Aberdeen Energy Capital of Europe - or is it?

Aberdeen (the Granite City) earned its reputation as the "energy capital of Europe" for its significant involvement in the Oil and Gas industry over the last 30 years. Many of the industry key players have a considerable presence in the City and use it as a base for work in the North Sea and beyond. It is also host to a unique concentration of around 900 energy-related businesses, agencies, government bodies and research institutes.

30th August 2007

Aberdeen (the Granite City) earned its reputation as the "energy capital of Europe" for its significant involvement in the Oil and Gas industry over the last 30 years. Many of the industry key players have a considerable presence in the City and use it as a base for work in the North Sea and beyond. It is also host to a unique concentration of around 900 energy-related businesses, agencies, government bodies and research institutes. It plays an important role in the development of the fast-growing UK renewable energy market, into which many technological, research and project management oil and gas skills are directly transferable.

So why now when the Government announces plans to build an Energy Technology Institute (ETI) in the UK is Aberdeen not even the lead player in the Scottish consortium bid? Or more importantly with all the debate around the ETI hub being focused on location does anyone actually know what the aims and objectives of the project are?

What is the ETI and what are its objectives?

"The Energy Technologies Institute will bring a new level of focus, ambition and industrial collaboration to the UK's work in the field of energy science and engineering, and will exploit the UK's potential to be a world-leader in energy technologies." (Energy Review Report 2006)

Energy has become one of the hot topics in the last few years. As society becomes more globally aware of the growing energy needs, the importance of affordable energy supplies and the effects of climate change there is increasing pressure on governments and businesses to explore potential solutions. Society now demands efficient, affordable and sustainable energy that will aid their economic development but that also helps reduce their levels of CO2 emissions. In order to achieve these goals substantial investment had to be injected into the energy research and development sector, and that is where the ETI steps in.

The Institute will supplement current research and development projects, but it also signifies a considerable change in the focus, direction, funding and outcomes of UK energy science and technology. Therefore the Institute will not only seek to research new and ambitious projects, but will also help to meet the Government's current goals on energy policy, for example, to cut the UK's CO2 emissions by some 60% by about 2050, with real progress made by 2020. The Institute itself also sets out some objectives in its prospectus as per the Energy Review:

  • To increase the level of funding devoted to R&D to meet the UK's energy policy goals, both domestically and internationally;
  • To provide better strategic focus for commercially applicable energy related R&D in the UK;
  • To connect and manage networks of the best scientists and engineers, both within the UK and overseas, to deliver focussed energy R&D projects to accelerate eventual deployment;
  • To deliver R&D that facilitates the rapid commercial deployment of cost effective, low carbon energy technologies. Exceptionally this may include small demonstration projects;
  • To build R&D capacity in the UK in relevant technical disciplines to deliver the UK's energy policy goals.

How will the ETI be funded?

The ETI will be funded on the basis of a 50-50 joint private-public partnership and has the potential for £1 billion investment over a ten-year period. The project has brought together some of the world's largest energy companies – BP, Shell, E.ON UK, EDF Energy, Rolls-Royce, Caterpillar and Scottish and Southern Energy Group. It is hoped that by bringing together the efforts and investments of both public and private sectors, and by focusing on the key energy challenges with a new level of scale and ambition, that there is increased potential for making considerable progress and advances.

Where will the ETI Hub be located?

This question has stirred a heated "central bias" debate between politicians and media from both ends of the country. Before Scotland has even won the bidding for the ETI's Hub there has been intense arguments over the decision to name Strathclyde University ahead of Aberdeen as Scotland's bid for the Hub. The Hub will be home for the UK ETI director and his team, but work will be carried out in locations all over the UK and even overseas. Nevertheless, North-East politicians and journalists cry bias as their "Energy Capital of Europe" is overlooked and they are offered the consolation prize of a satellite office. On the one hand, supporters of the Strathclyde University led consortium argues that despite Aberdeen's strengths in oil and gas that they have in Glasgow two first-class engineering universities and also the UK base of Iberdrola, the worlds biggest renewable energy company. Another argument is that Aberdeen has a tight job market that would make it difficult for a publicly funded research institute to hire staff.

However Aberdeen itself is home to around half of the energy companies in the UK and is a growing centre for renewable energy development. Since 2001, the city is also the host to the UK's largest renewable energy conference, All Energy, which is held annually. In 2005, it also organised the influential World Renewable Energy Congress. The city has embarked on a number of high-profile flagship renewable energy projects funded by the City Growth Fund. Recently the City Council adopted plans to establish an Energy Futures Centre to promote the world-class energy development expertise in oil and gas and renewables that would further reinforce Aberdeen's image as a 'true energy capital'.

The North-East politicians and business community accuse the old  Administration of fixing the decision making progress including allegations of bullying. The decision in favour of Strathclyde was made by a meeting of the review group which was attended by representatives of the Scottish Funding Council responsible for University Finance, Scottish Enterprise, the Scottish Scientific Advisory Committee and the Scottish Executive.

The truth is that both cities are good candidates for the ETI Hub and if needs be, the best thing for Scotland could be to unite as a consortium behind the offer in securing the Hub. However, the Scottish consortium bid has now reached the final stage of the selection process and faces some tough competition from the Newcastle University led North-East England Consortium and the Nottingham University-led Midlands Consortium. During the next phase, representatives of the funding organisations will now visit each of those short-listed and will make a final recommendation to the ETI Board by early Autumn. The ETI board will consist of the director (who will be appointed shortly) and his core team of staff. A range of opportunities will be available for all the high calibre research organisations to engage in the research activities of the ETI as the technical priorities begin to emerge.

However, if Scotland were to lose out to Newcastle University it is likely that Aberdeen would still play an active role in future of the Institute as Newcastle indicated that if they were successful Aberdeen would be a natural partner for them to work with due to the city's particular expertise. The Energy Minister Malcolm Wicks refused to be drawn into the debate saying, "I do not as a mere Englander wish to be involved in that controversy. This has got to be a matter for the Scottish consortium."

Conclusion

The thing is that there are more important matters at stake here than to use this as a political stunt to see who can collect the most votes by putting on a brave stand for their city. The UK as a whole needs to develop and radically transform its energy systems in the next couple of decades. There is no doubt that this is an immense challenge, faced not only by the UK but by the developed and developing world at large, but a successful ETI would be a considerable step in the right direction. The more controversy that surrounds the new ETI, the more that potential private sector investors may be deterred from vital investment.

At the end of the day, if the government is ever going to come close to meeting its 2020 targets for renewable energy then the ETI is going to have to produce some fantastic research and development projects with significant support from both the private and public sector.

Leon Moller
leon.moller@shepwedd.co.uk