UK Government must not ramp up decline of Scottish oil and gas sector, MPs warn

The UK Government should not ramp up the decline of Scotland’s oil and gas industry, a report has urged, after it found jobs created in clean energy are failing to make up for losses in the North Sea.

The report by the House of Commons Scottish Affairs Committee warned the sector is now at a “critical juncture” as the nation moves away from fossil fuels and towards renewable energy.

MPs also concluded the Scottish and UK governments should have acted sooner to prepare for job losses at Grangemouth – Scotland’s last oil refinery.

It said the resulting employment gap was “avoidable” and caused “trauma” for the surrounding community reliant on the industry.

The report, the first part of its inquiry into GB Energy and the net zero transition, warned that until clean energy jobs can be created at the scale needed to match current fossil fuel job losses, the UK Government “should avoid accelerating the decline of North Sea oil and gas production”.

MPs called on the UK Government to set out urgently how it will address the employment gap.

The report said as fossil fuels will continue to form part of the UK’s energy mix for decades, 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”.

The committee added: “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.”

It also backed industry calls for the windfall tax on oil and gas companies to be reformed “as soon as possible”.

The report expressed concern “that without reform, the current tax regime will accelerate the decline of the North Sea oil and gas industry and its supply chain”.

It urged the UK Government to “take a pragmatic approach” to North Sea licensing policy and clarify how developers may be allowed to undertake new drilling activity under existing exploration licences.

MPs said the closure of Grangemouth should become a case study for governments’ management of Scotland’s energy transition to ensure future closures can be better managed.

They also recommended the UK Government issues an explanatory statement along with every environmental impact assessment outlining how environmental concerns were weighed against energy security and economic considerations.

Labour MP Patricia Ferguson, chairwoman of the Scottish Affairs Committee, 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, replaces jobs being lost and ensures 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.”

Ms Ferguson described the closure of Grangemouth as the “energy transition’s canary in the coalmine”, adding: “Without a doubt, both governments should have moved faster to prepare for job losses and the site’s future, and must learn lessons from this.

“Additionally, I want to acknowledge the UK Government’s recent announcement of its clean energy workforce plan.

“We’ll be reviewing the plan with interest to explore whether it can deliver some of the priorities we outline in our report, to create good, secure jobs and support our economy.”

A spokesman for the Department of Energy Security and Net Zero said: “We are not willing to accept the status quo we inherited of the North Sea being in decline.

“This is why we have taken rapid steps to deliver the next generation of good jobs for North Sea workers in a fair and orderly transition, including by making the biggest investment in offshore wind and carbon capture.

“Our landmark clean energy jobs plan will deliver the next generation of skilled jobs across the country, where Scotland could see over 40,000 new jobs by 2030.”

The GMB union said ministers can no longer “stick their fingers in their ears” around energy jobs.

“The alarm bells around the so-called just transition have been ringing constantly for years but are now deafening,” GMB Scotland secretary Louise Gilmour said.

“Ministers can no longer stick their fingers in their ears and shout more loudly about all the great things coming tomorrow while ignoring catastrophic job losses today.

“The MPs’ report is grim but completely unsurprising and comes days after the Scottish and UK governments were continuing to insist they have a plan. If they do, it is beyond time to share it.”

Deputy first minister Kate Forbes said: “At its heart, this report calls for a just transition for our energy workforce and the Scottish Government is resolutely determined to support one. It’s precisely why we are working closely with the energy sector to plan for a multi-skilled workforce, one that can benefit from opportunities across the energy system.

“I share the committee’s concerns regarding the energy profits levy. At a time where we need to give the offshore energy sector much-needed certainty, we continue to call on UK Government to listen carefully to concerns being expressed by businesses around its impacts.

“The levy was always supposed to be a temporary measure and the UK Government should be urgently considering its earliest possible end date.

“Scotland’s transition to net zero presents enormous opportunities for our economy and our energy workforces. Renewables already supports tens of thousands of jobs and the Scottish Government is clear workers will remain at the heart of a just transition as we unlock further benefits over the coming years.

“Through initiatives such as the Just Transition Fund and the Energy Transition Fund, we have already invested £120 million to support the North East’s transition to net zero helping to create green jobs, support innovation and secure the highly skilled workforce of the future.”