UK Government must not ramp up decline of Scottish oil and gas sector, MPs warn

The UK Government should not ramp up the decline of Scotland’s oil and gas industry, a report has urged, after it found jobs created in clean energy are failing to make up for losses in the North Sea.

The report by the House of Commons Scottish Affairs Committee warned the sector is now at a “critical juncture” as the nation moves away from fossil fuels and towards renewable energy.

MPs also concluded the Scottish and UK governments should have acted sooner to prepare for job losses at Grangemouth – Scotland’s last oil refinery.

It said the resulting employment gap was “avoidable” and caused “trauma” for the surrounding community reliant on the industry.

The report, the first part of its inquiry into GB Energy and the net zero transition, warned that until clean energy jobs can be created at the scale needed to match current fossil fuel job losses, the UK Government “should avoid accelerating the decline of North Sea oil and gas production”.

MPs called on the UK Government to set out urgently how it will address the employment gap.

The report said as fossil fuels will continue to form part of the UK’s energy mix for decades, there are “compelling arguments” for the “gradient of UK production decline to be eased, to meet as much energy demand as possible from domestic sources”.

The committee added: “Doing so will mean Scotland retains highly skilled supply chain workers, rather than being lost to overseas markets, which are vital for the growth of clean energy sectors.”

It also backed industry calls for the windfall tax on oil and gas companies to be reformed “as soon as possible”.

The report expressed concern “that without reform, the current tax regime will accelerate the decline of the North Sea oil and gas industry and its supply chain”.

It urged the UK Government to “take a pragmatic approach” to North Sea licensing policy and clarify how developers may be allowed to undertake new drilling activity under existing exploration licences.

MPs said the closure of Grangemouth should become a case study for governments’ management of Scotland’s energy transition to ensure future closures can be better managed.

They also recommended the UK Government issues an explanatory statement along with every environmental impact assessment outlining how environmental concerns were weighed against energy security and economic considerations.

Labour MP Patricia Ferguson, chairwoman of the Scottish Affairs Committee, said: “Today’s report outlines our concerns that jobs from the clean energy industry are simply not being created fast enough, or on the scale needed, to match the mounting job losses from the oil and gas sector.

“It’s vital that the Government moves quickly to plug this employment gap, replaces jobs being lost and ensures a smooth energy transition for workers and communities.

“Until this is tackled, the Government should avoid making decisions that would further accelerate oil and gas production’s decline.

“Our report sets out several ways to do this whilst still preparing for the longer-term clean energy future.”

Ferguson described the closure of Grangemouth as the “energy transition’s canary in the coalmine”, adding: “Without a doubt, both governments should have moved faster to prepare for job losses and the site’s future, and must learn lessons from this.

“Additionally, I want to acknowledge the UK Government’s recent announcement of its clean energy workforce plan.

“We’ll be reviewing the plan with interest to explore whether it can deliver some of the priorities we outline in our report, to create good, secure jobs and support our economy.”

The GMB union said ministers can no longer “stick their fingers in their ears” around energy jobs.

“The alarm bells around the so-called just transition have been ringing constantly for years but are now deafening,” GMB Scotland secretary Louise Gilmour said.

“Ministers can no longer stick their fingers in their ears and shout more loudly about all the great things coming tomorrow while ignoring catastrophic job losses today.

“The MPs’ report is grim but completely unsurprising and comes days after the Scottish and UK governments were continuing to insist they have a plan. If they do, it is beyond time to share it.”

The UK and Scottish Governments have been approached for comment.