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Report: ‘oil-producing countries risk collectively losing $13 trillion by 2040’

The net-zero deal: a new challenge for the North Sea Oil & Gas industry

By: Elena-Sofia Cesario

Platform off Aberdeen's coast - Credit: Photographic Services, Shell International Limited

Royal Dutch Shell (RDSA) has declared that it reached peak oil production as of 2019, and consequently there will be a decline of 1% - 2% every year in its production.

Following the lead of other companies such as BP (formerly British Petroleum) and Total (TOT), RDSA plans to be a net-zero emissions company by 2050, with a goal of selling more clean energy.

The Scottish Government has committed itself to end Scotland’s contribution to climate change by 2045 at the latest.

Speaking at Student Council on 23 February, the University’s Senior Vice-Principal Karl Leydecker said he and members of senior management were in ‘constructive’ discussions with student groups to bring about the University of Aberdeen’s ‘withdrawal’ from fossil fuels.

But what does a ‘green transition’ mean for oil states and regions and how much could it cost?

The low-carbon scenario will mean a shortfall of revenues for petrostates and regions, as a report by the Carbon Tracker think tank indicates; worldwide, all oil-producing countries risk collectively losing $13 trillion by 2040 compared with industry expectations, a 51% drop.

In particular, the future jobs in of the Oil Capital of Europe, Aberdeen, has been raised, with the issue of tackling the haemorrhaging of ancillary jobs linked to the Oil & Gas industries a major concern.

Recent research from Carbon Tracker has outlined the need for petrostates to diversify, for government revenues and for national economies to face decarbonisation.

Environmentally and economically, the switch to a net-zero policy will have lots of benefits.

A well-managed transition could lead to the creation of “a new workforce of green jobs with the potential for job creation across multiple sectors” according to the Scottish Government’s Just Transition Commission.

As a signatory to the Paris Agreement, the UK’s Nationally Determined Contribution (NDC) commits it to reduce economy-wide greenhouse gas emissions by at least 68% by 2030, compared to 1990 levels.

Luke Murphy, Associate Director of the Institute for Public Policy Research think thank (IPPR), said: “As host of COP26, the UK has the opportunity to lead by the power of our example’ by committing to keep fossil fuels in the ground and offering a blueprint for affected workers and communities to make the most of the huge opportunities offered by the zero-carbon economy.”


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