Associate feature: Powering the Scottish Economy with Homegrown Energy and Talent

OEUK represent over 400 companies in the integrated offshore energy sector. Our membership includes independent oil and gas producers, large integrated energy multinationals, renewable energy companies, infrastructure owners, and the energy supply chain. 

For over 50 years, the North Sea has powered homes and businesses, anchored communities, and supported a highly skilled workforce across Scotland and the wider UK.

Together, the UK oil and gas sector supports over 200,000 jobs  and generated £30 billion in gross value add in 2022. In Scotland alone, the sector supports 90,000 jobs and £18.9 billion in GVA. The opportunities as we expand to deliver a homegrown offshore future are greater still. However, to deliver this in a way that grows Scotland’s economy, we will need both oil and gas and renewables. 

Leveraging the experience of the offshore energy sector is the right path to building the energy industries of the future; however, the growth of companies in Scotland that are competitively equipped to lead the energy transition cannot be taken for granted.

The energy transition remains one of the greatest opportunities to create value in the Scottish economy, support highly skilled jobs, and deal with carbon emissions. Drawing on more than 50 years of successful operations in North Sea waters, we have built an industry capable of creating a secure, skilled, and sustainable future. 

The world-class supply chain here in Scotland is a national asset with the potential to power the nation’s drive to ever cleaner energy production. Our industry is intrinsically tied to the sectors which make Britain’s industrial past, present, and future. Steel, cement, ship building, glass, car making and more rely on the energy and technologies we produce, and we are committed partners in enabling safe, efficient, low carbon, and affordable homegrown energy. 

Our supply chain is an integrated ecosystem encompassing operators and developers, manufacturers, and service companies along with small to medium enterprises providing specialist capabilities. It is a supply chain which provides skills, services, innovation, and materials to a community of operators and developers looking to develop homegrown energy at pace. They will design mooring systems, manufacture specialist valves, install high voltage subsea cables, maintain pipelines transporting energy and carbon, and remove offshore structures. While it possesses the skills, experience, and commitment to adapt, growing UK companies so they can be competitively equipped to lead the energy transition needs nurturing.

The supply companies investing in opportunities, such as floating offshore wind and carbon storage, will require the cash-flow from a stable and predictable oil and gas business to fund these opportunities right across the UK. Today, a significant proportion of supply chain company revenues are from the oil and gas sector.

Last year, the UK as a whole was dependent for almost 40% of total energy demand on imported energy, and UK energy prices are higher than many of our counterparts. 
In the UK, where today 75% of our energy comes from oil and gas, the solution is the build out of renewable energy alongside the responsible production of our own oil and gas from the North Sea. Scotland and the UK will need oil and gas for energy security through to 2050 and beyond. This will require a pragmatic approach to the licensing and regulatory regime for the North Sea. 

Significant oil and gas reserves remain in the North Sea. With supportive policy, domestic production could support half of the UK demand and add an additional £165 billion of value in the UK economy whilst supporting jobs and the very supply chain companies needed for future investment in offshore wind, carbon storage, and hydrogen. 

OEUK is clear that the transition will require both public and private capital, particularly during the embryonic phase of low-carbon technologies. The long-term goal should be to grow these sectors in a way that avoids long-term subsidies. 

Overall, our offshore energy companies could invest £200 billion in homegrown energy this decade alone, with the right investment environment. This investment will support the UK in reaching 50GW of wind, 10GW of hydrogen and contribute to UK oil and gas demand while scaling at least 4 carbon capture and storage clusters by 2030. Indeed, the Acorn CCS scheme in Aberdeenshire could see up to 105 Mt of CO2 stored in the first phase alone. However, half of the potential investment - £100 billion - is waiting on Final Investment Decisions from businesses that need renewed certainty to progress. 

We must work together to unlock this investment across all offshore energy opportunities. If we can anchor a world-class domestic supply chain here in Scotland, ScotWind alone could see £28.8 billion invested in the national economy, where the average investment of £1.4 billion per project and £1 billion per gigawatt of capacity built.

To guarantee a homegrown energy future, devolved government policies should directly focus on delivering an energy strategy that will: 

Protect energy security and drive economic growth. Provide a robust but predictable regulatory and planning regime to move investment forward.

Recognise the need for both renewable and oil and gas as part of Scotland’s energy mix on the path to 2045. 

Deliver a homegrown transition which champions technology and innovation. 

Accelerate the offshore wind, hydrogen, and carbon capture and storage pipeline, making the most of Scotland’s resources and supply chain. This includes steps to secure INTOG, swiftly progress the consenting process, and deploy anticipatory capital into the supply chain to maximise ScotWind potential. 

Progressively grow Scotland’s energy supply chain within a phased plan to meet clean power targets, focusing on identifying and building exportable strengths.

Focusing on specific high technology aspects of offshore energy will ensure we build capabilities able to meet UK needs and be attractive to other markets. 

Rystad Energy’s 2024 Report ‘UK oil and gas supply chain and opportunities in the energy transition’ highlighted the vast potential of export opportunities largest addressable markets being for hydrogen and CCS, with accumulated spending reaching £590 billion and £470 billion, respectively, between 2024 and 2040. Likewise, the potential export market for design and engineering services, where the UK holds significant capabilities, totals £125 billion across the three new energy verticals during this period. 

Support and grow a diverse workforce with good jobs now and for the future. 

Anchor and grow energy jobs in Scotland through supporting a skills passport to allow people to work across sectors, growing regional connectivity, and engaging with the current and future workforce. Funding mechanisms for apprenticeships across all levels of devolved government should seek to maximise and deploy Apprenticeship Levy funding streams to support the growth and diversity of the workforce and help mitigate the impact of the removal of the Flexible Workforce Development Fund.

Homegrown energy has the potential to continue to be at the heart of Scotland’s economic growth and regional prosperity while supporting its position as an energy and net-zero leader. It will require industrial heartlands and regional energy hubs across Scotland to be supported with a pro-business growth approach to secure this future. 

This article is sponsored by OEUK.

www.oeuk.org.uk