Written evidence submitted by Scottish Trades Union Congress (NRG0026)

Scottish Affairs Committee Inquiry Response

GB Energy and the net zero transition

The STUC is Scotland’s trade union centre. Its purpose is to co-ordinate, develop and articulate the views and policies of the trade union movement in Scotland, reflecting the aspirations of trade unionists as workers and citizens. The STUC represents over 560,000 working people and their families throughout Scotland.

Summary

The STUC has been working to establish a just transition to net zero for several years. Despite these efforts, political promises have been made and remain undelivered, undermining support for the move towards net zero. The UK has rapidly developed offshore wind technology with the second highest capacity of any country in 2023.[1]

Political commitments to develop these technologies have repeatedly come alongside promises of jobs and reindustrialisation that have never materialised.[2] The UK Government has set out positive steps towards a different approach through GB Energy and other initiatives, however these must be given sufficient resources and clear direction to lead the transition.  In considering the potential role for GB Energy and the net zero transition more broadly, the Committee should seek to learn lessons from Scotland.

After many years of talk around ‘just transition’, workers and their communities see little evidence of progress. The declining production of the North Sea is having real impacts for energy workers now, with installations being decommissioned and redundancies increasing at a rapid scale. Despite the scale of renewables, and particularly onshore and offshore wind projects, already operational and in the pipeline in Scotland, there are few jobs and no pathway into them for existing energy workers.

Delivering a just transition is vital to retain the skills and experience of energy workers, as well as to maintain support for the important work of decarbonising the economy. The mistakes in Scotland are tied to the unwillingness to control and direct the transition, and this remains a barrier today.

Our submission to the inquiry addresses the questions raised by the Committee by highlighting the issues in Scotland’s approach to renewable energy, and the steps which need to be taken to build workers’ confidence and positive outcomes in the energy sector.

Growing gap between turnover and jobs in Scotland’s wind sector

In the first quarter of 2011, offshore and onshore wind capacity in Scotland stood at a combined 2.7GW. By the third quarter of 2024, capacity had grown rapidly to over 13GW.[3] A landmark was reached in 2022, when renewable energy generation in Scotland was more than overall electricity consumption in the year.[4]

However, for all the progress in building renewables, particularly wind, there has been little benefit for people in Scotland. Ownership is concentrated in the hands of private companies, people have not been insulated from soaring price rises, and crucially there has been a failure to realise job promises. This is a significant issue for the transition, considering the number of workers in oil and gas production even as production levels have fallen. Getting the transition right for existing energy workers relies on the creation of sufficient numbers of high-quality jobs in clean energy industries. This issue is already unfolding as over the last decade, direct and indirect jobs in Scotland’s oil and gas sector have fallen by 40% to 74,100 in 2022, while low carbon jobs have barely risen over the same period, reaching just 25,700 jobs.[5]
 

The approach to building wind capacity over the last decades has been unsuccessful at retaining economic and social opportunities from these natural resources. Figure 1 below shows that offshore and onshore wind companies are rapidly increasing their turnover, at a rate that is far behind any comparable trends in the number of people working in the sectors.[6] Between 2021 and 2022, there was a 68% rise in offshore wind turnover, yet the number of jobs in the sector fell in the same period.
 

Figure 1

The reason for the increasing gap between turnover and employment is the failure to build domestic supply chains and manufacturing in the sector. The UK’s offshore wind projects largely source key components such as nacelles, towers, and jackets from overseas. Figure 2 below shows the import gap in Scotland’s low carbon and renewable energy economy.[7] In 2022, this stood at £408m made up mainly from the £286.5m import gap in the offshore and onshore wind sectors. Despite being second in the world for offshore wind capacity, there is little domestic manufacturing for the industry. This is evident from the experience in Scotland where existing supply chain and manufacturing companies have struggled to win contracts in the wind sector.[8]

Figure 2

The rapid increase in offshore and onshore wind capacity may be considered a success in some quarters, yet for people in Scotland there is little to show for it. Successive governments have designed a system that encourages near complete private control of these resources, with limited requirements to ensure there are benefits to workers and their communities. As projects become operational in Scotland, this issue is increasingly stark with turnover outstripping jobs.

Before even considering the imperative of securing a just transition for exiting energy workers, the lack of wealth and opportunity captured for people in Scotland from these natural resources is unacceptable.
 

