The oil and gas sector has an undeniably significant role in the Scottish economy and job market. In 2018, it accounted for 6.6% of Scottish GDP and contributed £11.6bn in Gross Value Added. It has provided employment and prosperity to communities across the nation, particularly in the north east, and has had real impacts on the quality of life of citizens there.
Thus, as the Scottish Government pursues its goal of achieving net zero by 2045, concerns have been raised over whether it is possible to reduce the use of fossil fuels while protecting regions whose economies remain closely tied to the sector.
Holyrood’s economic case
While the primary focus of the transition to green energy is certainly addressing the climate crisis, there is also a strong economic case offered by its supporters. Economic resilience and stability have become central to the argument for investing in renewable energy. This is because the North Sea is a “mature and declining basin”, meaning that its remaining oil and gas reserves are becoming increasingly difficult and costly to extract and the reliance on them is becoming unsustainable.
As these resources diminish, the Scottish Government argues that the energy sector must evolve to protect the prosperity and stability of the Scottish economy. The transition to an energy system that focuses on renewables, such as offshore wind, has therefore been offered as a long-term solution.
Challenges to the transition
However, there have been strong criticisms voiced, and widespread concern surrounding the replacement of jobs. The rate of employment in the oil and gas sector is declining more rapidly than jobs are being created in renewable energy: there are about 31,000 jobs that have not been replaced. Paul de Leeuw, director of the Energy Transition Institute at Robert Gordon University, has put it plainly, stating that the green energy sector is “simply not ready to take all the jobs”. Thus, communities such as Aberdeen, “Europe’s oil capital”, are likely to be heavily impacted, as thousands of workers face possible redundancy.
In addition to concerns over job losses, critics argue that the transition away from North Sea that the transition away from North Sea oil and gas before the green energy sector is able to take on the full responsibility of supplying Scotland’s energy, risks inflicting further damage onto the national economy. If supply of gas and oil from the North Sea falls faster than the demand for it, the UK may rely more heavily on imports and therefore be more greatly exposed to external shocks and international events that affect price volatility. Stating its belief in the sector’s importance, Offshore Energies UK notes that in 2023, Scotland got 79% of its total energy from gas and oil and 85% of homes in the UK relied on gas boilers for heat.
The devolved policy problem
It is also important to note that the Just Transition policy originates from the Scottish Government, but its ability to deliver it successfully is impacted by the economic tools controlled by Westminster. The taxation that affects the production of energy, for example, is controlled by the UK Government, therefore any changes made to corporation tax or tax breaks to encourage investment will heavily impact the development of green energy but are out of the hands of Holyrood. Consequently, the devolved government can set ambitions and invest in skills, but it cannot by itself guarantee the investment needed to replace those jobs lost in the oil and gas sector.
The politics of profit
Additionally, the debate surrounding Scotland’s transition to net zero has been shaped by the influence of major oil and gas companies, many of which generate substantial profits from extracting North Sea resources. Companies such as Shell and Perenco therefore have a clear commercial interest in the continuation of oil and gas production and have actively lobbied governments on energy policy. Their concerns over economic damage and the loss of jobs are not necessarily invalidated through this, but should be considered in light of their financial incentives, as it may be naïve to assume that opposition to such a transition is driven solely by concern for workers.
Scotland’s green future
Ultimately, the Just Transition stems from a commendable ambition to tackle climate change while ensuring that workers and communities are not left behind. The policy undoubtedly faces significant challenges, particularly replacing the thousands of jobs lost in the oil and gas sector and securing the investment needed to build a thriving renewable energy sector. The debate it has provoked extends far beyond Scotland’s future and has created discussion about whether governments should prioritise long-term environmental sustainability over the short-term economic interests that have traditionally shaped energy policy.
At a time when political figures continue to champion slogans such as Donald Trump’s “Drill, baby, drill!”, Scotland’s commitment to a just transition represents a markedly different vision of the future.
