Scottish affairs committee urges UK government to support North Sea oil or risk losing thousands of jobs including in Shetland
Politicians and business leaders have demanded urgent tax reforms to save thousands of jobs in oil and gas - many of them in Shetland.
A stark report published today (Friday) by the UK government’s Scottish affairs committee warns that job losses from the decline of North Sea oil is currently outstripping those created in renewables.
The cross-party committee calls for the energy profits levy (EPL), sometimes called the windfall tax, to be reformed as soon as possible to create certainty for the industry.
Sullom Voe Terminal operator EnQuest has raised regular concerns about the impact of the levy on the business, including its capacity to invest in transforming the terminal into a green energy hub.
Industry body OEUK described the new report as a “wake-up call” - and warned that the UK cannot afford to accelerate the decline of North Sea oil and gas while clean energy jobs and projects are not yet being delivered at the scale required.
“The evidence is clear,” it said. “There is a growing consensus across industry, business groups, and supply chain companies that urgent reform to the EPL is needed to protect jobs, communities, and the UK’s energy future.”
OEUK said the offshore energy sector supported 200,000 jobs and will add £137 billion in value to the economy by 2050.
But without action, it warns the sector will lose 1,000 direct and indirect jobs each month between now and 2030, with losses concentrated in industrial hubs including Aberdeen to Shetland.
The committee’s report on the future of Scotland’s oil and gas industry marks the conclusion of the first part of its inquiry into GB Energy and the net zero transition.
It says North Sea oil and gas industry has been a vital part of the economy but has reached a critical junction as production declines and the UK’s clean energy transition ramps up.
As part of this juncture, in the coming months, the UK government is expected to make its decision on the controversial Rosebank oil and gas development, west of Shetland.
Following a judicial review, Norwegian energy giant Equinor has recently submitted its application for the project, this time with details of the 250 million tonnes of carbon dioxide that would be generated from the the fossil fuels produced in its 25 year lifetime..
With a month-long consultation now under way, environmental campaigners are mounting protests and co-ordinated responses to apply pressure on the UK government to refuse the application.
According to the committee’s report, however, the UK government should avoid accelerating the decline of North Sea oil and gas production until clean energy jobs can be created at the scale needed to match the current job losses.
It concludes that as fossil fuels will continue to form part of the UK’s energy mix for decades to come, there are “compelling arguments” for the gradient of UK production decline to be eased, to meet as much energy demand as possible from domestic sources. Doing so will mean Scotland retains highly skilled supply chain workers, rather than being lost to overseas markets, which are vital for the growth of clean energy sectors.
Committee chairwoman Patricia Ferguson said: “Today's report outlines our concerns that jobs from the clean energy industry are simply not being created fast enough, or on the scale needed, to match the mounting job losses from the oil and gas sector.
“It’s vital that the government moves quickly to plug this employment gap, replace jobs being lost and ensure a smooth energy transition for workers and communities.
“Until this is tackled, the government should avoid making decisions that would further accelerate oil and gas production’s decline. Our report sets out several ways to do this whilst still preparing for the longer-term clean energy future.
OEUK’s supply chain and people director Katy Heidenreich said the report was a “stark reminder” that the UK’s energy future must be carefully managed.
“The Scottish affairs committee adds to a growing chorus of voices calling for the EPL to be reformed at the upcoming budget.
“We already have a clear plan for jobs and our supply chain - one that makes the most of our world-class oil and gas expertise while accelerating new opportunities in wind, carbon capture, and hydrogen.
“The real story is not that clean energy jobs aren’t replacing oil and gas jobs, but that we have a path to deliver both, if government policy supports it.”