Energy workers and the net zero transition

The issues outlined above are exacerbated by the situation facing Scotland’s existing energy workforce. Jobs in the oil and gas sector have been declining in recent years as production levels have fallen. Unite has led a “no ban without a plan” campaign, calling for intervention to develop a fully funded plan that guarantees jobs for North Sea workers on commensurate pay and conditions.[9]

The existing energy workforce understand the importance of change in the energy system and are willing to bring their skills and experience into new green energy sectors. Alongside their trade unions and other interested groups, they have repeatedly set out what needs to happen to make the transition work for them and their communities.[10]

However, the experience in Scotland has fallen far short of expectations. At a time when there should be increasing opportunity for energy workers as renewables grow, jobs are few and far between. There have been high profile cases of companies historically engaged in manufacturing and supply chain work in oil and gas, struggling to win contracts in the renewables sectors, including BiFab/Interserve/Harland and Wolff, CS Wind, and SGL Carbon.

Research commissioned by the STUC has shown that Scotland needs 19 major manufacturing sites to deliver on the promised levels of investment of ScotWind project developers.[11] Currently, the research shows that Scotland has zero sites of the necessary scale, and only two in development. Companies and workers with strong track records of delivering in the oil and gas sector have been unable to move into the growing wind sector, leading to job losses and closures in the high-profile examples listed above. Even where jobs are available in the renewable sector, these are often on precarious contracts with worse pay and conditions.[12] Trade unions are attempting to organise in the sector to raise standards, but face barriers as employers take advantage of loose regulations for seafarers and self-employment structures onshore.[13]

In considering the readiness of the oil and gas sector for the transition to net zero, and of the renewables industry to support this transition, these are issues which must be addressed. The challenge is not just to create new employment and supply chain opportunities in areas currently engaged in oil and gas work, but to ensure jobs in growth sectors are high-quality and well-paid industries, with high levels of collective bargaining coverage. The situation in Scotland of soaring turnover but limited jobs is far from the ambition shown by energy workers. With jobs in the North Sea oil and gas sector falling in recent years, there is major concern from the workforce that promises will not be met. The evidence from Scotland proves these concerns are justified, and getting the transition right will rely upon far greater certainty and control of delivering social and economic objectives in the development of future wind projects.

Getting the transition right for workers

The UK Government has set out its ambition to deliver a just transition for workers in the North Sea and to ensure communities are reindustrialised through the growth of renewable energy. Lessons must be learned from the experience in Scotland where similar promises have been made without the necessary steps to deliver. For existing energy workers, the transition can no longer be a promise and must instead mean clear job pathways and concrete guarantees of high-quality employment. The approach of de-risking private developers’ investments to secure new projects cannot deliver these objectives, and the government must play a far more active role in the sector.

There are lessons to be learned from international examples of transition in recent years from Denmark (and particularly Esbjerg[14]) and Germany (the Ruhr Valley[15]) which provide support for a proactive government, including public ownership. However, the government can look to the UK’s own history of industrial transitions to find both well and badly managed transitions. The closure of the coalmines is often cited in this context, with workers abandoned and communities still trying to rebuild today.[16] However, research carried out for the Just Transition Partnership shows the positive experience in the UK of the moves into nuclear power and oil rig manufacturing as well as the conversion of town gas to natural gas.[17] The role of government in leading these shifts are evident in the positive experiences shared by workers in the report.

GB Energy can play a key role in delivering the objectives of the UK Government in the move to net zero and delivering a just transition for energy workers. However, this will be one piece of the puzzle. The government must become a more active player in the energy sector across the board, from owning projects, tighter regulation and conditionality, and in monitoring and enforcement. As examples, this should include:

• Reforming the Contracts for Difference process to ensure contracts are awarded to bidders making commitments to domestic supply chains.
• Ensuring the British Jobs Bonus is used to incentivise projects which deliver quality employment, with recognised trade unions, and a focus on areas currently reliant on the oil and gas sector.
• Creating clear structures for collective bargaining in the wind sector to address poor employment practice.
• Retaining equity stakes in future licensing rounds and replicating GB Energy’s partnership with the Crown Estate, with Crown Estate Scotland, to ensure that the public benefit from Scotland’s offshore wind development.

The lessons from Scotland are clear and continued promises without action are undermining faith in just transition and consequently support for moves to net zero. It is vital that this is turned round quickly to create new opportunities for workers, reindustrialise communities, and capture the benefits of natural resources for across the UK. GB Energy has an important role to play driving higher standards and rebalancing ownership from the private sector, however, more will be necessary across all areas of regulation, conditionality, and public investment.

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January 2025