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Jobs at stake in the energy transition – BBC News

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  • By Douglas Fraser
  • Business and economy editor, Scotland

Image source, Getty Images

  • The difference between a good and a bad shift from fossil fuels to renewables is newly calculated at 95,000 jobs, nearly half of that gap in Scotland.
  • Aberdeen academics warn government has to put the right incentives and capital in place to get ready for a vital period between next year and 2028.
  • The opportunity and the warning has been set out after a failed auction for offshore wind, and after the offshore energy industry warned there is £100bn of investment currently stalled.

The stakes are high in the Great Energy Transition from fossil fuels to renewables, and nowhere higher than in Aberdeen.

Over five decades, the city that has become dependent on the older industry. It has a unique cluster of skills. It could be left stranded and damaged if the transition goes badly, but there are big prizes to be won if it goes well.

Just how badly or well that job transition goes has now had some numbers applied, by a team at the city’s Robert Gordon University (RGU).

These come a week after Offshore Energy UK trade association told us £200bn in investment is in the pipeline for the next decade, of which £100bn is stalled due to political and regulatory uncertainty and because of the rising cost of finance.

Such stakes, which include oil, gas, offshore wind, carbon capture and storage and hydrogen developments, can appear so big as to be meaningless.

Under-achievement

The new modelling is about jobs, and that is far from meaningless for Aberdonians and many others beyond. The jobs and investment benefits of offshore renewables will be – they already are – far more widely spread.

The research tells us there are 154,000 UK jobs at present in offshore energy. Of those, 79,000 are in Scotland. Some 120,000 remain in oil and gas, the other 34,000 in renewables.

Image caption, Scotland’s biggest offshore wind farm Seagreen, which is off the Angus coast, began generating power last month

As you can tell, these are round numbers, indicating that such forecasts should be treated with due scepticism. They are almost certain to turn out wrong, but for now, they’re our best guesses. They give at least a sense of trajectory and scale, based on company, industry and government data.

The RGU team have modelled three scenarios. The first follows current UK and Scottish government policy, as announced last year for offshore wind, hydrogen and carbon capture and storage, in theory if not in its delivery so far. This is ambitious. A lot of things would have to go right to achieve this.

Scenario Three reflects outcomes by 2030 that fall well short of those ambitions – up from 12 gigawatts (GW) of wind to 30GW instead of the target 50GW, quarter the capacity for hydrogen and half the carbon capture and storage. These look like more realistic under-achievement rather than undue pessimism.

The other variables include the speed at which oil and gas investment and production are in decline, and the extent to which governments at Holyrood and Westminster are successful in securing domestic production rather than relying on imports of renewable power equipment.

Scenario two, as you’ll have guessed, is a mid-way point.

Drillers to caterers

The model encourages us to follow the money. That’s where the jobs go.

In brief, the upside Scenario One points to an increase in total offshore energy jobs from 154,000 jobs to 225,000 by 2030. Oil and gas would be down under any scenario. It’s clearly in decline. The question is how fast, and that will depend on political decisions around licensing and tax, linked to industry confidence to invest.

Scenario One would take it from 120,000 to 87,000, Scenario Three to 60,000. That is a big gap of 27,000 jobs to contemplate, and to defend, if you’re one of the politicians urging a faster rate of decline.

A lot of jobs go quite quickly because the 180 or so fields likely to be closed down by 2030 are those with the most intensive work on them at present. New fields have more automation and need less maintenance.

Image source, Getty Images

Meanwhile, renewables and associated industries would see a rise from 34,000 jobs now to reach more than 140,000 by 2030, with the cross-over point to the majority of jobs in renewables as soon as 2027.

Paul de Leeuw, lead researcher on this project at RGU, says there is a ‘goldilocks zone’ for this transition between 2024 and 2028, when the supply chain and workforce skills are best placed to shift from fossil fuels to renewables.

It will require, he says, capital investment primed by governments in order to have the capacity in place for the big new investments required in offshore wind and carbon capture.

And if it goes well in Scotland, the model points to employment going from 79,000 close to 100,000. If it goes badly, it goes below 50,000.

Going, going, flop

These are very wide gaps between good and bad outcomes – 95,000 jobs overall, nearly 50,000 of them in Scotland.

The stakes in Aberdeen are particularly high because one in five workers are directly employed in the oil and gas sector, and once they have spent their earnings, ‘imputed employment’ (dependent on that spending) reaches one in three.

The forecast is also for a more transient workforce, following the big capital projects in a shift from operational jobs which dominate in oil and gas at present.

Those with fossil fuel skills in operations and engineering, technicians, and managers of projects, procurement and supply chains will find the transition less of a challenge. It will require a lot more re-skilling for those in drilling and offshore catering if they are to stay in the energy sector.

According to Professor de Leeuw: “There is a huge prize up for grabs and we want to equip decision-makers – in government, industry or in individual businesses – with new insight to convert those opportunities into reality.

“With investment at risk and wind projects facing delays, the findings underline the present-day situation for the UK offshore energy industry and its stakeholders. The big prize of a significant jobs gain is still within our collective reach.

“Inaction or simply slow progress will mean that offshore energy job numbers overall could drop by 15% by 2030, making the path towards net zero even hard to negotiate.”

Image source, Getty Images

The warning and the opportunity are set out at a vital moment. Last Friday, there was a highly significant flop in the auction for offshore wind Contracts for Difference.

That is a reverse auction in which developers are asked to bid for a tranche of the output which has a guaranteed floor price. That gives investors an assurance of a minimum flow of earnings over 15 years.

As a device for driving down costs, it had been successful. The price of offshore wind has plummeted, as developers compete for that guarantee. Until now.

The cost of finance as well as steel, cables, blades, installation and almost everything else in the supply chain has gone up markedly in the past couple of years. The government’s guidance on the maximum price it would accept for a megawatt hour of offshore wind power was too low to attract any bids.

That is a blow to the industry’s ambition, and it was well signalled ahead of the auction result. It’s a bigger blow to the government’s handling of the transition and its drive to reach net zero by 2050.

It has to create the conditions investors need before they commit to those hundreds of billions – on price, on ensuring there are timely connections into the grid, on the time it takes to get planning consents, including those for pylons through politically sensitive onshore territory, on sending signals to suppliers that they should invest in capacity ahead of contracts being awarded.

If government doesn’t do that, other locations will attract those internationally mobile investment funds.

And now, Britain can see what those outcomes could mean, measured in many tens of thousands of jobs.

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