Experts have warned that the next UK Government will have just 100 days to save 100,000 jobs in the North Sea energy sector.
The 39th Energy Transition report from Aberdeen & Grampian Chamber of Commerce revealed there has been a “sharp decline” in work across production, exploration and renewables.
They said that companies are awaiting the outcome of the upcoming general election before considering further investment.
According to the long-running survey, industry confidence in UK activities has plunged to a record low, with high taxes and a potential exploration ban threatening to bring the domestic oil and gas industry to a premature end.
The chamber estimates that the party which wins the election has 100 days to restore confidence or face losing investment worth £30bn.
The chamber has also called for an independent body, free from political influence, to oversee the energy transition.
Echoing calls from union Unite, the report said a “relentless focus” on renewable energy job creation is needed for major investment to create jobs in wind power manufacturing and operations, hydrogen, carbon capture and decommissioning.
The Energy Transition survey sponsored by KPMG and ETZ Ltd, published on Monday, shows that companies expect only around half of their work (51%) to be in renewables by 2030 up from 34% currently, although headwinds remain.
Russell Borthwick, chief executive at Aberdeen & Grampian Chamber of Commerce, said: “The Energy Transition survey has charted the highs and lows of the UK’s energy sector for the past 20 years, but never before have its findings been so important; and the need for action so urgent.
“From our survey and listening to focus groups, we believe the next government has just 100 days to convince industry that there is a future in the UK Continental Shelf.
“Failure to do so will result in the current apathy, which is evident throughout this report, turning to open revolt, where companies move their resources on to countries which offer a less hostile business environment and better returns. Privately, industry leaders are being very clear that this will be the outcome of an extended windfall tax with scaled back allowances.
“Should this transpire, our path to net zero could look more like a road to nowhere. A road that leaves the UK poorer, less energy secure, and beholden to foreign regimes for the energy we need to keep the lights on and our economy running.
“To set a different path – one where the UK seizes the huge economic opportunities of the energy transition – requires a diversity of thought and approach, and reflect the views of industry, academics and workers.
“We need a new body, free of political interference, to make the right decisions for the long-term future of our energy sector. I thought that was important before. I now believe it is essential.”
Maggie McGinlay, chief executive of ETZ Ltd, added: “ETZ Ltd is delighted to partner with Aberdeen & Grampian Chamber of Commerce and KPMG for this latest survey which underscores the need to deliver stable policy signals for investors to get on with the business of the energy transition.
“We must supercharge our renewables revolution by cutting through the red tape around grid and planning which are clearly not incentivising the investment levels required in order to achieve this.
“What is reassuring, however, is there is clearly still a strong appetite across our industry base to accelerate transition and that is reflected in ETZ Ltd’s ongoing support for the supply chain who are seeking to capitalise on the huge opportunities before us.
“As we approach a General Election I would urge political debate to focus on the need for a joined-up industrial plan recognising the lasting, vital role the energy industry plays.
“Whoever comes to power must see the transition as an unprecedented opportunity to support decarbonisation and lasting industrial and jobs benefits to communities across the North-east, Scotland and the wider UK.”
Paula Holland, office senior partner for KPMG in Aberdeen, said: “It is quite clear that political instability in an election year, ever changing tax policy, and uncertainty in the market understandably weigh very heavily on the minds of those who responded, outstripping concerns over the oil price for the first time.
“This difficult climate is seen as a significant barrier to the speed of UK diversification to renewables and other low carbon sources of energy, something which is closely tied to the investment decisions being made in this region every day.
“The findings show that the majority of companies remain optimistic about the long-term future of Aberdeen and its place on the world stage as a major energy hub.
“Overall, it’s clear that everyone just wants to know which way the wind will blow. Waiting is wasted time on the global stage though, which is why it’s critical that Aberdeen remains focussed on securing its prime position in the transition.”
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