A renewables push will not keep us warm this winter – Telegraph.co.uk

Returns on renewables investments – at least in the short term – are not sufficient on their own to finance the capital requirements of ever-larger low carbon projects. So investors need to recycle returns from existing production to capitalise renewable investment.

We therefore need to get the balance right between existing energy projects and the move to renewables. 

We have an opportunity to protect critical infrastructure, energy security, tax revenues, jobs and supply chains. The oil and gas sector alone supports almost 200,000 jobs and has contributed more than £33bn to the Treasury since 2010, but is also a critical enabler of the energy transition as recognised by the Government in the North Sea transition deal.

Energy projects are hugely capital intensive and often take years to build, during which time investors’ capital is at risk. Investors will only be prepared to take that risk if they have confidence in a stable fiscal and regulatory regime.

Subsidies and other fiscal incentives have served their purpose in reducing the cost of renewable energy production, although intermittency still remains the hidden cost and the unsolved issue.

The solution is likely to be a combination of hydrogen and CCS, but for both to become a reality, the Government must show the same kind of bold thinking and clear regulatory framework that they did with renewables. Only then will costs come down and projects move forward.

As delegates fly over the North Sea en route to Glasgow this November, they would do well to remember its treasure is a help, not a hindrance, in the transition to net zero. Because green ambitions alone won’t keep us warm this winter.

Sam Laidlaw is executive chairman of Neptune Energy

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