Recommendation 4

HM Government · verbatim extract Accepted in Part

The government agrees with the importance of taking a pragmatic approach. Transitional Energy Certificates will enable some oil and gas production in areas adjacent to already licensed fields. For a Transitional Energy Certificate to be awarded, the NSTA must be satisfied that any eventual development on that site: • Will not undertake any exploration, and • Is for a block of acreage which is part of, or adjacent to (linked by a tieback), an existing field, and • The activity is necessary for a managed, prosperous and orderly transition. Given that no exploration is permitted, the area should already be well- understood. These certificates recognise the often-iterative nature of oil and gas developments by allowing the often-used methods for maximising existing fields to continue - such as ‘tying back’ to other areas or drilling ‘infill wells’. It will help to maintain existing fields for the entirety of their lifespan and ensure they remain economically viable. Recommendation / Conclusion 5 We recognise that maximising economic return from clean energy investments requires supporting and expanding UK-based supply chains. (Conclusion, Paragraph 56) The Government should set out how it intends to increase the proportion of UK-based supply chains used by clean energy generators. (Recommendation, Paragraph 56) The government agrees with this recommendation. The importance of attracting and sustaining investment into domestic supply chains was reiterated in the Government’s North Sea Future Plan, published 26 November. We announced several new policy interventions aimed at supporting the North Sea supply chains futureproof and diversify their activities. These are: • A new North Sea Future Board will convene people with the experience and levers to manage the energy transition across the North Sea. Establishing a supply chain workstream will be one of the first tasks for the Board. • To develop a comprehensive guidance package for supply chain businesses and investors • Working with the NSTA to develop a Basin Wide Plan to support greater transparency regarding upcoming activity in the North Sea. • To work with GBE to ensure that their £1bn Supply Chain Fund will support the North Sea transition through strategic funding and a focus on utilising the UK’s existing industrial strengths in oil and gas to deliver the next generation of clean energy technologies. We also reiterated that industry-led local content requirements are critical to providing the demand certainty for British clean energy manufacturers and enabling the UK to reach its productivity and Growth ambitions. Our paper underscored how Government is putting local workforce at the heart of the supply chain transition. UK supply chain growth means both securing good jobs for the workforce now and creating good British jobs into the future. In addition to these announcements, we described several sector-specific activities that will also help to ensure that we grow and make the best use of our domestic supply chains. The Clean Industry Bonus will support manufacturing in coastal and energy communities and cleaner, more sustainable supply chains, while increased transparency and predictability in future Contracts for Difference (CfDs) allocation rounds will support investment. CfDs incentivise investment in renewable energy by providing developers of projects with high upfront costs and long lifetimes with direct protection from volatile wholesale prices, and they protect consumers from paying increased support costs when electricity prices are high. The government will work with the Offshore Wind Industry Council (OWIC) and Industrial Growth Plan (IGP) Strategy Board to introduce new metrics by the end of 2025 to determine the health and success of the supply chain, based on the detailed supply chain analysis conducted for the IGP. Building on the industry’s previous work to develop a UK-content methodology, these metrics can provide the underpinning for industry-led UK local content goals for the offshore wind sector. The Contracts for Difference Clean Industry Bonus Allocation Round 7 (end 2025/start 2026) will be allocating extra Contracts for Difference (CfD) funding to developers investing in the offshore wind supply chain, including reserved funding for investments in the floating offshore wind supply chain, through CfD Allocation Round 7 projects. This policy will enable investments to be concentrated in the UK’s poorest communities – ex-industrial, port and coastal towns - and in cleaner manufacturing facilities. Funding will be confirmed after Allocation Round 7 results, which are expected end 2025/ early 2026. The government has awarded more than £55 million Floating Offshore Wind Manufacturing Investment Scheme (FLOWMIS) funding to Port of Cromarty Firth to secure critical facilities needed for the rapid development of new floating offshore windfarms and ensure they are built from the UK. Following the Spending Review, the government and Gre