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Martin Gilbert: New year brings both challenges and opportunities for north-east

Martin Gilbert.
Martin Gilbert. Image: James Thorneley

For almost 50 years the north-east oil and gas industry has made a massive contribution to the UK’s economic productivity and energy requirements.

In doing so, it has established the region as an internationally recognised energy centre.

Today, in the face of an unprecedented climate emergency, there is a clear need to accelerate energy transition activities.

Our region has a unique opportunity to build on its global reputation, to become a sustainable and long-term industry cluster for new and green technologies.

Green freeport disappointment

Rather frustratingly, we have started the new year with new challenges to overcome.

Earlier this month the Scottish and UK governments announced the North East Scotland Green Freeport bid was unsuccessful.

Along with the rest of the business community across the region, I was and continue to be a committed supporter of the bid.

Sir Ian Wood pledging his support to the North East Green Freeport bid.

A green freeport would have secured us the necessary tax breaks and lower business tariffs to attract the investment required to accelerate energy transition, while also meeting the net-zero targets set by both governments. I hope we will have the chance to bid again.

This disappointment has been compounded by publication of the Scottish Government’s draft energy strategy, which includes a “presumption against” further oil and gas exploration.

Oil and gas industry’s ‘central role’

The challenge here is the strategy – so far – has failed to recognise that in the next decade and beyond the skills, experience and investment capital of our oil and gas industry will play a central role in transforming the way Scotland and the UK generates, transports and uses energy.

Sir Ian Wood, writing in this paper last month, highlighted a crucial point.

He said: “The UK Climate Change Committee has made clear we will still require hydrocarbons to meet our energy requirements up until at least 2060.

“Stopping production now would simply increase our reliance on carbon-heavy imports, place up to 100,000 jobs at risk and adversely impact our balance of payments.”

I hope the government will reconsider its position in the next draft.

Increased oil and gas activity

Despite these setbacks, there is still cause for optimism. There are early indications the north-east is outperforming the rest of the country, mainly due to increasing activity in the North Sea oil and gas sector.

Our business community is as industrious as ever and has a proven track record of resilience in the face of ever-changing economic challenges.”

We should take confidence in the fact this region is home to 75% of the world’s subsea engineering capability and the highest concentration of energy companies anywhere in the UK.

Our business community is as industrious as ever and has a proven track record of resilience in the face of ever-changing economic challenges.

We have adapted before and, with the region’s pioneering spirit, we are doing so again to place ourselves firmly at the forefront of energy transition and the race to net-zero.

Bosses have explained how an Aberdeen ETZ campus could turn the city around
This new concept image is just one of many unveiled as plans for the Aberdeen ETZ campus progress. Image: ETZ

That spirit is what underpins the development of the Energy Transition Zone (ETZ).

It covers a significant majority of revitalised brownfield accommodation across the Altens and East Tullos industrial estates in Aberdeen, alongside a new release of catalytic development sites.

These will provide businesses with a unique opportunity to invest in the largest dedicated energy transition complex in Scotland.

The zone will be anchored around the brand new £400 million Aberdeen South Harbour, a magnificent development that I was hugely impressed with when I visited last year.

Port of Aberdeen’s £400m development at Nigg Bay. Image: Kenny Elrick/DC Thomson

The expanded harbour has been designed to accommodate larger, wider and deeper ships, and incorporates considerable heavy-lift, flexible laydown space and expansive project areas. This makes it an ideal port for supporting high-value manufacturing for the massive offshore wind opportunity on our doorstep.

Offshore wind potential

With the majority of the licenses awarded under ScotWind – the world’s largest commercial offshore wind round to date – within 100 nautical miles of Aberdeen, the north-east has the critical mass to be an international leader in this growing market.

ETZ Ltd is only 18 months into operation, yet it has already secured an agreement to create a National Floating Offshore Wind Innovation Centre within the zone.

Aberdeen has the tools to build a regional ecosystem with green energy at its heart.”

Spearheaded by the Offshore Renewable Catapult, the £9m centre has the specific aim of accelerating the delivery of offshore wind by developing new products and services, as well as supporting the growth of a dedicated supply chain.

This is exactly the type of project to demonstrate that Aberdeen has the tools to build a regional ecosystem with green energy at its heart – unrivalled anywhere in Europe.

The Granite City is primed to become Europe’s energy transition capital.

Martin Gilbert is co-founder and former chief executive of Aberdeen Asset Management and chairman of AssetCo, Toscafund and Revolut.

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