A new taskforce that will oversee the switch from oil and gas to clean industries must avoid the failures of the past, according to the former civil servant who was critical of Britain’s departure from the European Union.
Philip Rycroft, who was permanent secretary to the Department for Exiting the European Union, will lead the task force to map out an orderly transition for the North Sea that will protect jobs and secure the country’s energy future.
He has warned that without a long term plan there is a risk to the stability of all those who will be affected, including those in the supply chain.
Mr Rycroft will pull together the expertise of supply chain businesses, unions, environmental groups, and energy policy experts to deliver the widest possible consensus on the right way forward.
The initiative follows a survey last year by Aberdeen & Grampian Chamber of Commerce, KPMG and ETZ and will be launched alongside the latest edition of the survey at business breakfast in Aberdeen today.
It shows that confidence in the North Sea is at an all-time low and far worse than at any point during the financial crisis, oil price crash or during the Covid-19 pandemic.
In a report published in September, the British Chambers of Commerce warned that failure to secure an orderly transition risked 200,000 jobs directly and indirectly reliant on North Sea industries. It said this risked a repeat of the devastating impact on communities last seen in the coalfield closure programme of the 1980s.
Mr Rycroft, who was head of the Department for Leaving the European Union from 2017 until 2019, told an audience in Scotland in May that following the Brexit referendum, the government had no plan.
He led a team that produced an impact study that demonstrated that any form of Brexit was worse for the UK economy than staying in. Brexit has been far more complicated and difficult than the Leave side imagined, he said.
To avoid similar errors he said the North Sea taskforce must answer key questions on a range of topics including licensing, decommissioning and investment as well as ensuring effective legislation and the right fiscal and regulatory framework to manage the transition.
He said: “There is no doubt the North Sea will continue to have a vital role in the UK’s energy supply for many years. However, the approach to moving away from oil and gas to low carbon industries is a careful balancing act. Without a long-term plan, decision-making will continue to be piecemeal, making it harder to provide stability for all of those impacted.
“Alongside the dialogue between Government, business, NGOs and the public on current and emerging issues, our work will look to ensure a long-term strategic vision that will help to protect the highly skilled North Sea workforce and guide future operations.
“We need to involve the widest possible cross-section of interested parties in the decision-making process to ensure we reach a broad consensus on the right way forward and that no one is left behind.”
Mr Rycroft also worked in Downing Street for the deputy prime minister and other previous roles include director general, education in the Scottish Government, and head of the Enterprise, Transport and Lifelong Learning Department in the Scottish Executive.
The North Sea transition taskforce will hold its first meetings before the end of the year and is due to publish its recommendations for the Scottish and UK Governments next Spring.
Paula Holland, office senior partner for KPMG in Aberdeen, said: “This latest report showcases the fine balancing act facing Aberdeen in its role as a major energy hub.
“While uncertainty has weighed heavy on those operating in the sector, with many fiscal and regulatory changes over the past few years, levels of optimism remain about the long-term future and its place at the centre of the UK transition.
“The recent confirmation of the location of GB Energy in Aberdeen, alongside the announcement of the North Sea Transition Taskforce, needs to be seen as a significant opportunity.
“It can only enhance the view that the region will continue to be the hub of the energy sector in the UK. However, the next few years are critical in turning local grit and long-term optimism into action.”
Shevaun Haviland, director general of the British Chambers of Commerce and the executive director of the taskforce, said: “The importance of the North Sea cannot be overstated; it is a national asset and this deserves a national conversation.
“The transition is vital for Net Zero, for the UK’s energy security and long-term growth, but it must also preserve the roles of hundreds of businesses and their tens of thousands of skilled workers.”
Maggie McGinlay, chief executive at ETZ, said: “Our clear focus is on repositioning the North-east of Scotland as an internationally recognised energy cluster focused on the delivery of net zero.
“In order to accelerate the commercialisation of offshore wind, green hydrogen and carbon capture and storage, we must be able to draw upon the skills and expertise of our world class supply chain and that is why this newly established taskforce is a welcome development.”
Russell Borthwick, chief executive of the Aberdeen and Grampian Chamber of Commerce, which is hosting today’s Energy Transition event, said: “There are great opportunities for Aberdeen to become a globally recognised renewable hub and ensure we protect our skilled workforce, maximise inward investment and decarbonise.
“But we need to act now or risk sleepwalking into repeating the mistakes of the 1980’s when the coalfield closures blighted whole communities for generations.”
The taskforce will review four main areas of work – assessing the scale of the problem, identifying which operations in the North Sea need to be managed, evaluating the impact of the transition on the workforce and exploring the governance arrangements being put in place to manage the transition.
