Urgent political alignment needed for UK to achieve ‘just and fair’ energy transition by 2030

The UK will fail to achieve a “just and fair” energy transition by 2030 unless there is urgent alignment across the political spectrum to sustain offshore energy industry jobs, supply chain investments and the economic contribution of the workforce, a new report by Robert Gordon University (RGU) states.

The “Delivering our energy future” report analyzed over 6,560 pathways for the UK offshore energy industry between now and 2030 of which fewer than 15 or <0.3% meet the “just and fair” transition principles, concluding that UK and Scottish political decisions, rather than energy market economics, will determine the size of the workforce and supply chain.

To note, the United Nations’ definition of a “just and fair” transition means “ensuring that no one is left behind in the transition to low carbon and environmentally sustainable economies and societies”.

According to RGU, even these limited scenarios require the renewables sector to achieve higher levels of ambition through billions of pounds of additional investment in the next six years and the ongoing decline in the oil & gas industry needs to be offset much faster by greater levels of activity and higher UK content in renewables if any pathways to a just and fair transition are to remain open.

If this does not occur, interim steps will need to be taken to address the decline in activities, including oil & gas production, currently expected to decline by more than 40% by 2030.

Professor Paul de Leeuw, Director of RGU’s Energy Transition Institute, stated that the UK also needs more flexible electricity pricing mechanisms to avoid project delays or cancellations and a proactive focus on building UK content.

“The UK still has a unique opportunity to create a new energy future. Accelerating the re-purposing of the North Sea as a world-class, multi-energy basin will ensure the sector can power the country for decades to come. The prize for the UK to get this right is enormous. But to deliver this requires action and urgency, which means faster planning and consenting and access to the grid,” De Leeuw said.

“While there is consensus across all stakeholders including governments, politicians, industry organisations and economic development bodies that we need to realise a ‘just and fair’ transition, a far more agile and joined up approach is required to address how the country can best secure its energy ambitions, while addressing the cost-of-living crisis, managing energy security and delivering on the net zero agenda.”

To achieve this outcome, the UK offshore energy sector needs to deliver on spend of up to £200 billion over the remainder of this decade across offshore wind, hydrogen, carbon capture and storage (CCS) and oil & gas projects, De Leeuw noted.

The report finds that in order to sustain the offshore energy workforce at 2023 levels, the UK has to deliver almost 40 GW of installed offshore wind capacity – compared to around 15 GW cumulative capacity in 2023 – and up to 40% of the investment needed to achieve this to be spent in the UK.

If unsuccessful in delivering this ambition and content targets by 2030, the UK is unlikely to be able to retain the offshore energy workforce without progressing additional activities, including oil & gas.

Significant levels of new operational capacity and capability will be required to deliver on the ambition of up to 40% UK capex content for new offshore wind projects and up to 50% for oil & gas decommissioning activities by 2030.

Each additional 10% of UK capex content for offshore wind is estimated to yield between 3,000 and 12,500 jobs by 2030. RGU analysis highlights that every 10% salary differential between oil and renewables may require up to 7% more people to maintain economic contribution.

Currently, 1 out of 30 of the working population in Scotland is employed in or supports the offshore energy industry, versus 1 in 220 across the UK. According to RGU, if Scotland fails to capture a significant share of future renewables activities, selective oil & gas activities may need to be sustained until 2030 to retain the Scotland-based offshore energy workforce, skills, supply chain and economic contribution.

“The Scottish Government is determined to play its role in maximising these benefits – and negotiating the challenges – not least through the publication of our Energy Strategy and Just Transition Plan, which will set out our vision for a future energy system that delivers affordable, secure, clean energy and delivers economic benefits to every part of the country,” said Cabinet Secretary for Net Zero & Energy Mairi McAllan.

“We will continue to work closely with industry, communities and other key partners to deliver this vision and ensure a just transition for our energy workforce and for everyone in Scotland.”