The UK’s North Sea oil and gas industry should agree to phase out production through a series of five-year targets to help its 260,00 strong workforce migrate to clean energy sectors, according to a report.
The plan would require the UK and Scottish governments to scrap a controversial policy that calls on North Sea companies to extract as much oil and gas as they can from the ageing basin.
It would also call on oil company chief executives to take on extra environmental obligations, which would determine their end-of-year bonuses.
The report, by the IPPR thinktank, found that a new net zero deal, which kept North Sea oil and gas in the ground while channelling investment towards low-carbon industries, could secure jobs and help the UK lead by example ahead of the UN climate crisis talks in Glasgow next year.
Luke Murphy, an associate director at IPPR, said: “It’s time for the UK to move on from oil and gas to a net zero North Sea and a greener and brighter future.
“As host of Cop26, the UK has the opportunity to lead by the power of our example by committing to keep fossil fuels in the ground and offering a blueprint for affected workers and communities to make the most of the huge opportunities offered by the zero-carbon economy.”
The report comes before a deal between the North Sea companies and the government, which is expected to offer financial help to the struggling industry in exchange for commitments to help the UK meet its legally binding target to reduce carbon emissions to virtually zero by 2050, and 2045 in Scotland.
The North Sea was hard hit by the oil market collapse in 2015, and again in 2020 as prices fell to 21-year lows in response to a collapse in demand for transport fuels during the coronavirus crisis.
Deirdre Michie, the chief executive of Oil and Gas UK, said a hard deadline on oil and gas production – similar to the ban the sale of new fossil fuel vehicles from 2030 – would be a “blunt instrument” that could lead to “unintended consequences” for the thousands employed by the sector.
The UK’s North Sea supports about 260,000 jobs, 230,000 of which are in the on-shore supply chain, according to the IPPR report.
“You run the risk of investment stopping from the day you say it, not from the date of the deadline,” Michie said. “If there is a framework, and clarity of direction, it enables people to work out how they are going to get there rather than saying: ‘By that point, game over.’ The game would be over from the day that you say it.”
The IPPR said that a “managed transition” of oil workers to clean energy sectors, rather than a simple “managed decline”, could help to create a more stable economy by being less reliant on fossil fuels.
Josh Emden, a research fellow at IPPR, said: “The Covid pandemic has hit oil and gas workers and communities particularly hard, but is just the latest crisis for a volatile industry with a long boom and bust history.”
“To ensure stable and secure jobs, the government must now invest in low-carbon projects of the future, provide a skills bridge for workers to move out of oil and gas, and bring their voices to the table so that job quality is firmly at the top of the agenda in the industries of the future.”