Why Scotland risks losing offshore jobs and missing out on new opportunities

David Whitehouse is CEO of Offshore  Energies UK, the leading representative body for the UK’s integrating offshore energy industry <i>(Image: Offshore Energies UK)</i>
David Whitehouse is CEO of Offshore Energies UK, the leading representative body for the UK’s integrating offshore energy industry (Image: Offshore Energies UK)

Politicians must work to reframe the energy debate – or risk losing jobs and missing out on Net Zero opportunities, writes David Whitehouse is CEO of Offshore Energies UK

WITH an ongoing war in Ukraine, the cost-of-living crisis and increasingly evident impacts of climate change, energy policy remains firmly at the centre of the political debate. And in 2024, there will be a UK general election.

These are important times. So, how do we successfully support energy production which is affordable, secure and which delivers on our climate goals, while also creating high value jobs in communities up and down the country?

The answer is right here on our doorstep: through leveraging our homegrown offshore energy industry, our geography, and our people.

Earlier this month, OEUK published its 20th Economic Report: Unlocking our energy future which sets out the framework to answer this question: the UK must compete globally, unlock energy investment – and we must act and fast.

We must re-frame the energy debate here in Scotland and the wider UK. Parliaments may thrive on opposition and argument, but we know big engineering projects only succeed through collaboration.

The Herald:
The Herald:

The transition to net zero will be the biggest engineering project this country has ever seen.

We need consensus to support the very industries and workers whose skills will be vital for building our energy future.

When looking at our future energy networks and supplies, there is no simple choice between oil and gas or renewables. The reality is that to keep our homes warm, the lights powered, and our economy growing, we need both.

Domestic oil and gas will be a critical component in the UK’s energy mix as we supercharge the roll out of wind, hydrogen and carbon capture technologies. The Climate Change Committee’s Balanced Net Zero Pathway estimates oil and gas will still meet just over a fifth of UK energy needs by 2050.

There are those who argue that to fight climate change we must just stop any further domestic oil and gas development in our North Sea.

This argument is disconnected from the reality of our energy needs, and from the need to support jobs.

Today, 75% of our energy needs come from oil and gas, and we domestically produce about half of it.

Last year filling the fuel import gap cost the UK £117bn. That’s a lot of money spent supporting the economies of other producing countries. Surely, it makes sense to prioritise our own.
There are those who argue that we must move at pace to build renewable energy.

There is no challenge to this argument from those who work in the domestic oil and gas sector – there is no conflict between domestic oil and gas production and an acceleration of renewable energy on the journey to net zero – the two go intrinsically together.

The International Energy Agency in their influential 2021 net zero report stated that the transition to net zero must be “for and about people”.

Those who advocate policy that undermines highly skilled jobs, that make the country poorer, while simply increasing our reliance on imports undermine the very prospects of delivering a fair transition.

The Herald:
The Herald:

THERE are still big opportunities and oil and gas from the North Sea is just as important now as it will be in years to come.

Our domestic oil and gas sector has powered the UK for the last 50 years. Today the offshore oil and gas sector supports around 220,000 jobs and in 2022 generated almost £30bn in gross value added – around 1.5% of the total UK economy.

The UK oil and gas industry, through the North Sea Transition Deal, was the first sector to sign up to a commitment to align with the UK’s net zero ambition. The industry is in action delivering on these commitments.

But the North Sea is not just oil and gas. Today, the UK boasts the world’s second-largest offshore wind capacity behind China, and the world’s largest operational wind farms. Our energy mix is changing – but more slowly than people may often think.

Renewables are making inroads into electricity supply, replacing coal. But electricity use has been falling, and the bulk of energy use in the UK is transport and heating.

They are both dominated by oil and gas. Today renewable energy provides 5% of the energy the UK needs, so we are on the path, but with a long way to go.

Our report highlights that total offshore energy spend could reach £200bn this decade in oil and gas offshore wind, carbon transport and storage and low carbon hydrogen – highlighting the opportunities we have.

Other countries are in action. In the US, the Inflation Reduction Act is ploughing many billions into the next generation of energy infrastructure, building on its position as the world’s leading exporter of gas. In China and the EU, similar programmes have been put in place.

Make no mistake we are in a global race to secure these opportunities, secure these jobs, and secure the people we need.

THE windfall tax leveraged on oil and gas production is biting. Around 90% of our oil and gas operators have cut back on their investment due to the tax. With investment on hold, our production volumes are low as they have ever been.

When there is a cost-of-living crisis hitting people across the country, it is right that all sectors play their part. But when the windfall conditions have gone, the windfall tax must go.

Earlier this year, we heard that Vattenfall will stop development of its huge British Norfolk Boreas offshore wind project due to rising costs and warned that Britain could struggle to meet its wind targets without improved incentives.

As predicted, no offshore wind farms bid for contracts for the next round of projects. 
The truth is we have huge opportunities. But we have too much investment on hold.

Projects are progressing, but not in the numbers that the UK needs to deliver secure affordable energy, protect jobs, and deliver on our climate goals.

The Herald:
The Herald:

SO how do we unlock this? We must show that you can have affordable, reliable, lower carbon energy which creates jobs, grows the economy and cuts emissions.

We can only do this through working collaboratively, not by setting one sector against another.

To unlock the opportunities that will deliver on net zero, businesses need supportive and stable policy.

It is essential that we create a competitive fiscal environment across the entire energy landscape that encourages investment and allows a fair return.

To provide project developers and supply chain companies greater surety, we must streamline and align our regulatory consenting and project approval processes.

The bedrock to success and delivering growth in the economy can only be in collaboration between private and public capital.

Scotland and the UK mustn’t just become a good place to do energy business, it must become irresistible.

And at the same time, we need to ensure that we engage with the public on the journey. 
The energy transition has to be done with people and not to them.

By getting this right, we will grow the economy, cut emissions, support jobs and protect energy security in the UK, and for the UK.

You can read and download the full 2023 Economic Report on the OEUK website

David Whitehouse is CEO of Offshore Energies UK, the leading representative body for the UK’s integrating offshore energy industry

  • This article was brought to you in association with Offshore Energies UK