The British Chambers of Commerce (BCC) has called for the establishment of an independent taskforce to guide the future for the North Sea energy industry and ensure tens of thousands of jobs are “not cut adrift”.
BCC director general Shevaun Haviland warned that while the “imperative for net zero is ratcheting up daily”, the UK needs a plan in place “as soon as possible” in order to avoid “catastrophic harm to our economy and workforce”.
The national business organisation set out its proposal for a taskforce in a new paper issued ahead of UK government plans to consult on its budget, which is due to be revealed 31 October.
The report, entitled Securing the long-term future for North Sea energy production, recognises the UK must achieve its climate commitments. But it said the independent group it proposes would engage with industry, environmentalists, economists, unions, academia and others to “ensure that the UK develops a sustainable pathway to net zero, while protecting jobs and our energy security”.
BCC highlighted recent estimates that 200,000 direct and indirect jobs across the UK are reliant on the oil and gas industry.
The taskforce would produce recommendations for the Government aimed at accelerating a North Sea transition to cleaner sources of energy and the use of carbon capture and storage (CCS), while maintaining jobs, skills and employment currently supported by the oil and gas industry.
Crucially, it called on the new body to examine the fiscal regime for the industry for the long-term. This should “prioritise long-term economic and energy security” and help address the recent changes to taxation on the North Sea, including the Energy Profits Levy (EPL).
The paper added that the Labour-led government’s proposals to extend the so-called windfall tax as well as remove investment allowances “risks reducing investment,
and by extension, underdelivering production and revenues from the North Sea”.
Furthermore, it warned the new government’s commitment to a ban on new oil and gas
licences risks creating a climate of fear amongst operators and investors “who may fear greater ‘sanctions’ including the revocation of existing licences despite the current reliance on oil and gas in the UK and for export”.
The paper also demanded “clarity” on how the government’s proposed Great British Energy will spend taxes raised on offshore energy to deliver “a clearer fiscal pathway to an accelerated transition”.
© Supplied by British Chambers ofBCC director general Shevaun Haviland said: “The imperative for net zero is ratcheting up daily as fresh evidence of the damage caused by climate change emerges. But it’s equally important that we manage this process to avoid catastrophic harm to our economy and workforce.
“We need an effective energy transition which does not cut adrift the tens of thousands
of highly skilled people across the UK who rely on the sector for their livelihoods.
“It must also balance the diversity of our power supplies, so that the UK’s energy security is not put at risk, and we do not become over-reliant on imported fuels.
“This means having a clear and integrated plan in place as soon as possible. Politicians
cannot keep kicking the can down the road. It is in everyone’s interests to get round the
table and find pragmatic solutions.
“There also need to be honest conversations about how this can be financed. Plans to
reduce capital and investment allowances will undermine business confidence in the
sector and jeopardise a successful transition.
“If private investment in the sector is put at risk, then the repurposing of infrastructure
and the pathway forward are also put in doubt.
“We are therefore calling for the establishment of an independent taskforce to further
our research and support the new government. A partnership approach can create a
future for the North Sea which preserves the investment and skills needed for the green
economy and safeguards thousands of jobs.”
She added the BCC report addresses government plans to consult on environmental guidance for the oil and gas industry following the Supreme Court ruling on Finch, a precedent which means producers need to consider the impact of burning oil and gas, called scope 3 emissions.
She said: “Last week’s announcement that government will consult on new environmental guidance for the oil and gas sector, provides an opportunity for all parties to shape the fair and just future everyone wants to see. This report provides the framework for this to happen”.
“Independent recommendations from a taskforce will help create a route towards the
certainty and confidence that businesses, the workforce, unions and environmental
groups can all believe in.”
BCC represents a network of 52 chambers of commerce across the UK, representing tens of thousands of firms.
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