A year ago, the North Sea Transition Taskforce warned that the window for delivering a successful energy transition was narrowing. Today, that window remains open, but it is closing fast.
The fundamental problem is one of timing and the simple fact that Britain’s traditional energy economy is declining faster than the new one is being built.
Oil and gas production is falling, investment is weakening and skilled workers are leaving the sector. But offshore wind, carbon capture, hydrogen and other industries are not yet growing quickly enough to absorb the people and industrial capability being lost.
That gap is where a successful transition can become a disorderly decline.
Some 25,000 jobs have been lost since the last election and the impact has been particularly acute in the North-east of Scotland, where around one in four working people is employed in or supports the offshore energy industry, approximately 80% of which remains oil and gas.
Once those people leave the industry, or the country, we cannot assume they will return when we need them to build the next generation of energy infrastructure.
The UK Government’s North Sea Future Plan has moved policy in the right direction. It recognises the need for a managed transition, better co-ordination across the basin and stronger support for workers. But the direction of travel matters little if we move too slowly.
The most urgent issue is tax. The Energy Profits Levy has been changed repeatedly and the headline tax rate on North Sea producers now stands at 78 per cent.
The Government has designed a more predictable successor, the Oil and Gas Revenue Levy, but under current plans it will not replace the EPL until 2030 unless existing price conditions trigger an earlier end. That is too late. The new regime should begin in the 2027-28 tax year, when it could unlock up to £50 billion of additional private investment.
Fiscal reform alone, however, will not deliver the transition.
Government must give the North Sea Transition Authority a clear mandate to co-ordinate the competing demands on the basin, from oil and gas and offshore wind to carbon storage, electrification and decommissioning. Britain should also strengthen its energy resilience, including through greater gas storage.
Most importantly, we need to protect people through the transition. Training matters, but telling an offshore worker that their skills are transferable is meaningless if the alternative job does not yet exist, is hundreds of miles away or pays substantially less. Government should consider practical measures including time-limited wage insurance, re-employment grants and income-bridging support for workers caught between the old and new industries.
The Scottish Government also needs to finalise its long-delayed Energy Strategy and Just Transition Plan and align it with a coherent economic and skills plan.
None of this requires another institution or years of legislation. Much of the framework already exists. What is missing is pace.
Britain has spent more than half a century building one of the world’s great energy industries in the North Sea. The people, businesses and infrastructure created over those decades can help build the next one.
But only if they are still here when we need them.
Philip Rycroft is Chair of the North Sea Transition Taskforce, which was established by the British Chambers of Commerce (BCC) and Aberdeen & Grampian Chamber of Commerce (AGCC).
Source: Aberdeen and Grampian Chamber of Commerce
