Economic Report 2020

ECONOMIC REPORT 2020

Achieving net-zero UK – challenges and opportunities

The UK net-zero objective In 2019, the UK government legislated to achieve net zero greenhouse gas emissions by 2050 - the first G7 nation to do so - with Wales adopting a target to reduce net emissions by 90 per cent during the same time frame and Scotland aiming to achieve net zero by 2045. Worldwide, countries making up almost half of global GDP, including China, now have commitments in place or policies aligned with achieving net-zero emissions. The President-elect of the United States, Joe Biden, has also indicated that an initial priority for his administration will be to re-join the Paris Agreement which commits to keeping global warming well below 2 degrees Celsius. Achieving these ambitions will require wide-scale political, economic and societal change, including from how we use land, to our consumer choices and how we both produce and consume energy. In doing this, it is crucial the transition to net zero is managed in an effective, efficient and economical way to ensure it is achieved alongside continued economic growth and ongoing energy security. Although the drivers are very different, the economic turmoil of 2020 provides an illustration of the potential consequences of rapid and unmanaged societal and economicchange.UKemissionshavefallenbyanestimated 10.2 per cent so far this year, while global emissions have

fallen by 5.5 per cent. 10 However, this reduction has been the result of widespread economic shutdowns and stay- at-home orders, which have also resulted in record levels of public debt and rising unemployment. Net zero and the oil and gas sector Net zero is both a challenge and opportunity for the UK’s changing oil and gas sector. The industry is evolving, adapting and, in many cases, is already taking advantage of new diversified growth areas. Investments from traditionally oil and gas production and supply chain companies will be a key driver of solutions to tackle climate change and many have adapted their strategies to align with net zero ambitions. Along with this, many of the net- zero solutions will be provided by the skills, technologies and capabilities which already exist within the oil and gas industry. The Oil and Gas Authority (OGA) - working with the Department for Business, Energy and Industrial Strategy (BEIS), Crown Estate and other regulators - estimates that the North Sea has the potential to contribute as much as 60 per cent of the UK’s emission abatement requirements

10 https://carbonmonitor.org/ - November 2020

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