A new report has concluded that the North Sea should play a crucial role in the energy transition ahead of northwestern Europe, which could result in between €100 billion and €200 billion in economic value for neighboring regions in the transition away from fossil fuels.
These are the key findings from a new report published earlier this month by the World Energy Council (WEC) Netherlands, entitled The North Sea opportunity. The North Sea has already played a pivotal role in the development of northwest Europe, specifically for its bordering countries — the United Kingdom, the Netherlands, Scandinavian countries Norway, Sweden, and Denmark, Germany, Belgium, and France. Measuring approximately 570,000², the North Sea is also relatively shallow, with an average depth of only 65 meters (in comparison, the Mediterranean Sea is 1,500 meters deep on average).
Today, the North Sea is not only a vital maritime trade route and supplier of seafood, but it is a hotbed for energy generation — first oil and gas fields, and now increasing numbers of offshore wind farms.
The new report highlights the tremendous role the North Sea has already played in the development of the region, but argues that it must continue to play an important part in the region’s future energy transition from fossil fuels to renewable energy. Specifically, the authors of the report argue that cooperation between countries neighboring the North Sea would significantly reduce costs for decommissioning oil and gas assets, constructing offshore wind farms, and developing smart networks — which all in turn would lead to a decrease in the social costs of the energy transition.
“The opportunities and diversity thereof in the North Sea are huge,” said Jeroen van Hoof, the chair of WEC Netherlands. “The Energy Transformation in the North Sea creates new industries. We can benefit from huge economic advantages by installing large wind farms. Also, a co-ordinated removal and smart re-use of former oil and gas assets can generate new economic activities. The potential is significant.”
“The region around the North Sea is one of the most prosperous in the world and the North Sea has been and still is one of the sources of that wealth,” added Jan-Willem Velthuijsen, main author of the report and chief economist of PwC Europe. “The North Sea and its harbours make up the transport supply line for the entire continent of Europe. The fishing grounds are an important source of our protein needs, and oil- and gas production generates a significant contribution to our competitive position, public finances and foreign currency holdings.”
It is currently estimated that the decommissioning of the existing oil and gas platforms and infrastructure across the North Sea and the construction of new offshore renewable energy assets (primarily offshore wind farms) will require a total investment somewhere in the range of €390 billion to €690 billion over the coming decades. These figures are based on current offshore wind pipelines, and a total growth that results in 180 GW of offshore wind in the North Sea by 2050. However, not all North Sea-adjoining countries have confirmed their plans to build offshore wind farms, so this figure will likely only increase.
There will be significant social costs, however, due to a variety of missed tax income from hydrocarbon production, decommissioning tax deductibility, and subsidies for renewable energy development — though, as we know, the need for subsidies is becoming less and less vital as technology innovation continues and expertise grows. Collaboration between neighboring North Sea countries could significantly reduce these social costs, according to the report. Specifically, cooperation across the four primary arenas — decommissioning, repurposing oil and gas infrastructure, building offshore wind, and maritime activities — could yield a value of €103 billion and could yield 5570 Mt reduction in greenhouse gas emissions between 2017 and 2050.
“Particularly at a time when President Trump announced the withdrawal of the US from the Paris Climate Agreement, it’s encouraging to see a variety of viable opportunities offered by energy transition,” added van Hoof. “In Europe, we must therefore continue to make every effort to seize these opportunities, both for ourselves and for future generations.”
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