Aberdeen & Grampian Chamber of Commerce (AGCC) met face-to-face with UK Energy Secretary Ed Miliband at Westminster yesterday to discuss the energy transition and the crucial role that the North-east of Scotland will play in the UK Government’s clean energy ambition.
AGCC Chief Executive Russell Borthwick, who earlier appeared in front of the Scottish Affairs Committee, used the meeting to welcome the UK Government’s decision to locate Great British Energy in Aberdeen and its commitment to increasing investment in renewable energy.
Mr Borthwick raised concerns from AGCC members about the impact that the Energy Profits Levy is having on investment in the North Sea, and how the policies of the UK Government are accelerating the decline of oil and gas at a pace that places a vast number of jobs at risk.
Mr Borthwick also reinforced growing concerns that a potential shift to zonal electricity pricing in the UK would jeopardise investment in ScotWind, and the 25,000 jobs it would create.
End investment paralysis
Speaking after the meeting, Mr Borthwick said: “We are grateful for the opportunity to meet the Secretary of State for what was a constructive meeting covering key issues of huge importance to the North-east, Scottish and UK economies.
“Jobs and investment in ScotWind are the backbone of Scotland’s just transition – if these projects don’t go ahead, then we face the chaotic energy transition that both the UK and Scottish governments promised they would avoid.
“We urgently need the UK Government to unlock the investment paralysis that threatens our energy capital status both today and in the long term.
“We need clarity on future oil and gas licensing; we need clarity on the future tax regime; we need clarity on funding for the Acorn project; and we need the government to reject a shift to zonal pricing for electricity which would end our offshore wind sector before it has even started.
“If the government can address these concerns, then hundreds of billions of pounds worth of investment is ready to flow into our energy sector, delivering jobs, revenue and a secure future for our energy communities.
“Our message to the UK Government is simple: the growth you seek is sitting on our doorstep – we just need the political will to go and grab it.”
A UK Government spokesman said: “The government recognises oil and gas production in the North Sea will be with us for decades to come and is committed to managing the energy transition in a way that supports jobs in existing and future industries.
“We will work together with the sector and others to develop an approach, giving the sector and its investors the predictability they need to keep investing while ensuring that they will pay their fair share of tax on excess profits in the future.”
'Don't follow New Zealand'
Addressing the Scottish Affairs Committee at Westminster earlier in the day, Mr Borthwick warned that the UK must not follow New Zealand in “accelerating too quickly” from oil and gas.
Prime Minister Sir Keir Starmer wants to ban all new licences in the North Sea, just like former New Zealand Prime Minister Jacinda Arden’s Labour-led government
But last year her successor Christopher Luxon’s centre-right government said it would pass laws to reverse the ban. Speaking in August, he said severe energy shortages had led energy prices to spike.
Mr Borthwick told MPs: “They accelerated too quickly.
“What that meant in New Zealand was power shortages, significantly increased consumer bills…and now a reversal of the bill which actually is encouraging domestic gas production again.”
Watch: Scottish Affairs Committee
Jenny Stanning, OEUK’s external affairs director, who also took part in the Scottish Affairs session, said New Zealand was a “great example of a rushed end to licensing of oil and gas”.
She added that when licensing was reopened “operators did not want to bid for new licences because they had already exited the basin and taken their supply chain with them”.
Protect supply chain
The MPs were also told that moving too quickly from oil and gas to green technologies will also put thousands of jobs in the supply chain at risk and undermine the energy transition.
Company executives Louise Kingham (BP) and Hebe Trotter (Harbour Energy) warned the committee that a lack of clarity around tax and regulation would see investors divert their money elsewhere in the world, with jobs and skills being lost.
“A decision by a company not to go forward with a contract doesn’t just impact them but the supply chain underneath,” said Ms Trotter, vice president of global government relations at Harbour Energy.
“It has a massive cascading effect to maybe 20 other companies. Those are the same companies that will be providing support to the clean energy transition that we need.”