A new report from Aberdeen’s Robert Gordon University has warned that up to 95,00 offshore energy jobs in the UK could be at risk if investment does not “increase significantly”.
The stark words from the ‘Powering up the Workforce’ report comes days after trade body Offshore Energies UK (OEUK) said £100bn of North Sea investment was stalled over political uncertainties.
Governments around the world have set goals to ensure net zero targets are met to combat the effects of climate change.
However, if the cash needed to see out the transition is not there, Robert Gordon University’s (RGU) ‘Powering up the Workforce’ report shows that skilled workers needed to cut carbon emissions and keep Britain’s lights on will look for employment overseas.
The RGU report outlines that £200 billion of spending is needed in UK offshore energy by the end of the decade and 90%, close to £175 billion, will be spent in the supply chain.
Half of that £200bn is held up by issues like political uncertainty for oil and gas, grid connection for offshore wind, and a lack of clarity on business models for CCS, as reported last week by OEUK.
According to Powering Up the Workforce’s predictions, offshore wind could account for close to 60% of all spending by 2030, a 30% increase from today. Capex will account for 50% of spending, increasing from around 40% in 2023.
However, the report outlines that the UK offshore energy workforce can increase by up to 50% from over 150,000 in 2023 to 225,000 by the end of the decade if the right level of investment is met in the renewables sector and oil and gas.
RGU’s director of the energy transition institute, Paul de Leeuw said: “We’re the first generation to see the impact of climate change and we’re also the last generation that can do something about it.”
The report found that retaining the offshore oil and gas supply chain, its workforce and associated skills over the next five years will be crucial to the UK’s successful transition to renewable energies.
This is because there is a limited capacity for the UK offshore renewables sector to take on board the amount of skilled oil and gas workers impacted by the predicted decline in the hydrocarbon sector until later this decade.
CfD woes serve as ‘wake-up call’ for industry and government
The new report also follows last week’s “wake-up call that system auctions need to be thought through” for the industry as the government’s latest Contract for Difference round saw no bids put forward for offshore wind, said the RGU professor.
He explained: “The shape of this curve is going to be really driven by what this government and the next government is going to do.
“They will set the direction of travel and how it’s going to work, that has huge implications.”
In a conversation with Energy Voice Mr de Leeuw dived into the issues surrounding the Contracts for Difference (CfD) process.
He said: “The message last week was a big wake-up call that the system auctions need to be thought through and need to be more dynamic and adapted.”
Mr de Leeuw added: “There also needs to be joined up government because it’s not all the UK government, some of the planning and consenting is more localised, it’s more involved. This is about joint government working together to deliver it.
“What you saw last week, wake-up call, if you don’t get it right, that’s what happens. If you want to be a leading energy basin, and we have been for 50 years and we want to continue that, we are going to have to lead and we cannot have this happen again.”
Making ‘smart decisions’ to create renewable energy jobs
RGU has found that by not managing the decline in oil and gas in the North Sea and supporting the roll-out of renewable energy, jobs will be lost in hydrocarbon positions and equivalents will not be there for those looking to move into green energy.
In line with production decline and decommissioning activities, the report finds that a managed and just transition from oil and gas to renewables will still see the oil and gas workforce decline from 120,000 today to around 87,000 by 2030.
The research outlines three scenarios for the workforce on the journey to net zero.
The first two show that encouraging investment in renewables will more than make up for the jobs lost by the declining work in the North Sea oil and gas sector.
However, the third scenario indicates that “the decline in oil and gas jobs exceeds the opportunities available in the offshore renewables sector.”
Stuart Payne, chief executive of the UK regulatory body, the North Sea Transition Authority, said that “smart decisions” need to be made to protect the workforce.
He commented: “The UK is at an energy transition crossroads – if we think big and make smart decisions, we can sustain, build on and grow our brilliant offshore workforce.
“Equally, though, if we take the wrong turn then we risk squandering the skills that have been built over generations.
“To get this balance right means continuing to back oil and gas projects – developed responsibly – to protect the UK’s energy security and its world-leading supply chain, and dramatically accelerating investment in renewables and emissions reduction.
“Crucially, the offshore energy industry must remove obstacles that prevent workers moving from oil and gas to clean energy jobs, enabling them to become the engine room of the drive to net zero.”
The ‘winning combination’ for UK renewables
Paul de Leeuw outlined his “winning combination” to ensure that investment goes into the renewables sector to ensure jobs are created and that energy security is achieved, following the disappointing results of the CfD process.
He said: “If an investor wants to invest in the UK, what you want to know, particularly in the renewables sector, is that the planning and consenting system is working and working fast. You want to make sure that when you’re developing your fields it will get access to the grid fast and in a reliable way.
“If you want to do this, you want to make sure you have a supportive framework so that the power you actually get is going to work.”
The professor added that investors are looking to see if they can place orders in the UK and award work to the local supply chain and that these firms have the capacity to take on the contracts.
Paul de Leeuw said: “This is the winning mix of what we need to happen. What we’re saying is, that is the story of how we build the supply chain and workforce model.
“What you saw last week is just one of the elements, it was the element around the price not being right, but investors look at the whole range of anywhere from planning consent to the price system to the supply chain being available but also access to the grid. The combination of that is what we need to get right.”
The coming years will be ‘critical’ to Aberdeen
Leader of the SNP in Westminster and MP for Aberdeen South, Stephen Flynn, said that the work presented by Paul de Leeuw and RGU is “invaluable” and “highlights just how critical the coming years will be for Aberdeen.”
The MP added: “The report reinforces that in order to secure the economic future of our city for the long term we must see investment in renewable technologies gather pace, and it’s clear that the Government has a key role to play in helping to facilitate that.
“What we cannot afford to do is get this wrong. Yet just last week the UK Government auction for offshore wind failed to secure a single successful bid – without urgent action and focus we run the risk of not being able to protect Aberdeen’s economic future.
“The report is clear, the energy transition can be successful for workers and for Aberdeen’s economy but it requires action – from the US to the EU, our allies across the world are driving huge sums into the green energy gold rush and we must do the same.”
‘No simple choice between oil and gas or renewables’
The wider energy industry shared their opinion on the findings of the Powering up the Workforce report.
David Whitehouse, chief executive of OEUK, said: “This report shows that we must embrace the opportunity to work with all energy sectors or risk losing 95,000 highly skilled jobs in the UK by 2030.
“When looking at our future energy networks and supplies, there is no simple choice between oil and gas or renewables.
“The reality is that to keep our homes warm, the lights on, and our economy growing, we need both – this report clearly shows that cross-energy sector cooperation is the route to delivering high skilled jobs, a growing economy, and a successful energy transition.”
Aberdeen-based entrepreneur and chairman of ETZ Ltd., Sir Ian Wood said that the work carried out by RGU is ” hugely valuable.”
He added: “Owing to a world-class oil and gas sector, the North East of Scotland is home to the critical mass in skills and expertise that will be crucial in ensuring we successfully accelerate new and green energies, protecting and creating jobs as we do so. ”
Sir Ian Wood also said: “We must continue to support our oil and gas sector as part of a managed and just transition.”