Reliance on oil and gas has not gone away despite move towards renewables, says Highland energy analyst
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The global energy market is arguably experiencing a higher degree of turbulence than at any other time in recent history, with several factors aligning to create the perfect storm.
The shut down in global economic activity last year due to the pandemic led to reductions in gas production and storage, which triggered the well-publicised rise in gas prices. And, as around 50% of UK electricity is produced from gas, this has severely impacted electricity prices.
There are fears of widespread fuel poverty. It has been suggested energy bills could rise by £700 this year as wholesale price increases are passed on to customers.
In oil, prices fluctuated backwards and forwards in the second half of last year as more oil was used for electricity generation – pushing prices up – and then receded amid fears of another economic slow down due to Omicron. Those fears appear to be unfounded, and growing economic confidence is causing oil prices to rise again as the world gets back on its feat.
Alongside the short term necessities of energy demand here and now run the longer-term ambitions of the wider energy transition from fossil fuels to renewable sources. If there was ever a need for a structured, co-ordinated and well thought out energy policy from the UK and Scottish governments it is now.
There’s widespread acceptance that we must reduce greenhouse gas emissions and move to a better future. But there is, hopefully, a growing recognition that we can’t do that overnight, and that oil and also gas will continue to play an important role in our energy mix for decades to come. In the energy debate, it should really no longer be about one side against the other – we should all be going the same way.
Every keyboard warrior needs a keyboard that’s most likely made from oil-based synthetic plastic.
In this highly volatile situation, the purpose and practices of the fossil fuels industry have come under intense scrutiny. That’s absolutely appropriate because it ensures the industry is always kept on its toes when it comes to environmental and technical improvements. It may be argued that the pace of change isn’t quick enough but, equally, the responsibility to lead the energy transition doesn’t sit with the oil and gas industry alone.
Driven by investor trends supported by societal demands, many companies, from operators to the supply chain, have looked to reposition themselves from oil and gas businesses to energy providers and demonstrate their environmental, social and corporate governance (ESG) credentials. But it’s a risky strategy. Vague ESG statements that can’t stand up to public scrutiny can backfire and create a reputational hole that wasn’t there before. As an example, there is currently much talk about sustainability among businesses but often little clarity on what sustainability means for each of them.
Post COP26, consumers are learning to treat such phrases with caution and are increasingly recognising corporate greenwashing – falsely branding a business as eco-friendly – when they see it. During COP26 the BBC published a blog titled: ‘Climate change: Seven ways to spot businesses greenwashing’.
Recent months have seen the debate over new North Sea development intensify, with the much publicised decision to shelve plans for the Cambo field west of Shetland regarded as a moral victory by anti fossil fuel campaigners over the oil and gas industry.
But, however unpalatable it may be to some, until our energy demands can be met 100 per cent by ‘green’ energy, we will continue to rely on oil and gas to some degree. Every keyboard warrior needs a keyboard that’s most likely made from oil-based synthetic plastic. Every campaigner needs to get to the point of protest via a mode of transport that will be painted and fitted out with oil-based products, irrespective of whichever energy source is used to propel it.
Fossil fuel companies only exist because we provide them with a market and our governments have yet to put credible alternatives in place to enable us to go about our daily lives.
In the meantime, we should recognise that while the fossil fuel industry has been the focus of the problem, it has a vital role to play as part of the solution. And many of those that work in it – our neighbours, friends, relatives and partners – are no doubt keen to be part of the change.
I noted a recent article in Energy North by Fergus Ewing MSP where he urged us not to be mealy mouthed in support of oil and gas workers and other “minorities” and I agree with him. We should accept that the jobs they are doing right now mirror our energy demands of today. And as our demands transition they and others can be the people that facilitate our energy future.
- Andrew Bradshaw is head of energy insight at global corporate communications company Fifth Ring and is based at the company’s Inverness office. He is internationally recognised as one of the leading experts in energy public relations.