The risky assumptions underpinning Ed Miliband’s green job promise
The discovery of oil and gas at the massive Forties Field, about 110 miles off Scotland’s North Sea coast, triggered a decades-long boom of activity in the North Sea. But 55 years later, the good times are almost over – and the industry that helped power the country is at a crossroads. The number of jobs reliant on North Sea oil and gas tumbled from 191,000 to 121,000 between 2016 and 2023, as what remained in the basin became harder and harder to exploit. Now, Ed Miliband has called time on new licences as well, citing the need to tackle climate change. The Energy Secretary argues that continuing to drill will fail to bring household energy bills down, while only adding more carbon dioxide emissions to the atmosphere. Instead, Miliband has laid out lofty plans for the North Sea to be “at the heart of Britain’s energy future” by transforming itself into a hub of “homegrown” green power. “Oil and gas production will continue to play an important role and as the world embraces the drive to clean energy, the North Sea gives Britain a chance to show new leadership once again,” Miliband said this month.
Amid the sweeping ambitions, a key question remains: what will happen to the tens of thousands of oil and gas workers who risk becoming jobless? Under plans recently put forward by the Department for Energy Security and Net Zero, many would transfer their skills to new roles in offshore wind, carbon capture and hydrogen production. According to the proposals, between 70,000 and 138,000 jobs could be created in these new offshore industries by 2030. The “goldilocks” period for workers to change their jobs would begin from around 2027, when the number of roles in green energy finally begins to overtake those in oil and gas. The scenario is at the heart of the Government’s promise to deliver a “just” transition to net zero that doesn’t leave former fossil fuel workers out of work as the closure of coal mines in the 1980s did. But the forecasts – taken from Robert Gordon University, in Aberdeen – rely on critical assumptions that are by no means certain.
Britain’s energy transition will transform offshore industries – Direct and indirect employment
One is that Britain will manufacture more of its own wind turbines, instead of simply importing most parts from abroad. Another is that businesses can make carbon capture and storage (CCS) technology viable, and the production of green hydrogen from electrolysis. Both rely on huge subsidies today. Success will also require Britain to turn around its poor record on creating jobs from investment in wind power. Despite boasting more offshore turbines than any country bar China, foreign companies – several of them state-controlled – still build and own the lion’s share of Britain’s wind farms. This must change for North Sea oil and gas workers to get a “just transition”, warns Professor Paul de Leeuw, head of Robert Gordon University’s energy transition institute. “Most jobs in offshore wind are not in operating the facilities, they come from building them,” he says. “So if you do not build, you won’t get the jobs.” Wind farm developers and the Government have been promising to increase British involvement in the supply chain for more than a decade. Under the North Sea Transition Deal in 2021, developers voluntarily pledged that 60pc of the lifetime expenditure on wind farms would go to domestic firms. But a report by the independent offshore wind champion, Tim Pick, found in 2023 that UK content had “stuck stubbornly around 50pc”.
