Data from the oil and gas industry shows that it directly supports around 26,000 jobs across the UK and indirectly supports 95,000 more – through offshore drilling, rigging, catering and scaffolding, and onshore fabrication yards, anchor manufacturing, vessel maintenance and more. 

There are an estimated, further 84,000 jobs for hospitality workers and taxi drivers that serve these industrial communities.

The UK has of course experienced previous energy and industrial transitions with the closure of its coal mines in the 1980s, and more recently the closure of major steel manufacturing works. The harsh experience of deindustrialisation has raised concerns that large, skilled workforces may bear the brunt of moving away from fossil fuels.

The successful redeployment of the workforce at the UK’s last coal power plant Ratcliffe may prove difficult to replicate for the sector-wide transition away from oil & gas. Yet a key element in delivering the energy transition will be to ensure that the benefits from existing fossil fuel extraction can be utilised in establishing the industry that will replace it.

In the initial session in Parliament on October 29, witnesses from the industry highlighted the need to address the oil and gas industry’s fiscal environment.  They reinforced the Scottish Affairs Committee’s conclusion that there needs to be a revision to the Energy Profits Levy where “a lack of clarity on the fiscal regime beyond 2030 has created uncertainty for industry in the North Sea. The Energy Profits Levy at its current rate of 38%, which brings the headline rate of tax to 78%, is seen by many in industry as no longer proportionate”.

The Committee also heard a further call to ensure that refineries were included in the Carbon Border Adjustment Mechanism, so they could compete on a level playing field with foreign based competitors in what is a global market.

The Committee is now launching a full inquiry into the role of oil and gas in the energy transition, the management of the UK’s North Sea energy basin and how the transition away from gas in home heating might be achieved. It will aim to:

• Make recommendations for creating a long-term, credible North Sea Just Transition Plan for the onshore and offshore workforce; including goals, parameters and next steps
• Assess what role the government’s current policies, including the British Jobs Bonus and Great British Energy, can play in delivering a just transition for the North Sea, and
• Consider the risks of failing to deliver this
• Identify any additional policy mechanisms and institutions needed
• Determine how best to keep industry engaged with the oil and gas industry as outputs decline
• Examine how gas might most effectively be removed from home heating.

Climate change is a global problem that requires a global response. The world is now experiencing the increasingly severe impacts of a rapidly heating climate with intense wildfires, severe droughts, and heavy rainfall leading to destructive floods more frequently and over a wider range.  

The 2015 Paris Agreement represented a significant moment of international coordination to reduce emissions and to adapt to climate change. But the UN recently announced that global action has failed to limit global heating to the 1.5 degrees agreed there.  

In 2022, the IPCC warned that “any further delay in concerted global action will miss a brief and rapidly closing window to secure a liveable future”.  

The UK became the first country in the world to make a legally-binding national commitment to cut greenhouse gas emissions in The Climate Change Act 2008. In 2019 the UK was the first major economy to enshrine its commitment to Net Zero by 2050 in law.  

At COP 29 in Baku last year, the agreed target for climate finance flowing to developing countries was increased from $100 billion to at least $300 billion a year by 2035, with an aspiration for that to hit $1.3 trillion per year over the same period, in recognition of the scale of the challenge.  And in 2022, the latest data available, developed countries delivered around $116 billion – over that target - to developing countries for climate action.  

But the global political consensus on climate change, the financial sector’s commitment to action on climate and climate diplomacy have all been impacted by tensions and transformations in the global order. 

The UK Government has stated “there is no global stability without climate stability”, that the UK “must play its part by resetting at home and reconnecting abroad”, and has placed an emphasis on re-establishing the UK “as a climate leader on the global stage”.  It committed to meet the previous Government’s pledge of providing £11.6 billion in international climate finance between 2021 and 2026 - but beyond March 2026 the approach is unclear.  

Through this inquiry, the Committee intends to investigate how the Government can best demonstrate international leadership on climate policy.