The transition to a clean energy economy is paved with obstacles, says TERRY MURDEN
The green energy transition was not meant to be like this. Four hundred jobs going at the Grangemouth refinery, a similar number at the heat pumps manufacturer Mitsubishi in Livingston, another 160 being lost at Alexander Dennis which is building electric buses. We were promised more jobs, not fewer, but it’s clear the switch to a cleaner future will provide no short-term guarantees of an employment boom.
The SNP pledged to create 130,000 green jobs in Scotland by 2020 but the latest figures show the current number is just 25,700. Between 2021 and 2022, Scotland was the only nation in the UK to see a fall in the number of jobs in the low carbon and renewable energy economy. Labour says “it will deliver where the SNP has failed”. Well, let’s see how that one works out.
CBI chief executive Rain Newton-Smith told the organisation’s members in Glasgow that the shift to the new industries is “complicated” and making it easier will require governments to set out the sort of conditions that are still not in place.
She said that despite progress on laying the foundations, there are big questions around tax, planning and regulation. The stuff that governments control and which needs to be attractive to investors who are “restless” to put their money behind the revolution but will be unwilling to do so until the path is made clearer
Among those companies mentioned above, the complication was spelled out most starkly by Alexander Dennis which blamed an “uneven playing field” with other countries. Green is the colour of envy and overseas firms are offering incentives and other benefits that make UK companies less competitive. This is also evident in the car industry, with low cost China-built electric vehicles making big inroads into a UK market where “fair work” standards put extra costs on manufacturers.
Over in Grangemouth, there may have been lots of talks between UK and Scottish Government ministers over the future of the refinery, but it has not been helped by the sort of dithering that Ms Newton-Smith alluded to in her speech.
A transition plan for the complex which the Scottish government promised in 2022 has still not materialised. While the talking goes on, the announcement last November by Petroineos that oil refining will cease has now been confirmed and it is planning to turn it into an import terminal with a fraction of the current workforce.
Any prospect of producing hydrogen, or sustainable aviation fuel, or being a centre for carbon capture, is yet to take hold. There is said to be interest from a potential buyer, ironically to continue oil refining on the site. But the damage from the refinery’s more likely closure will spread into many more hundreds of jobs across the supply chain.
The energy profits levy, or windfall tax, on oil and gas company profits is supposed to raise money to be invested in the transition, not least via GB Energy, the Labour government vehicle which is expected to play a leading role.
In the meantime, the levy is deterring investors, with Enquest and Serica Energy joining those trimming their plans for the North Sea. The industry continues to argue that without the revenue from oil and gas, support for green projects will be held back.
Progress on building a supply chain is part of the renewables deal as foreign money arrives from the likes of Sumitomo, the Japanese company that is investing £350m in a subsea cable manufacturing plant at Port of Nigg on the Cromarty Firth. On the evidence of the last few weeks, it can’t come soon enough.
Terry Murden was Editor and Business Editor at The Sunday Times Scotland, Business Editor at The Scotsman, and Business and City Editor at Scotland on Sunday. He is now Editor of Daily Business.
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