North-East energy industry is at a crossroads - choosing the right path

Thursday 23 June 2022

Paul de Leeuw, Energy Transition Institute
Writing for the Press and Journal, Professor Paul de Leeuw, Director of the RGU Energy Transition Institute, explores how the harsh realities of the cost-of-living crisis, global energy security concerns, the impact of the war in the Ukraine and the climate emergency continue to create shockwaves across the world.

As the UK is left considering what a sustainable future holds, the prospect of change has never been more apparent in the North-East of Scotland as its oil and gas sector undergoes significant transformation in the drive to net zero. With around one in three people in the North-East of Scotland employed in or supporting the offshore energy industry, the sustainable future of the region’s economy is directly linked to its ability to address the issues associated with energy security, climate emergency and to capitalise on the opportunities associated with the energy transition.

Against this backdrop, Robert Gordon University’s (RGU) Energy Transition Institute published its ‘Making the Switch’ report in May 2022. The report describes the future shape of the energy workforce in the North-East of Scotland and highlights a ‘win-win-win’ scenario – if the region attracts levels of investment in renewables that match its status as the UK’s largest offshore energy hub.

The size of the prize for the North-East is self-evident in some of the headline findings of the ‘Making the Switch’ review. Attracting £17 billion of additional renewables investment to the region between now and 2030 will sustain a workforce of 54,000 people – 9,000 more than the local industry’s employment levels of close to 45,000 in 2021.

That will genuinely position the North-East as a global energy hub, leading the pursuit of the Scottish and UK net zero strategies. That’s because around 60% of those 2030 jobs are projected to be in the renewable sectors.

More modest ambitions, however, will have a negative impact on employment numbers in the industry. They could fall to as low as 28,000 by the end of the decade – from 45,000 in 2021 - if capital investment in local manufacturing, installation, commissioning and operational capabilities falls short of expectations.

The North-East can certainly make a compelling claim that, after more than 50 years of oil and gas exploration and production, it’s the natural home for much of the planned transition activity. It has an established, world-class supply chain, globally recognised universities and, critically, hosts the largest energy skills cluster in the UK – one that constitutes more than a quarter of the UK’s overall offshore energy workforce.

This expertise positions the region well for the opportunities associated with the renewables sector. More than 90% of people working in the industry today have medium to high skills transferability to adjacent sectors. All of which serves to make clear the key steps necessary over the coming years if that global hub status is to be realised.

First, it needs to sustain oil and gas workforce levels over the next five years to ensure the requisite skills pool is there as renewables grow in prominence. Given the likely lead times for renewables activities, many developments being planned today are only likely to come to fruition in the years after 2025.

Second, those developments – in the North-East and elsewhere – do need to be taking shape soon if net zero ambitions are to be realised: the recently-published British Energy Security Strategy envisions 50 GW of installed offshore wind capacity, 10 GW of hydrogen generation and up to 30 million tonnes of annual carbon capture and storage by 2030. Large scale investment in the region, including in the Energy Transition Zone, a new Green Freeport, in new technology and innovation and into new renewable clusters will be critical for Scotland’s North-East to sustain its status as a global energy hub.

Finally, targeted and properly resourced training and skills development will be key in helping people to transfer from oil and gas into renewables, or indeed in supporting the entry of new talent into the industry. The review estimates that, between now and 2030, close to 14,000 people currently working in the oil and gas industry in the North-East of Scotland will need to move into renewables from oil and gas, and up to 16,000 new people will need to enter the renewables arena, as part of the best-case scenario.

A strategy that embraces all these drivers could mean everyone’s a winner. The workforce wins, with a diverse range of new long-term opportunities in new sectors where current skills are largely applicable. The region wins, with the industry that has underpinned its prosperity for over half a century protected.

Ultimately it all comes back to investment, which is key to unlocking this opportunity and sidestepping the potential economic downside for the area. Governments, industry and the education sector all have a central role to play in converting these possibilities into reality through a co-ordinated strategy that ensures the right things are done at the right time.

The first line of the review states that the energy industry in the North-East is at a crossroads. Choosing the wrong route might see the region suffer the sort of decline experienced by former coal and steels communities in the 1980s. There is, however, a huge opportunity to take the right path – and embark on a journey towards a successful, sustainable and net zero future.


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