Aberdeen is expected to be at the centre of Europe's net zero ambitions as it strives to reach carbon neutrality by 2050, a report by KPMG has revealed.
The Oil and Gas Transition Survey, conducted by the Aberdeen and Grampian Chamber of Commerce’s Research Chamber in partnership with the Fraser of Allander Institute and KPMG UK, is examining how the industry is transitioning to renewables.
It concludes that for Europe to reach climate neutrality by 2050, it will require offshore wind capacity to increase from 23 gigawatts today to up to 450 GW, with half of this capacity to be installed in the North Sea.
Presently, Aberdeen has the world's first floating wind farm and TotalEnergies announced that the city has been chosen as a global centre for its offshore wind operations.
"Aberdeen has a vision to be a world-leading hydrogen city and develop Scotland’s first commercially scalable, investable, hydrogen production and distribution facility," it says.
"By making use of oil and gas pipelines that are already in place – offshore geology that is ideal for permanently storing carbon dioxide – the Acorn project will be a vital catalyst for the next phase of the UK’s journey to net zero. It has the potential to deliver more than 20 per cent of UK’s blue hydrogen target by 2030.
"In fact, the joint venture ... seeks to remove up to one million tonnes of CO2 every year through Direct Air Capture It could be the largest DAC facility in Europe and depending on the final configuration, potentially the biggest in the world. All of this and more is part of a projected £170+ billion investment in capital and operating activities in the UK offshore energy sector between 2021-30, much of it located in this region or powered by companies and people based here."
The report has surveyed more than 100 oil and gas companies in the area about their visions for the future.
It reveals the majority of the sector is actively transitioning out with oil and gas but companies still have a range of key concerns and barriers to overcome to achieve this successfully.
Of those interviewed, 80 per cent of companies indicated that strong sustainability credentials were critical to their long-term future.
More than half revealed they have already developed a strategy to reduce their carbon presence.
"Most oil and gas firms are doing far more than paying lip service to sustainability," said Martin Findlay, office senior partner at KPMG Aberdeen.
"The vast majority we surveyed believe that strong sustainability credentials are critical to their long-term success. Sustainability planning has huge potential to drive bottom line growth and is fast becoming part of a business’s licence to operate.
"It’s clear the industry is on the cusp of transformation, and with many businesses having already chosen their path – and heading towards a greener future."
More than three quarters of companies said they were positive about Scotland’s future potential as an energy heavyweight and with Aberdeen being the energy centre at the heart of that vision.
More than half of the sector has committed to carbon neutral targets, the survey reveals, with 20 per cent aiming to be carbon neutral by 2030.
"Three quarters of companies reported being either 'moderately' or 'extremely' optimistic about Aberdeen, Scotland and the UK playing a leading role as a future energy hub," Aberdeen's Chamber of Commerce said.
The region had recently suffered a setback after its carbon capture project missed out on the next round of government funding and was labelled as a reserve project.
The report is calling on the government to reconsider its decision.
"Carbon capture and storage will be critical to our net-zero ambitions, described as ‘a necessity, not an option’ by the Climate Change Committee," it said.
"The recent decision to label the Scottish Cluster as a ‘reserve’ project will hamper the development of this vital capability within the Scottish supply chain.
"The UK Government should recognise the pressing need for additional carbon capture capacity and the significant advantages it offers in reducing emissions via CO2 shipping from other parts of the UK and via direct air capture.
"The UK government should reconsider this recent decision and progress the Scottish Cluster as a third ‘Track-1’ cluster."
The report has been released to coincide with the world climate summit, Cop26, taking place in Glasgow.