How Scotland's oil and gas workers face sacrifice at altar of just transition

There was, perhaps surprisingly, a substantial degree of consensus across political parties as to what the just transition should look like. There is a recognition that as we move away from energy based on fossil fuels, which has been economically hugely significant to Scotland over many decades, towards that derived from renewables, this will require significant shifts in public policy and government support.

The risks of the just transition to those currently working in the oil and gas sector are already clear. The announcement last month that Petroineos are to close the Grangemouth refinery will lead directly to the loss of 400 jobs, and undoubtedly many more in the wider supply chain. Converting the site to an import terminal will save some of the workforce, but with significantly fewer jobs than presently exist.

Grangemouth an alarming portent

What is happening in Grangemouth is a precursor to what might happen in the North-East of Scotland, the subject of the committee’s second inquiry. The job losses announced in Grangemouth will just be a fraction of the total number we are likely to see lost should there be a premature shutdown of oil and gas production in the North Sea basin.

Whilst everyone accepts that a just transition needs to happen, the pace of this is still being debated. There are those in the Scottish Parliament, like the Greens, who want to see an end to oil and gas production as a matter of urgency. For the Scottish Conservatives, our view is that, with an economy likely to be dependent on fossil fuels still for some decades to come, prematurely closing down the North Sea would be a grievous mistake.

It does not make any sense from an environmental point of view, or from an economic one, to be replacing domestic production with imports. Moreover, even when we stop using oil and gas as an energy source, we will still need it as the raw material for a petrochemical industry, given hydrocarbons are required as the basis for the manufacturing of virtually everything we use in modern life.

35,000 jobs at risk

The committee heard evidence from Aberdeen and Grampian Chamber of Commerce that decisions being taken by governments were damaging the sector already, and investment was being driven elsewhere. The best example of this is the energy profits levy – the windfall tax on oil and gas companies. Introduced by the Conservatives, Labour now plan to remove all allowances. According to the industry body Offshore Energies UK, that would reduce the value of the oil and gas sector by £13 billion by 2029, putting 35,000 jobs at risk. The SNP’s approach is little better, with a presumption against new exploration in the North Sea.

The early shutdown of oil and gas production domestically cannot be justified. Its proponents also misunderstand the basic point that the very energy companies which will be required to deliver the just transition to renewable power sources are the ones that will be harmed if North Sea production ceases earlier than would otherwise be the case.

If a just transition is to occur, then there needs to be clarity with regard to the investment models required to make it happen. The Just Transition Fund of £500 million over ten years, established by the Scottish Government, is administered by the Scottish National Investment Bank. However, there are already doubts about that fund’s sustainability.

In the first year of the fund, £20m was allocated, with £50m in the second year. In the coming year, that will drop to just £12m. We need clarity as to how that money will be provided in future if we are to ensure the just transition is adequately supported.

12-year planning delays

It is not just money that will be required to make the transition. The committee in its report concluded that planning constraints are one of the biggest barriers to attracting investment. SSE told the committee that current practice means it takes 12 years to deliver an offshore windfarm. We will never achieve net zero as a country, or a just transition, unless we start removing some of the barriers to planning and getting these developments delivered.

The other substantial constraint on our ability to deliver a just transition is around skills. There are those currently working in the oil and gas sector with highly transferable skills into the renewables industry, but even with that we will still require a new workforce, and that will mean a focus on apprenticeships and young people and the delivery of STEM subjects – science, technology, engineering and mathematics – in schools and further and higher education.

Before the pandemic, we had 30,000 apprenticeship places in Scotland. Today that figure is down to 25,500. In its most recent budget, the Scottish Government cut employability spending by 24 per cent. If a just transition is to work, we need a proper focus on the workforce, and in particular more apprenticeship places.

Oil and gas workers’ futures

Everyone involved in this debate wants to see a just transition that is fair to all. This is not something that will happen of its own accord, it will require a proper focus, and appropriate support and direction from government.

We should be seeing the oil and gas and renewable energy sectors as complementary, not in competition. Crucially, we should not be sacrificing our oil and gas workers on the altar of a just transition. They need to feel that their futures are secure, and the language used by politicians around this debate will be significant in ensuring that happens.

Murdo Fraser is a Scottish Conservative MSP for Mid-Scotland and Fife