Crucially, he also warned that domestic spending on construction and planning (or capital spending) “rarely” exceeded 25pc. For Miliband’s dream of green jobs to be realised, De Leeuw’s researchers at Robert Gordon say the UK share of capital spending must rise to between 40pc and 50pc. “You can’t do everything in the UK, because we don’t have all the capacity and capabilities,” De Leeuw says. “But for capital spending – the foundations, the substations, the cable laying, the towers and the turbine itself – we think 50pc can be done here.” “Higher end activities” such as manufacturing of blades, gearboxes, control systems and subsea infrastructure are areas where the UK has ready advantages, he says. Fortunately for Miliband, De Leeuw argues there is still time to change Britain’s performance on this score: most of the work for offshore wind is still to come. The Government’s plan to deliver a clean power system by 2030 will require a tripling of current offshore wind capacity, a pipeline of business Britain can use to attract more factories. Many future wind farms will also be floating ones – a nascent part of the industry focused on deeper waters, providing a chance to secure first mover advantage. Floating wind farms will use conventional turbines mounted on semi-submersible platforms that are tethered to the seabed using cables and anchors – presenting a good opportunity for North Sea’s oil and gas workers who deal with similar challenges on a daily basis already on offshore rigs. But incentivising manufacturers to set up in the UK has proved challenging in the past. The biggest component maker in the country is the Siemens Gamesa blade factory in Hull. There are also four cable factories and three foundation factories elsewhere, mostly concentrated in Scotland and the North, according to a report by Wind Europe. In Teesside, South Korean steel manufacturer SeAH Wind is investing £900m into a factory that will build giant monopiles, the foundations of wind turbines. But these plants are the exception, not the rule. Most European components still made in Scandinavian countries and Germany. Chinese firms are also making inroads, with one poised to supply turbines for the GreenVolt project – the Continent’s first commercial-scale floating wind farm – off the coast of Scotland. Nathan Bennett, of industry group RenewableUK, says a lack of suitable port facilities is partly to blame for Britain’s failure to grab a bigger slice of the business. “What we need to allow greater UK procurement is improvements to our port infrastructure,” Bennett says. This includes creating large “laydown” areas where components can be stored while turbines are assembled. The Government has vowed to tackle this by co-investing with port operators, through the National Wealth Fund.
Earlier this month, ministers announced £55m would be provided to the Port of Cromarty Firth, in Scotland. The work will double the size of the port’s laydown area to 23 hectares. But for UK factories to play a role in Miliband’s 2030 clean energy plan, Robert Gordon’s De Leeuw says investments must be made soon. “You have to start building these key facilities in the next two to three years, because otherwise you won’t be ready for the ramp up in construction that is coming,” he warns. “You can’t do it at the same time projects get approved. You need to get ahead of the curve.” Without this, “UK wind farms could conceivably be built and installed with many high-value components never having touched British soil”, a report by the Government’s floating offshore wind taskforce has warned. Wind farm developers privately warn factories won’t materialise without greater certainty about work coming their way, as well as blockbuster funding awards from the Government’s upcoming contract for difference (CfD) auctions. “You’ve got to see real orders come in for a long time before people like Siemens are going to build a new factory that requires a 10-year investment,” one executive warns. “The next CfD auction needs to be a bonanza. If that happens, then the industry will say ‘OK, you said you’d do something and you’ve done it – so now we are going to deliver’.” The amount of money ultimately available for green infrastructure also remains up in the air, as Chancellor Rachel Reeves’s spending review juggles these priorities against others such as defence. Further cash will also be needed for carbon capture, an industry which the Government says could transform the North Sea’s emptied oil and gas reservoirs into storage tanks for carbon dioxide. But carbon capture remains commercially unproven – and controversial. The Institute for Energy Economics and Financial Analysis has branded the £22bn pledged towards trial schemes in the UK “a waste of public money”. It warned storing carbon under the seabed would require constant and costly monitoring to prevent dangerous leaks.
Meanwhile, the Government’s hydrogen plans have also attracted brickbats from critics who say electrolysis is far too energy-intensive for the gas to become a true mass commodity. For Miliband’s vision of a revitalised North Sea to come about, these issues must be resolved. Meanwhile, he faces claims that Labour’s net zero ambitions are unnecessarily hastening the oil and gas industry’s decline. In Grangemouth, the closure of an oil refinery will cost 400 jobs and has been blamed on plans to phase out petrol cars. “No other country in the world, especially at a time of heightened global instability, would actively choose to aggressively shut down its domestic oil and gas industry,” said Andrew Bowie, the shadow energy secretary. “But this is exactly what this Government, and in particular this department led by the eco-warrior-in-chief, is doing.” A government spokesman insisted the North Sea can be “a world-leading example of an offshore clean energy industry, building on the UK’s oil and gas heritage”. They pointed to the recently announced “clean industry bonus” for factories located here. Miliband may still get his clean power revolution. But if it isn’t made in the UK, then claims of a “just transition” will ring hollow in Aberdeen as North Sea workers find themselves out of work.