Why we urgently need a strategic, long-term integrated energy plan for the UK
Written by Colin Elcoate
Two weeks ago, we launched our Five Point Energy Plan for the UK Energy Industry Supply Chain together with resourcing specialists, Applica Resourcing. The Plan aims to highlight the key elements to enable the UK Energy Supply Chain to prosper in 2023 as we build towards a Net Zero energy system.
In short, the UK Energy Industry Supply Chain – of which Alderley is a part – is vital in enabling the country to deliver energy security, decarbonisation, growth and jobs. Yet much more needs to be done to ensure that the Supply Chain is able to take advantage of the opportunities provided by the energy transition.
Therefore, our Plan calls for much greater collaboration between Government and industry, greater incentives for localisation and job creation as well as clearer articulation of the milestones that the supply chain and UK energy sector must take to contribute to the goal of Net Zero.
We believe that by stimulating an open discussion about the value of the Supply Chain that the UK energy sector as a whole will be in a stronger place to drive towards Net Zero in 2050 and ensure that the country remains a leader in global energy.
But behind our Plan sits an existential challenge and opportunity about how we in the UK create a long-term plan for the country’s energy needs.
Speaking as CEO of a UK-based global supply chain business, the energy transition provides a once-in-a-century opportunity for us collectively to reconfigure the energy sector.
However, the vision of a world based on renewables and low-carbon technology should not blind us from the fact that now and for the foreseeable future we will need to consider all energy forms as part of a balanced energy mix and a managed transition.
Only by doing this will we ensure that the UK Energy Industry and the Supply Chain will prosper long-term and not disappear.
Here are my thoughts on what I believe must happen:
1) Revenues from the hydrocarbons sector will ultimately fund the energy transition – this is an inescapable fact. They are also needed for energy security and to provide the UK with the affordable energy it needs. Without UK gas this Winter’s energy bills would have risen much more quickly. Let’s not slowly strangle the UK’s oil and gas sector through windfall taxes and a lack of clarity. Better to support this key strategic sector and use the proceeds to fund our energy transition.
2) There is an urgent need for a coherent, strategic and deep UK energy plan that stretches across the existing hydrocarbon portfolio and low-carbon space. Currently, the UK doesn’t have an integrated plan and promotes ‘pilot projects’ with little commitment beyond. Unfortunately, this does not foster the right stable environment for investment.
For example, what if the pilot projects fail? As someone who saw the first nuclear renaissance of the 2000s, I can attest personally to the fact that the Energy Industry Supply Chain shares some negative collective memories of being given the green light only to see it turn red when the slew of new nuclear projects failed to materialize. In this instance, part of our domestic supply chain faded, and the UK had to buy abroad. Let’s not allow this to happen again. Not this time.
3) An integrated strategic plan for the energy industry and its supply chain would enable us to map and respond to the jobs, skills and talent piece. We need to evaluate the transferrable skills and capabilities that we have so that we can answer the needs of the transforming energy mix and roadmap to 2050.
Without this, we will have to revert to international supply chains. We need much greater government support not just for large- and small UK companies but for mid-sized businesses like Alderley, who collectively make up the majority of the industry’s specialisms and capabilities. Germany even has a word for these firms – ‘Mittelstand’ – which according to the German Ministry for the Economy “are the country’s strongest driver of innovation and technology and are renowned across the world”. We need to give our mid-tier supply chain firms the same support and respect.
4) Let’s take one area and get it right rather than try to do everything and end up leading nothing. My recommendation would be for the UK to double-down on CCUS as the skills of the existing oil and gas workforce are highly relatable and transferrable. Plus, we have the right geography and existing assets in the North Sea to give us a significant head start. If a strategic plan that tied in resource with (CCUS) technology were put together for the UK, and we got it right, it’s conceivable that we could become the leading country in deployment of carbon-capture and storage at scale within the next decade. What an opportunity this represents. But we need first to create a bridge between the existing hydrocarbon supply chain with the emerging CCUS sector.
5) We must be honest to ourselves about the UK’s status and potential. The UK isn’t large enough to sustain UK-only supply chain companies – export is key. The UK needs to be first to develop the skills and capability in the UK and then export around the world. We’ve already missed out on wind, solar and nuclear. Unless we get our act together, we will miss out on hydrogen and CCUS at home and abroad. Dangers lurk in the form of the US’s Inflation Reduction Act – it’s no surprise that the Institute of Directors has called for the UK government to respond with a programme of its own. Let’s respond strategically and proportionately.
In sum, we are the masters of our own destiny when it comes to energy policy. That means we must stop blaming the war in Ukraine and the pandemic for the situation we find ourselves in. Instead, we must concentrate on building a strategic plan for the UK energy industry that weaves in the hydrocarbon sector with the low carbon one, and thinks not just of the large companies but also the mid-sized ones in the supply chain – so central to the health of any sector. If we get this right, we won’t just deliver on the goals of Net Zero, we will also create long-term prosperity across the country.
This article was written by Colin Elcoate, CEO of the Alderley Group of companies. Colin has 30 years of experience in the global energy sector.