The UK Government has announced an intention to sign an agreement with Norway, establishing a Green Industrial Partnership (the “Partnership”). This agreement is expected to be signed in spring 2025. It is said to involve enhanced cooperating across a range of sectors, including future clean energy innovations, and to have the “potential to create thousands of new, skilled jobs in the UK, including by seizing on cross-border carbon capture opportunities under the North Sea”. Assessing the specific features of the Partnership will only be possible once its terms are known. Assessing its successes will need further time still. However, one can anticipate certain opportunities and challenges. We do so in this article.
The Partners
There is an intuitive attraction to the idea of greater cooperation with Norway. Both countries have significant ambitions to develop greener energy systems, including through offshore wind and carbon capture, utilisation and storage. Norway is the UK’s single biggest supplier of foreign gas, is the world’s largest generator of electricity from floating wind (94MW across three projects), and since 1996, has been storing nearly one million tonnes of carbon dioxide per year in subsea formations on its continental shelf. The United Kingdom has operational floating wind capacity of 78MW and has in the past few weeks signed agreements that allowed the Northern Endurance Partnership and Net Zero Teesside CCUS projects (both backed by the UK’s bp and Norway’s Equinor, along with TotalEnergies in the Northern Endurance Partnership) to reach positive final investment decisions and financial close. And collaboration between the UK and Norway in energy matters is nothing new. In the oil and gas industry, fields that straddle the United Kingdom Continental Shelf and the Norwegian Continental Shelf were first developed in the 1970s and continue to produce today.
The Opportunities
It is hoped that to the extent either country has expertise it can offer to the other, the Partnership will be able to facilitate a collaborative environment for projects and businesses to learn from each other. The opportunity for UK CCUS projects in particular, to gain insight from Norwegian CCUS projects that have been storing carbon dioxide subsea for decades should be invaluable. Recent developments include Norway’s prestigious full-scale CCS demonstration project ‘Longship’, which offers companies across Europe the opportunity to store their carbon dioxide safely and permanently underground. The UK aims to capture 20 – 30 MtCO2 per year by 2030, from essentially a standing start today.
It is also hoped that the Partnership encourages collaboration in its most practical embodiments, such as through information sharing. In the offshore wind sector, the opportunity to share meteorological, oceanographic and other information between Norwegian and UK projects may be of significant benefit to both.
In addition, the UK Government’s press release on the Partnership mentions that the UK and Norway have, alongside the Partnership, “committed to initiate work to identify gaps and challenges to the development of our common North Sea as a hub for carbon storage and to develop a bilateral agreement or arrangement on cross-border transport of CO2 under the London Protocol”. Much has been made of the potential for cross-border transport of carbon dioxide to scale-up the UK CCUS industry, yet Norway seems to have made significantly more progress in this regard. If the UK is able to benefit from Norway’s initial progress alongside the Partnership, this could prove to be a key step for the UK on its CCUS journey.
The Challenges
The key challenge of the Partnership is likely to be its dependence on individual businesses making decisions that align with the UK Government’s aims in establishing the Partnership. These aims include:
- securing home-grown energy;
- protecting billpayers;
- making Britain a clean energy superpower by 2030.
In these two liberal economies, businesses are generally free (and usually expected) to make decisions that maximise shareholder value. If the terms of the Partnership are directed towards achieving these aims, it will be interesting to see how the Partnership seeks to ensure that commercial and societal interests dovetail.
At the same time, much has been made of the potential for a UK-based new energy supply chain to flourish as developers pursue ever bigger UK projects. Indeed, this seems implicit in the UK Government’s aims of securing home-grown energy and making Britain a clean energy superpower by 2030. Greater collaboration with Norwegian industry via the Partnership may rub against this desire for a domestic supply chain if the Norwegian supply chain, with potentially greater experience in the types of projects the UK Government wants to kickstart, is preferred by the developers of UK-based projects.
What’s next?
We look forward to the Partnership agreement being signed, to enhanced collaboration between the UK and Norway in the energy sector, and to any further announcements on cross-border transportation of carbon dioxide. Our market-leading, sector-focused teams in the UK and Norway are ready to support on both sides of the North Sea.
The UK Government press release about the Partnership is available here.
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