSIVE2050TRANSFORMATIONAL2050Summary81%IMPORTS~40%IMPORTS72%IMPORTS>Bluehydrogenplaysamajorrole>Largerelianceonimportedgas>Negligibleroleforfloatingwind>SignificantrequirementforCCSTODAY2020>Blueandgreenhydrogennotcommerciallyavailable>Gasimportdependencyrisingyearonyear>FloatingwindtrialsinUKwaters>CCSunderdevelopmentbutnotoperational>Blueandgreenhydrogenplayamajorrole>Moderaterelianceongasimports>Largeroleforfloatingoffshorewind>SignificantrequirementforCCS>Greenhydrogenplaysamajorrole>Lowrelianceonimportedgas>Crucialroleforfloatingwind>ModeraterequirementforCCSTechnologyprioritiesInnovationcostsavingsOffshoreenergymixOffshorewindHydrogenOil&GasCarbonCapture&Storage(CCS)GreenHydrogenOffshoreWindBlueHydrogenCarbonCapture&StorageElectrolysercatalystinnovationSubseaelectrolysersolutionsincorporatingcompressionSeawaterelectrolysis£55bnReducedcostfloatingwindfoundationsDynamiccablingsolutionstoreducedowntimeInnovativefloatingwindmooringsystems£97bnEnhancedSMRreactormembranesandcatalystsHigh-capacitysorbentsmoredurableathightemperaturesAlternativeproductionmethodseg,plasmapyrolysis£6.5bnModularretrofittablecarboncapturesolutionsDirectair/seawatercaptureModellinggeologicalbehaviourofCO2£1.3bnCostReduction61%CostReduction24%CostReduction32%CostReduction13%CCSCCSEconomyJobsImportsInvestmentImportsUK£13.4bn£9.4bn£6.5bnAverageCAPEXp.aAverageCAPEXp.aAverageCAPEXp.a£10bnAveragehistoricCAPEXp.a232,000158,000113,000Direct&IndirectDirect&IndirectDirect&Indirect140,000£125bnTotalEcomomicImpact£100bn£80bn£40bnImports~45%UKCSUKCS~30%UKCSImports~10%ImportsImports~45%UKCS£TotalEcomomicImpactTotalEcomomicImpactDirect&IndirectTotalEcomomicImpact270Twh801TwhOilGas54%IMPORTSATAGLANCEANINTEGRATEDENERGYVISIONFOR20501819SCENARIOSINDEPTHAnenergysystemdrivenbyoffshorewindandgreenhydrogen.>£125bneconomicimpact>232,000jobs(66%increaseon2020)>£13.4bninvestmentperyearRenewableelectricityplaysanincreasingrolewithgasstillasignificantcontributortotheoverallenergymix,alongsideasignificantrequirementforcarboncaptureandstorage.>£80bneconomicimpact>113,000jobs(20%decreasefrom2020)>£6.5bninvestmentperyearAnincreasedshareofoffshorerenewablesdominatestheelectricitymarket,alongsideablue/greenhydrogensplitandamajorroleforcarboncaptureandstorage.>£100bneconomicimpact>158,000jobs(13%increaseon2020)>£9.4bninvestmentperyearPROGRESSIVEEMERGINGTRANSFORMATIONALOurdifferentscenariosallofferaroutemaptonetzeroby2050andincludevaryinglevelsofopportunitywithinrenewables,oilandgas,blueandgreenhydrogenandCCS.Theypredictarangeofsignificanteconomicimpactsbasedonelementsincludingspecifictechnologicaladvancement,electricitygenerationandtheenergymix.20EMERGINGRenewableelectricityplaysanincreasingrolewithgasstillasignificantcontributortotheoverallenergymix,alongsideasignificantrequirementforcarboncaptureandstorage.KEYASSUMPTIONS60GW60GWoffshorewind(lowerthanCCC’sMay201975GWtarget)Limitedexpansionofothermarinerenewables65%ofelectricityfromrenewablegenerationIncreaseinonshorewindandsolar100%UKoildemandmetfromUKproduction81%ofgassuppliedfromimports100%bluehydrogenwithCCS337.5TWhofgasrequiredforbluehydrogen140MTCO2/yAtscale