Aberdeen is being pushed towards an economic collapse reminiscent of the demise of the coal industry, a new report has warned.
A paper published by the Jobs Foundation said there is a growing consensus between trade unions and energy bosses that current oil and gas policies risk decimating communities.
It called for the energy profits levy – or windfall tax – to be scrapped as soon as possible and for new North Sea exploration licenses to be granted.
In a foreword to the report, GMB Scotland secretary Louise Gilmour compared the current situation to pit closures in the 1980s.
“For those of us old enough to remember, this energy revolution is already resembling another, when sudden, savage pit closures 40 years ago only transitioned thriving mining communities into despair and dereliction,” she writes.
Elsewhere, she told the report: “We will always need oil and gas. I mean, I don’t like Donald Trump, but he’s right about ‘drill, baby, drill’. We’ve got this whole reserve of oil and gas just off our coast that we should be using.”
The Jobs Foundation was set up by the lobbyist and Tory peer Lord Matthew Elliott and Georgiana Bristol in 2023 to champion the role of business as a force for good.
Its new report, written by the charity’s research director Nick Tyrone, argues the energy sector “stands on a cliff edge”, adding: “We are running out of time to save the energy sector – in Aberdeen, in Scotland, in the United Kingdom.”
It quotes research by Robert Gordon University, which previously warned the North Sea workforce could shrink by approximately 400 jobs – the same number lost as a result of the closure of the Grangemouth refinery – every two weeks for the next five years.
The report says ruling out new licences for North Sea drilling or exploration “has been a disaster for Scotland and, more specifically, Aberdeen”.
It calls for a “concrete” transition plan and describes the extension of the windfall tax until 2030 as “madness”. It also argues for a specific focus on Aberdeen.
“Aberdeen became the oil and gas capital of Europe because it was geographically located close to large deposits,” it says. “The jobs in the energy sector in Aberdeen will not be magically kept or restored as we transition to renewables – the same geographic pluses are not present in the same way.”
Bruce Ferguson, the finance director for Hunting PLC, a manufacturing firm that builds equipment for the energy sector, told the report: “There is a lack of stability, of trust in the Government of the UK. It was a bit of a throwaway comment, but one operator said to me recently about investing in the UK, ‘Yeah, we’re going to invest in oil and gas, but we’ll do it somewhere more stable, like Nigeria’. And he wasn’t joking. I thought, is that where we’ve got to?”
The energy company EnQuest said it had faced an effective tax rate of 120 per cent in the UK in 2022, and 113 per cent in 2023.
SNP Net Zero Secretary Gillian Martin said: “What is happening at present is that UK government policies, such as the energy profits levy are acting as a tax grab on Scotland’s energy and driving an accelerated decline of North Sea oil and gas.
“This is costing jobs and investment and placing a just energy transition and investment in all energy projects at risk. The levy is also having detrimental effect on the decommissioning of end of life oil and gas infrastructure- work that could provide jobs.
“That is why we continue to call on the UK government to urgently remove the EPL, to help ensure there is a just and fair transition from oil and gas to renewables that protects skills and delivers a pipeline of future investment, and does not create a cliff edge.
“We also continue to call on the UK government to approach decisions for North Sea oil and gas projects on a rigorously evidence-led, case by case, basis – with climate compatibility and energy security as key considerations.
“The Scottish government will continue to do all it can to support the energy workforce with the powers available to us. More than £120 million has already been invested in the North East through our Just Transition and Energy Transition Funds, to support the region’s transition to net zero.”
A spokesperson for the UK Department for Energy Security and Net Zero said: “Issuing new licences to explore new fields will not take a penny off bills, cannot make us energy secure, and will only accelerate the worsening climate crisis.
“We have set out a plan to build a prosperous and sustainable future for the North Sea, backed by record investment to grow clean energy industries, support the management of existing oil and gas fields for their lifespan and deliver the next generation of good jobs for North Sea workers.”
