Britain risks losing thousands more skilled North Sea workers and critical industrial capability before new energy industries are ready to replace them unless the UK Government acts urgently, a major report warns today.
The North Sea Transition Taskforce says oil and gas activity is declining faster than offshore wind, carbon capture, hydrogen and other emerging industries are growing, threatening the jobs, investment and supply chain needed to deliver the energy transition.
Its new report, North Sea Transition Taskforce: One Year On, acknowledges progress over the past year, including through the UK Government’s North Sea Future Plan, but warns that the pace and scale of action is not yet sufficient to deliver a successful transition.
The Taskforce says greater conviction is now needed to turn policy commitments into action, warning that the window to protect jobs, investment and industrial capability while new energy industries scale up is narrowing.
It calls for the UK Government to end the Energy Profits Levy and introduce the Oil and Gas Revenue Levy from 2027-28 rather than waiting until 2030, providing the fiscal certainty needed to unlock investment and slow the loss of jobs.
The independent Taskforce, backed by the British Chambers of Commerce (BCC) and Aberdeen & Grampian Chamber of Commerce (AGCC), says the central challenge is one of timing.
It warns that the decline of North Sea production must be carefully managed so that workers, infrastructure and supply chain capability can transfer into new industries.
Oil and gas currently supports 115,000 jobs directly and through its supply chain in communities throughout the UK. However, 25,000 jobs have been lost since the last election and the impact of this 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.
The report says the strongest case for continued domestic production is economic, protecting employment, investment, tax revenues and the industrial capability required to build Britain's future energy system.
It also finds that domestic production can strengthen energy security by reducing exposure to imports and global supply disruption.
The Taskforce says bringing forward the new fiscal regime is now critical, calling for the Energy Profits Levy to be replaced by the Oil and Gas Revenue Levy from 2027-28. Industry analysis cited in the report suggests the move could unlock up to £50 billion of additional private investment and more than £13 billion in tax revenues over the following decade.
The Taskforce also calls on the Scottish Government to finalise its Energy Strategy and Just Transition Plan and bring the North-east's economic and skills strategies together into a single pathway.
Philip Rycroft, Chair of the North Sea Transition Taskforce, said: 'Last year, we warned that the window for delivering a successful transition in the North Sea was closing. That window remains open, but it has narrowed considerably.
'The fundamental problem is that the traditional energy economy is declining faster than the new one is being built. If we allow that gap to widen further, we will lose skilled people, businesses and infrastructure which cannot simply be recreated when new industries are ready to expand at scale.'
Shevaun Haviland CBE, Director General of the British Chambers of Commerce, said: 'The North Sea is a national economic asset and what happens there matters to businesses and communities right across the United Kingdom.
'The Government has made some welcome moves, but businesses invest on the basis of what happens, not what is promised. We now need pace, certainty and delivery.
'That starts with the fiscal regime. Moving to a stable and competitive regime from 2027 would give businesses confidence to invest, protect highly skilled jobs and help retain billions of pounds of economic activity here in the UK.'
Russell Borthwick, Chief Executive of Aberdeen & Grampian Chamber of Commerce, said: 'For the North-east of Scotland, this isn't an abstract debate about what our energy system might look like in 20 years. Jobs and investment are being lost right now.
'One in four working people in our region depends on the offshore energy industry and around 80% of that activity is still rooted in oil and gas. The renewable jobs we all want to see simply aren't arriving quickly enough or at sufficient scale to replace what is being lost.
'We have always championed the transition, but it has to be a transition in reality rather than just in name. That means protecting the skills, businesses and supply chains we already have while creating the conditions for new industries to grow.'
The report also points to polling showing 79% of UK respondents agree Britain urgently needs to invest in producing its own energy and would be better off producing more domestically rather than relying on imports.
It concludes that the choice is not between oil and gas and a clean energy future, but between a managed transition which retains jobs, investment and industrial capability and a disorderly decline in which they are lost before replacement industries are ready.
Source: Aberdeen & Grampian Chamber of Commerce