,around140MTCO2/yin205033%forbluehydrogen11%forelectricitygenerationWHATITLOOKSLIKETotalenergyproductionremainsheavilyreliantonhydrocarbons,primarilygas,whichwouldrequiresignificantimportsTogeneratepowerandproducehydrogen,aswellasmeetingdemandfordomesticandindustrialuses,morethan500TWhofgaswouldberequired,atapproximately800,000BOE/d,roughlysimilartodemandin2020.ThisfaroutstripsUKdomesticresourcepotential,leavingtheUKreliantontotalimportsofapproximately80%.Powergenerationisprimarilyfromlow-carbonsourcesexpectedtototal16MTCO2/yElectricityfromrenewableswillmeetaround65%ofdemand,alongwithnuclearandbio-energywithCCS.Gaswillmeetaround17%ofgenerationwithasignificantCCScomponent.Totalemissionstobeoffsetunderthisscenarioareexpectedtototal16MTCO2/y.EfficiencygainsandcostreductionswillbenecessaryforbluehydrogenproductionandCCSCostreductionsarepossibleacrosstheEmergingscenarioonthebackoftechnologyandinnovationupgrades,particularlyinCCS.CrucialenablersincludeadvancedSteamMethaneReformation(SMR)reactormembranesandcatalysts,highcapacitysorbentsandalternativemethodstoSMRsuchasplasmapyrolysis.Keyareasforinnovationincludedirectaircaptureandmodular/retrofittablesolutions,aswellascompatiblewellplugandabandonmentandreservoirmonitoring.TotaleconomicoutputacrosstheUKeconomyisboostedfrom£40bnin2020to£80bnin2050buttotaljobsdecreasefrom140,000to113,000.TheEmergingscenarioisexpectedtoleadtoadecreaseindirectandindirectjobsinthedomesticoffshoreenergysector,fromatotalofaround140,000in2020to113,000in2050.Seepage26formoredetail.WHATITREQUIRES£202bncumulativeinvestmentthrough2050Costreductionandincreasedefficiencyofcarboncapture,transportandstoragetechnologySignificantincreaseinbluehydrogenproduction,withmorethan60plantswithtotalcapacitygreaterthan35GWLifeextensionandelectrificationofoilandgasassetstoreduceproductionemissionsandensurehighestproportionofsupplycomesfromdomesticsourcesHydrogenOil&GasCarbon,Capture&StorageRenewablesCCSReductionincostoffloatingwindTechnologyEconomicimpactandjobsEnergyuseElectricitygeneration~4000Wouldrequire~4,000turbinesfixedandfloatingby2050basedon15MWcapacity2122KEYASSUMPTIONS~6600Wouldrequire~6,600turbinesfixedandfloatingby2050basedon15MWcapacityLimitedexpansionofothermarinerenewables80%ofelectricityfromrenewablegenerationIncreaseinonshorewindandsolar100%UKoildemandmetfromUKproduction72%ofgassuppliedfromimports73%bluehydrogenwithCCS27%greenhydrogen113MTCO2/yAtscale,around113MTCO2/yin2050Renewables100GW100GWoffshorewind(higherthanCCC’sMay201975GWtarget)101TWhofoffshorewindprovides75TWhofgreenhydrogen244TWhofgasprovides195TWhofbluehydrogenHydrogenOil&GasCarbon,Capture&StorageRenewablesCCSWHATITLOOKSLIKEGradualphasingoutofelectricitygeneratedfromgasby2050,withresourcesdivertedtohydrogenproductionTogeneratetherequiredpowerforhydrogenandsatisfydemandfordomesticandindustrialuses,thesystemwouldrequireaninputofroughly400TWhofgas,ormarginallylowerthancurrentUKdemandat650,000BOE/d.ThisdemandfaroutstripstheUKdomesticresourcepotentialandresultsinanimportrelianceof72%.Renewablesprovide80%ofelectricitygenerationGaspowergenerationisphasedoutcompletelyby2050undertheProgressivescenario,withthebalancebeingmadeupprimarilyfromoffshorewind.Thishighrenewablesscenarioiscontingentonassociatedimprovementsinstorage,interconnectionandnetworks.DeploymentatscalewilldrivecostreductionsparticularlyinoffshorewindThemorebalancedenergysystemofProgressive,withahigherproportionofwind,willalsodriveinnovationinbluehydrogenandCCS.Thisscenarioisbasedonareducedcostofgreenhydrogen,enablinganincreasingproportionintheenergymixby2050.KeyareasforinnovationincludeimprovedefficiencyofexistingSMRandAuthothermalReforming(ATR)technologies,alternativebluehydrogenproductionmethods,modellingofgeologicalbehavioursforCO2andinter-seasonalhydrogenstorage,directair/seawatercapture.Forfloatingwind,thefocuswillbeonUKCS-specificfoundationsandmooringdesignsaswellasdynamiccablingsolutions.TotaleconomicoutputacrosstheUKeconomyisboostedfrom£40bnin2020to£100bnin2050andemploymentincreasesfrom140,000to158,000jobsOverallgrowthissignificantwithdecliningoilandgasrevenuesoffsetbyexpansioninoffshorerenewablesjobsalongsidehydrogenandCCS.Directandindirectemploymentintheoffshoreenergysectorjumpsfrom140,000in2020to158,000in2050undertheProgressivescenario.Seepage26formoredetail.WHATITREQUIRES£293bncumulativeinvestmentthrough2050Largescale-upofbluehydrogen,requiringsignificantcostreductionandefficiencygainsLargescale-upofgreenhydrogen,includingcostreductionandefficiencygainsIncreaseddeploymentofoffshorewind,bothfloatingandfixed,atreducedcostOilandgaselectrificationtoextendfieldlifeandsecuredomesticsupplyEconomicimpactandjobsTechnologyElectricitygenerationEnergyUsePROGRESSIVEAnincreasedshareofoffshorerenewablesdominatestheelectricitymarket,alongsideablue/greenhydrogensplitandamajorroleforcarboncaptureandstorage.2324KEYASSUMPTIONSScenario1~10,000Wouldrequire~10,000turbinesfixedandfloatingby2050basedon15MWcapacityLimitedexpansionofothermarinerenewables80%ofelectricityfromrenewablegeneration,significantstorageandimprovedgridflexibilityIncreaseinonshorewindandsolar100%UKoildemandmetfromUKproduction54%ofgassuppliedfromimports7%bluehydrogen93%greenhydrogen91MTCO2/yAtscale,around91MTCO2/yin2050150GW150GWoffshorewind(doubletheCCC’sMay201975GWtarget)341TWhofoffshorewindprovides252TWhofgreenhydrogen21.5TWhofgasprovides17TWhofbluehydrogenHydrogenOil&GasCarbon,Capture&StorageRenewablesCCSWHATITLOOKSLIKESignificantwindandhydrogenleadstoreducedrelianceonimportedgasOffshorewindandgreenhydrogendominatetheenergymixintheTransformationalscenariofor2050.Relianceonimportedgasiscutto54%,representingareductionof355,000BOE/dfromCCCestimates.AhighproportionofrenewableelectricityenabledbyimprovementsinthewiderenergysystemRenewablessupply80%ofelectricity.Thisisbeyondcurrentdayvariabilitylimitsbutadvancesanddeploymentacrossbatteryandhydrogenstorage,aswellassmartgrids,areexpectedtobridgeanygaps.Traditionalgas-firedplantsmayalsobeusedinconjunctionwithcarboncapture,oralternativelyhydrogenpowerplants,tooffsetanyshortfallindemandduringtimesoflowrenewablesoutput.UndertheTransformationalscenario,relianceongasforpowergenerationisphasedoutintheearly2040s,10yearsaheadoftheProgressivetimeline.Innovationacrossgreenhydrogenandoffshorewindcouldresultincapexsavingsof£153bnby2050Investmentinlarge-scaledeploymentofwindandgreenhydrogenareexpectedtoleadtocapexsavingsof£153bnby2050.Forthelatter,keyareasincludeadvancementofelectrolysercatalysts,subseaelectrolysersandcompressionssystems,andsaltwaterelectrolysers.Forwind,innovationeffortswillfocusonfloatingfoundations,mooringsystemsanddynamiccablingsolutions.Alsokeywillbedevelopmentofammoniaorotherlow-carbonfuelledturbinesandmarinehydrogentransportsolutions.TotaleconomicoutputacrosstheUKeconomyisboostedfrom£40bnin2020tomorethan£125bnin2050,andemploymentincreasesfrom140,000to232,000jobsTheTransformationalscenariorepresentsthehighestpotentialincreaseintotaleconomicimpactandjobs.Directandindirectemploymentwillbenefitlargelyfromthedeploymentofoffshorerenewablesandgreenhydrogen(80%oftotal),resultingin232,000jobsacrosstheoffshoreenergysectorin2050,comparedwith140,000in2020.Seepage26formoredetail.WHATITREQUIRES£416bncumulativeinvestmentthrough2050FloatingwindtoaccessdeeperwatersandincreasedcapacityScale-upofgreenhydrogenrequiringsignificantcostreductionandefficiencygainsScale-upofearlybluehydrogenwithcostreductionandefficiencygainsby2035Fast-trackconsentingprocessfornewoffshoredeployments,bothwindandhydrogenOilandgaselectrificationtoextendfieldlifeandsecuredomesticsupplyEconomicimpactandjobsTechnologyElectricitygenerationEnergyUseTRANSFORMATIONALAnenergysystemdrivenbyoffshorewindandgreenhydrogen2527TheNorthSea’snecessaryjourneytonetzerorepresentsamassiveopportunityfortheUK:between£80bnand£125bnoftotaleconomicimpactin2050,dependingonthepathchosen.Itiscritical,however,thatweacturgentlytorealisethiseconomicopportunityandcreatejobs.Weneedhigherinvestment,quickerinterventionroutesandacceleratedaction–notonlytoachievethislevelofeconomicimpactbutevenmoreimportantly,tosecureandcreatenewjobswhichwillcounteracttheemploymentlossesweexpecttoseethisdecade.Alloptions–Emerging,ProgressiveandTransformational–arebuiltoncoordinatedactionacrossemployment,infrastructureandpolicy,mitigatingimpactswhilemaximisingrewards.Averageannualinvestmentofbetween£6.5bnand£13.4bn,worthatotalofbetween£202bnand£416bnby2050,ispredicatedoncross-sectorbuy-in,industrial-scaleprivatesectorinvestmentandgovernmentsupport.Thesupplychainwillbeencouragedtoseizetheopportunitiesonoffer,guidedbyaclearroadmapfortheNorthSeathatfacilitatescapability-buildingwhilesimultaneouslyensuringthatasmuchvalue,contentandemploymentaspossibleremainsintheUK.Between113,000and232,000directandindirectjobscouldbesupportedintheUKenergysectorbymid-centuryacrossallsectors,basedonthecurrentanticipationof60%UKlocalcontentinoffshorewindandhydrogen.Employmentinoffshorewind,forbothpowerandproductionofhydrogen,couldtotalnearly160,000,CCScouldsupportupto28,000posts,whileblueandgreenhydrogencouldpotentiallyemploy35,000.Domesticoilandgasjobsareexpectedtobearound27,000in2050.Itshouldbenotedthatthestatusquoisnotanoption;joblossesunderanybusinessasusualscenariowillbesignificant,particularlyintheperiodto2035whenemploymentinoilandgasisexpectedtodropbyaround60,000.EvenintheEmergingscenario,asignificantlossofjobsandskillsispredicted.TheUKcannotaffordtowastetheexpertiseandexperiencethateachofthosejobsrepresents..Industry,supportedbygovernment,isreadytoinvestintraining,transferability,innovationandthesupplychain;definitiveactionwillensurethetrueextentoffutureemploymentandwidereconomicbenefitisrealisedwhileavoidingthepotentialnegativeimpactsofthetransitiontothenewNorthSea.JOBSANDECONOMY2050Employment(directandindirect)EMERGINGPROGRESSIVETRANSFORMATIONAL■Oil&Gas■OSWtopower■OSWtogreenH2■GreenHydrogen■BlueHydrogen■CCS50,000100,000150,000200,000250,000THEUKCANNOTAFFORDTOWASTETHESKILLS,EXPERTISEANDEXPERIENCETHATEACHOFTHOSEJOBSREPRESENTS262928BLUEHYDROGENPotentialcapexsavings32%£6.5bnThedevelopmentofenhancedSMRreactormembranesandcatalysts,alongwithalternativeproductionmethodsandhigh-capacitysorbents,woulddrivesignificantcostssavingsinthebluehydrogensector,whichismorematurethanitsgreencounterpart.Expansionofthetechnology,whichreliesonhydrocarbonstodriveproduction,isseenaskeyintheneartermtohelpestablishmarketdemandamongdomestic,transportandindustrialsources.DevelopmentwillstimulateCCS,whichisrequiredtocaptureCO2emissionscreatedaspartoftheelectrolysisprocess.Totalpotentialcapexsavingsbetween2020and2050are£6.5bnandseveralCCSprojectsalreadyindevelopmentintheUK,includingtheAcornProjectandNetZeroTeeside,willhelpustoacceleratethedeliveryofbluehydrogen.CARBONCAPTURE&STORAGEPotentialcapexsavings13%£1.3bnCCSisacrucialtechnologypartnerintheUKNorthSea’sdrivetomeetnetzeroambitionsby2050.Eachillustrativescenariohighlightsthattheabilitytocaptureemissionsfromdomesticgenerationwillbekey,openingthedoortobecomingbothaworldleaderinthetechnologyandakeyEuropeanlocationforsequestration.TheuniquegeologyoftheUKNorthSeaprovidessafeoptionsforlong-termstorageand,withtherightinvestment,willsecuredomesticemploymentandsupplychainproducts.Earlyadoptionwilldovetailwithdemandforbluehydrogenintheneartermandsetthestageforgreenhydrogeninthemediumterm.Capexsavingsareexpectedtototal£1.3bnbetween2030and2050.OILANDGASVariablecapexsavingsOilandgaswillremainavitalsourceofenergyfortheUKin2050.Theindustryiscommittedtoresponsibleconsumption,offsetbyCCS,aspartofwidernetzeroproduction,alongsideelectrification,renewablesintegration,flaringmitigationandadvancedleakdetection.Remoteoperationandfulldigitisationcanfurthermitigatecarbonimpacts.Specificcostreductionsinthehydrocarbonssectorwillbemostsignificantinemissionsreductiontechnologiesandnewsubseaequipmentdesignedtotapstrandedreserves,aswellasthroughefficienciesacrossoperations.Site-specificdemandswilldictatethemosteffectivemeasurestoadopt.GREENHYDROGENPotentialcapexsavings61%£55bnCostsarecurrentlyuneconomicinwhatremainsanascenttechnologywithlimitedpracticalapplication.However,webelievethereisahugeopportunitytodevelopthesectoratscale,drivingdramaticallyreducedcosts–upto£55bnintotalbetween2020and2050–andincreasedefficiency.Potentialdependsonthenetzerooptionselected.UndertheEmergingscenariowidespreaddeploymentofthetechnology–andsodevelopment–isunlikely,whereasundertheProgressiveandTransformationalmodelsgreenhydrogenisakeyenablerof2050ambitions.Greenhydrogenismostviableinanenergysystemwhereexcessrenewablesgenerationcandriveproductionatscale.Thisalsocreatesapotentialnewexportmarket,wherebytheUKcansupplysurplusgreenhydrogentopartsofmainlandEurope.OFFSHOREWINDPotentialcapexsavings24%£97bnCostreductionsinoffshorewindwillbeachievedbyincreasingthecapacityofoffshorewindturbines,andasmorefocusisplacedonthefloatingsegmentintermsoffoundationdesignandmanufacture,mooringsystemsanddynamiccabling.AstandardisedapproachbasedontherequirementsoftheUKCSoffersthepotentialforeconomiesofscaleandsignificantlocalcontent.Offshorewind,bothfixedandfloating,willbedeployedatscaleacrossallofourscenariostomeet2050ambitionsandtotalcapexsavingscouldtotalasmuchas£97bnoverthe30-yearperiod;finiteoptionsforbottom-fixedturbinesareexpectedtodrivedevelopmentofthefloatingsegmentatapricepointthatenablesend-userstoaccessaffordableenergy,withUKGovernmenttargeting1GWby2030.Demandformorepowerfulnext-generationturbinesinthe20MW-classoffersthepotentialforhome-grownintellectualproperty.ENABLINGAFFORDABILITYNetzeroisachievableusingexistingcommercially-readyenergytechnologiesbutnotinamannerthatwouldcurrentlybeconsideredaffordable.Itisparamount,therefore,thatweenablecostreductionsthroughinnovationacrossallsectors.Workingtogether,theNorthSeasectorscanensureparallelprogressonmultiplefronts:interplayandinterlinkbetweenelectrificationofoilandgas,theincreaseddeploymentofoffshorewind,theproductionofhydrogenandtheadventofwidespreadCCS.Theoffshoreenergysectorwillworktosecurestakeholderandgovernmentbuy-inandensureopencommunicationchannelswithconsumersandbusinessusers.Mobilisationacrossalltechnologieswillbeaccompaniedby,andcarriedoutagainstabackgroundof,thewidersocio-economiccontext.30TECHNOLOGYFOR2050TheNorthSeaenergysectorbelievesinvestinginlarge-scaletechnologyadvancesandadoptionwillbefundamentaltomeetingnetzeroambitions,whilesimultaneouslyaddressingaffordabilitythroughpotentialcapexsavingsof£154bnthrough2050.Deploymentofnext-generationsolutionsiscentraltothesectorrequirementsandscenariosalreadyoutlined,andwilladdressbothgapstobefilledandbarrierstobeovercomeinordertomakeanyintegratedNorthSeaenergyvisionareality.Andcrucially,thosenetzeroinnovationsarekeytomakingenergyaffordablefordomestic,businessandindustrialconsumers.TheoffshoreenergysectoracrosstheNorthSeaiscommittedtothedevelopmentandwidespreaduptakeofnewandexistingtechnologiesinoffshoreelectrification,CCS,renewablesandhydrogen.Alsokeyisamajorreviewofinternalprocessesandproductsthatwillenablereducedoilandgasemissionsacrossthevaluechain.ValuableworkonidentifyingavailabletechnologiesandthoseareaswheremoreworkneedstobedonehasalreadybeencompiledbytheNetZeroTechnologyCentreinitsClosingtheGapReport.Buildingonthatwork,theenergysectorsarepreparedtomeetthetechnologychallengewithcoordinatedactionacrossanumberoffronts.Ofparticularimportancewillbesupportforinnovationoftheexistingcontributors–hydrocarbons,wind,hydrogen,CCS–thatarecriticaltodeliveryofaffordableenergy,andtheacceptancethatmultiplesolutionswillberequiredtomeetnetzeroambitions.Further,webelievethatexecutionmustbebasedonexpandedUKcapabilitiesinareasincludingengineering,manufacturingandinstallation,developmentofinnovationandassociatedintellectualproperty,andoptimisedsupplychains,skillsandinfrastructure.Investmentbytheoffshoreenergyindustries,supportedbygovernment,canalsomaximisethepotentialofachievingsignificantdomesticcontentprovisioninthefaceofincreasinglevelsofcompetitionfrombothNorthSeaneighboursandbeyond.Oil&GasAmmoniaorotherlow-carbonfuelledturbinesMarinehydrogentransportsolutionsPlaformelectrification(AC/DCcablingsolutions)SubseaelectrificationcostreductionOffshoreWindUK-specificfloatingwindfoundationsInnovativefloatingwindmooringsystemsDynamiccablingsolutionstoreducewinddowntimeCarbonCapture&StorageModellingofgeologicalbehavioursofCO2Modular,retrofittablecarboncapturesolutionsDirectair/seawatercaptureCO2-compatiblewellplugandabandonmenttechniquesHigh-capacitysorbentsdurableathightemperaturesHydrogenSeawaterelectrolysisElectrolysercatalystinnovationSubseaelectrolysersystemsincorporatingcompressionImprovedefficiencyofexistingSMRandATRtechnologyEnhancedSMRreactormembranesandcatalystsAlternativebluehydrogenproductionmethodsInter-seasonalhydrogenstorageWehaveidentifiedarangeofcriticaltechnologies,whichincludebutarenotlimitedto:INNOVATIONCANDELIVERPOTENTIALCAPEXSAVINGSOF£154bnBY20503132AMASSIVEOPPORTUNITYFORTHEUK£80bn/yTotaleconomicimpactin2050113,000Totaldirectandindirectjobsin2050£6.5bnAveragecapexinvestmentperyearto2050£202bnCumulativecapexinvestmentto2050£100bn/yTotaleconomicimpactin2050158,000Totaldirectandindirectjobsin2050£9.4bnAveragecapexinvestmentperyearto2050£293bnCumulativecapexinvestmentto2050EMERGINGPROGRESSIVE£125bn/yTotaleconomicimpactin2050232,000Totaldirectandindirectjobsin2050£13.4bnAveragecapexinvestmentperyearto2050£416bnCumulativecapexinvestmentto2050TRANSFORMATIONAL333534METHODOLOGYECONOMICIMPACTThishasbeenmodelledforallsectorsusingthesamemethodology.Inputshavebeencalculatedandsplitintorevenue,CAPEX,OPEXanddecommissioning(decom).ThesemetricshavebeensplitfurthertoassigninputsagainstStandardIndustrialClassification(SIC)codes,aseachindustryhasadifferentmultiplier.ORECatapultcalculatedinputsforoffshorewindandhydrogen.TheNetZeroTechnologyCentrecalculatedinputsforCCUS.OilandgasinputshavebeentakenfromWoodMackenzie,specificallyitsmodelusedinthe‘ClosingtheGap’report.Inallcases,theseinputshavebeenderivedfromestimatesofthetrajectoryforeachofthefoursectorsfor:levelsofdeploymentanddecom;levelsofrevenueperunitofoutput;levelofCAPEXandOPEXperunitdeployed;andlevelofdecomcostperunitdecommissioned.TheserevenueandcostinputshavebeenmultipliedbytheassumedUKshareofcontentforeachsectorandmetric.Finally,theUKshareofinputismultipliedusingindustryeconomicimpactmultiplierstocreatethemodeloutputs.Modelinputsincludeboththeestimatedrevenueanditsmultipliereffect,plusthemultipliereffectofcosts(butnottheunderlyingcoststhemselves,whicharepaidforbyrevenueandthereforeincludingwouldmeandouble-countingunderlyingcosts).Thetotalofalltheseoutputsisthetotaleconomicimpact.Totaleconomicimpactsectorrevenue(asaproxyfortotalsectoreconomicoutput)+multipliereffectsofrevenue+multipliereffectsofCAPEX,OPEXanddecom(includedtoreflectthefactthatoutputmultipliersfromInput-Outputtablesdonotcapturetheextentofspendandeconomicactivityinrapidlychangingindustries).JOBESTIMATESDirectjobnumbersforoffshorerenewables,hydrogenandCCUShavebeencalculatedusingthemethodbelow:Averageannualpayrollcost£50-65kperFTEbasedonmappingEstimated%paidforlabourUKshareofspendpaidforlabour,basedonmappingindustrysectors-worksout~25%ofspendisonlabourDomesticFTEnumbersDivideUKshareoflabourspendbyaveragepayrollcostAssigntoSICcodese.g.RevenuetogasdistributionCAPEXtoconstructionInputsRevenueCAPEXOPEXDecomUKshareofcontentMultiplyinputsby40-75%dependingonthesectorandmetricEconomicimpactMultiplybyeconomicimpactmultiplierandsumtocalculatetotalimpactThismethodofcalculatingeconomicimpactdiffersslightlyfromtheWoodMackenzieapproachusedintheClosingtheGapreport(September2020),whichincludedtotaleconomicimpactratherthanjusttheUKshareofeconomicimpact.IndirectjobcalculationhasusedthesamemultipliersasWoodMackenzie.Aminimumbaselinenumberofjobsforeachsectorhasbeenestimated(notlinkedtoeconomicimpact)–forexample,therearegreenhydrogenjobstoday,despitelowlevelsofspendingandrevenue.WoodMackenziejobestimates(andinputs)foroilandgashavebeenused,ratherthancalculated.COSTSAVINGSCAPEXreductionshavebeenmodelledbasedonindividuallycalculatedlearningrates.Thelearningrateisapercentagereductionincostperunit(e.g.costperMWh)foreverydoublingofinstalledcapacity(e.g.totalnumberofunitsortotalGWcapacity).CostsavingswerecalculatedbasedoncomparisonofmodelledCAPEXreductionovertimeversuscurrentCAPEXcostsperunit.Costreductionsareconsideredtoconsistprimarilyofinnovationsavingsvianewtechnologicaladvancementsandscalingfactors.36ACKNOWLEDGEMENTSTheteamthatresearchedandpreparedthisreportwasledbyJasonPatersonandincludedMartynTulloch,MyrtleDawes,LucaCorradi,NeilWilkinson,EmmaSwiergon,CharlieBoothandAnaPiresdeAlmeidafromtheNetZeroTechnologyCentreandGavinSmartandTomQuinnfromORECatapult.TheteamwouldliketothankWoodMackenzieforitssupportwiththeprojectincludingeconomicmodellingandAspectforitsstrategiccommunicationadvice,includingdesignandproductionofthereport.AndrewJamieson(OffshoreRenewableEnergyCatapult)ColetteCohen(NetZeroTechnologyCentre)CarloProcaccini(Oil&GasAuthority)GarethWynn(OGUK)MichaelTholen(OGUK)ClaireMack(ScottishRenewables)StephenMarcos-Jones(UKPIA)AndyRoberts(UKPIA)JourdanEdwards(Ofgem)AndyMcDonald(ScottishEnterprise)MartinFidler(ScottishEnterprise)JeffAsser(BEIS)WendyKennedy(BEIS)DanielLord(BEIS)MarkShields(BEIS)JulianSalazar(BEIS)HughMcNeal(RenewableUK)RebeccaWilliams(RenewableUK)MaggieMcGinlay(OpportunityNorthEast)MartinMcCormack(OpportunityNorthEast)RichardSweetnam(AberdeenCityCouncil)MichelleHandforth(AberdeenHarbour)GeorgeBoyne(UniversityofAberdeen)ElizabethRattray(UniversityofAberdeen)PauldeLeeuw(RobertGordonUniversity)ScottBradley(ScottishGovernment)AndrewHogg(ScottishGovernment)JillGlennie(OPITO)DavidRennie(SDI)LindsayGrant(WoodMackenzie)MalcolmForbes-Cable(WoodMackenzie)JessicaBrewer(WoodMackenzie)JakeMolloy(RMT)ColinMaciver(CrownEstateScotland)Industryexpertsinvolvedinthedevelopmentofthisreport:ANINTEGRATEDENERGYVISIONFOR2050
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