Renewables jobs boom realistic?
AS the co-operation deal between the SNP Government and the Scottish Greens was confirmed at Holyrood on Tuesday amid fanfare, leaders of one of the country’s most important industries struggled to make themselves heard.
The latest state of the North Sea report from oil and gas trade body OGUK highlighted the scale of the challenges facing an industry which has come under sustained attack from campaigners.
The Economic Report shows that investment in new North Sea fields and in extensions plunged by a third to £3.7 billion last year amid the fallout from the coronavirus crisis. OGUK said the total was the lowest level in real terms since 1973.
Oil and gas firms invested £11.4bn in North Sea developments in 2012 amid a boom encouraged by growth in Asia. The boom petered out from 2014 after growth in supplies ran ahead of demand.
However, the SNP fought the independence campaign of 2014 on the claim that the mighty North Sea industry would fuel a prosperous future for Scotland once it was separated from the rest of the UK.
The Scottish Greens on whom it is now relying for support in its fixation on the constitutional question seem to regard oil and gas production as the work of the devil.
Campaigners have been vocal in their calls for curbs to be placed on North Sea activity and have resorted to a range of legal manoeuvres to try to make life difficult for firms.
The campaign has reached a crescendo following revelations that an oil firm backed by US financiers, Siccar Point Energy, is seeking permission to develop the massive Cambo field off Shetland with Royal Dutch Shell.
OGUK reckons oil and gas firms are considering around 18 North Sea developments in total.
The wording of the co-operation agreement with the Scottish Greens shows First Minister Nicola Sturgeon is trying to tread a fine line. She wants to keep the Greens onside without alienating SNP supporters in the North East heartlands of the oil and gas industry.
The shared policy programme published by the Scottish Government stated: “While we do not entirely agree on the role of the oil and gas sector, given the urgency of the climate emergency, we accept that countries around the world, including the UK, cannot continue with unlimited recovery of hydrocarbons if the aims of the Paris Agreement are to be met – we cannot ignore the concern that unlimited extraction of fossil fuels is simply incompatible with protecting the planet.
“However, we recognise how important our oil and gas industry, infrastructure, highly skilled workforce and supply chain are to Scotland.”
We are told that future policy will be informed by a thorough review into the contribution of North Sea production to the global climate emergency and to Scotland’s economy, security and wellbeing. This is to be completed by the end of 2022.
But the parties to the agreement said they supported the call for Scottish Government involvement in a pre-production oil and gas licence climate checkpoint review.
This may seem odd to some given that Ms Sturgeon has been accused of sitting on the fence on Cambo. She has called on the Westminster Government to reassess the original Cambo licence, without calling for the proposed £2bn development to be blocked.
The development will require approval by the North Sea regulator but campaigners insist the Westminster Government has the power to block the project.
The wording of the co-operation agreement in respect of transport also seems to indicate it has been designed to appeal to the Scottish Greens.
The parties commit to align transport policy with climate targets and the goal of reducing distances driven by car by 20% by 2030.
They say that reducing the distance travelled by private car and the number of vehicles on the roads will improve air quality, the wellbeing of communities and reduce accidents, and is an important part of the approach to achieving Scotland’s greenhouse gas emission reduction targets.
It should be remembered that the SNP Government approved the £1.4bn Queensferry Crossing over the Forth and scrapped related tolls in an act that provided huge encouragement to people to drive over the river rather than use trains.
Drivers now face the prospect of 40 mile-per-hour limits being placed on bridge traffic while engineers try to come up with a solution for the huge problems caused by ice forming on the supports in winter.
The SNP and the Scottish Greens disagree about whether economic growth is good or how it should be measured.
However, they have bandied around big numbers about jobs that are presumably meant to assure people that their policies would deliver prosperity.
In advance of members backing the co-operation deal, the Scottish Greens said that in government they would create thousands of jobs expanding Scotland’s renewable energy capacity, without going into detail on exactly how many or the timescales involved.
A project like Cambo could be expected to generate hundreds of jobs across the North Sea supply chain.
OGUK noted in its Economic Report that the industry still supports 200,000 jobs across the UK even after companies shed thousands in response to the slump in oil prices triggered by the coronavirus crisis.
Sentiment has started to recover following the rally in prices that has been supported by the rollout of coronavirus vaccines, but remains fragile.
Gas prices have surged, in a development market-watchers think is related to moves by Russia to limit supplies to Europe.
OGUK noted that curbs on UK production will only increase the country’s reliance on imports unless demand is reduced in line. As heating, industry and transportation account for the bulk of demand, this won’t be achieved just by using windfarms to generate electricity for domestic use.
With the North Sea still facing competition for investment from around the world, OGUK warns that any move that damages the oil and gas industry could make it harder to maximise the potential to draw on the industry’s expertise to develop renewables.
Experience suggests promises that there will be a boom in green energy jobs should be regarded with caution.
Some key technologies are still under development and may not live up to expectations.
Former first minister Alex Salmond enthused about the potential of marine renewables only to find subsequently that Scottish wave energy pioneers Aquamarine Power and Pelamis fell into administration. The Saltire Prize that was launched in 2008 to encourage investment in wave power morphed into the £10m Saltire Tidal Energy Challenge in 2019. Less than half of that sum had been awarded in total, to only two recipients, when the scheme closed for applications.
Nova Innovation recently won £2m Scottish Enterprise support for its bid to create the first European assembly line to mass manufacture tidal turbines. But this is only expected to create round 35 jobs.
Investors have shown huge enthusiasm for windfarms, both on and offshore Scotland. In many cases projects have benefited from subsidies provided under the Contracts for Difference regime.
With much of the related manufacturing work completed outside Scotland, windfarms have yet to generate the boost to jobs expected
The Scotwind licensing round which closed in July sparked huge interest among oil and gas majors, including BP, Shell and Eni. However, it may be some time before work on any of the projects concerned starts in earnest. Industrial giants such as GE have already committed to developing big turbine manufacturing operations on Teesside that could probably serve Scotland. The platforms used on the giant Brent oil field are being decommissioned on Teesside.
The Scottish Government claimed EU state aid rules prevented it providing support for the Burntisland Fabrications business in Fife, which some hoped would become a major force in the turbine business
Once windfarms are developed they may not support that much activity. The operations and maintenance centre that EDF plans to develop in Eyemouth to support the giant Neart na Gaoithe windfarm is only expected to provide up to 50 permanent jobs.
By contrast, around 750 people work at the Torness nuclear plant EDF operates nearby, including contractors. Its production is carbon-free. Generation at Torness is due to end in 2030. The Hunterston plant in Ayrshire will enter the defuelling process this year
The Welsh Government is assessing the potential to develop small modular nuclear reactors at Trawsfynydd, which produced electricity from 1965 to 1991. A Scottish Government reliant on the support of the Scottish Greens will be unlikely to support any such developments.