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ScotWind: Investment needed to deliver supply chains & jobs in Scotland

Transition Economics was commissioned by the Scottish Trades Union Congress to analyse ScotWind projects, including ownership, potential job creation, and the infrastructure and supply chains needed to deliver on investment committed by offshore wind developers.

Our full report is available here Scotwind: The Investment needed to secure manufacturing jobs in Scotland

STUC’s press release launching the report is here: ‘Hot Air’: STUC Report Exposes £2 Billion Black Hole in Government Green Jobs Ambitions

Launching the report, STUC General Secretary Roz Foyer said:

“Our ScotWind report released today, the latest in our analysis of Scotland’s green energy economy, shows that politicians have their head in the sands with a £2 billion gap in the funding needed to build our domestic supply chain.”

“In order to reach the target of 25,000 jobs, Scotland needs a minimum of 19 manufacturing sites. We currently have zero. That’s a chronic indication of the political rhetoric clearly not matching the action needed to do what is right by our energy workers.”

Summary of our analysis on ScotWind investment, ownership, potential job creation and investment needed to deliver supply chains and jobs:

  • ScotWind developers have committed to invest 38% of their overall supply chain spend in Scotland – equivalent to almost £30 billion.
  • If ScotWind developers do actually source from Scotland at the scale committed to, this could potentially deliver peak direct employment of 25,000 jobs.
  • The potential average direct & indirect jobs per annum are 3,500 over 10 years of development, 19,700 over 9 years of manufacturing & fabrication, 7,100 jobs over 9 years of installation, 2,000 jobs over 26 years of operations, and 455 jobs over 8 years of decommissioning if ScotWind developers meet their commitments. These phases will be partially overlapping as individual projects are initated at different times.
  • However, to reach the job creation potential and domestic procurement ScotWind developers have promised, there needs to be an enormous ramp-up in the Scottish supply chain for offshore wind.
  • Scotland will need 19 significant fabrication sites for offshore wind components (e.g. blades, nacelles, towers, foundations, floating substructures, cables). Currently, Scotland has 0 significant fabrication sites. Only 2 significant fabrication sites are currently in development, with approved sites and initial funding allocated.
  • Existing public investment to scale up Scotland’s domestic supply chains for offshore wind is a drop in the ocean compared to the £2.5 billion – £4.5 billion required. Currently there is less than £600 million on the table – between 13% and 23% of what is needed.
  • We estimate the total Net Present Value (value of future profits) of ScotWind projects at between £7 billion (at an Internal rate of return of 4%) to £29 billion (at an Internal rate of return of 8%).
  • Greater public investment also needs to be combined with an industrial strategy setting accountable conditions to grow domestic supply chains, alongside a publicly-owned Scottish energy champion able to use its heft to make long-term commitments to domestic suppliers.

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Labour’s British Jobs Bonus: Potential increased job creation and local investment in industrial heartlands

For Keir Starmer’s launch of the Labour Party’s Climate Mission on 19 June in Edinburgh, Transition Economics was asked by Labour to conduct an independent assessment of the potential increased investment and increased jobs in target areas in the UK’s industrial heartlands that could be catalysed by the Labour Party’s proposed British Jobs Bonus.

Our numbers feature in the Labour Party’s official climate Mission Briefing, and media coverage of the British Jobs Bonus announcement (e.g. Financial Times, Guardian)

The briefing estimates that new jobs catalysed by the British Jobs Bonus could be 19,300 in Year 1, rising to 64,600 in Year 5. 

In 2030, this breaks down

  • as 35,200 jobs in English regions
  • 19,300 jobs in Scotland
  • 5,800 jobs in Wales
  • 4,300 jobs in Northern Ireland. 

The analysis also finds that the British Jobs Bonus can increase local construction and manufacturing investment from offshore wind, onshore wind, solar and green hydrogen development in target areas by £1.7bn in Year 1 of a Labour government, rising to £5.9 billion in Year 5.

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Treasury to pay billions to North Sea gas producers under energy bill support scheme

According to Transition Economics analysis commissioned by Uplift, North Sea oil and gas companies are expected to get a ‘windfall’ payment worth £7 billion from the government’s six month energy support scheme, despite making eye-watering profits, adding pressure to calls for a strengthened windfall tax.  

If gas prices return to levels seen in September, the amount of taxpayers money flowing to these companies is expected to more than double to over £15 billion. 

BP and Shell are each expected to receive between £500 million and £1 billion from the Treasury, depending on the gas price.

Download the full Analysis by Transition Economics

Under the Energy Price Guarantee for households and the Energy Bill Relief Scheme for businesses, the government has committed to cover energy costs above a certain unit price for gas and electricity, with the money paid via energy supply companies and electricity generation companies.

Analysis by Transition Economics, commissioned by Uplift, looked at the revenues expected to flow from the Treasury to oil and gas companies operating in the North Sea from these energy support schemes, which are set to run for the six months from October 2022.

Our analysis estimates that this winter, £7.4 billion in revenues will be effectively paid from the UK government to oil & gas companies extracting gas on the UK Continental Shelf, if this winter is a typical winter. This could rise to £15.3 billion, if wholesale prices return to levels seen in September.

This includes

  • £1,090 million to £2,260 million paid to Total
  • £1,030 million to £2,130 million paid to Harbour Energy
  • £580 million to £1,210 million paid to Shell
  • £500 million to £1,040 million paid to BP.

Our analysis also estimates that government will effectively make a total payment to all oil & gas companies of between £19.8 billion to £42.8 billion if this winter is a typical winter, or between £23.2 billion to £50.1 billion if this winter is a cold winter. These are revenues flowing both to UK North Sea companies, and to companies who export gas to the UK from other countries (such as Norway and Qatar).

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Potential clean job creation in regions with high oil & gas employment

This place-based analysis by Transition Economics, commissioned by Platform, examines the potential for clean job creation in Aberdeen & Aberdeenshire, Fife & Tayside, Tyneside and Teesside. These four regions all have significant current employment within the oil & gas sector and its supply chains.

The report identifies three key sectors for potential clean job creation in the decade to 2032 within these regions: domestic energy efficiency retrofits, offshore wind (both fixed and floating, including manufacturing, construction and operations & maintenance), and hydrogen electrolyser exports.

Download report on regional potential clean job creation (pdf)

Total clean job potential by region by 2032 (in domestic retrofit, offshore wind and hydrogen electrolyser exports)

  • Aberdeen & Aberdeenshire: 24,500 – 33,800 jobs
  • Fife & Tayside: 24,100 – 34,200 jobs
  • Teesside: 20,100 – 28,300 jobs
  • Tyneside: 29,100 – 42,600 jobs

Total clean job potential by sector by 2032 (in Aberdeen & Aberdeenshire, Fife & Tayside, Tyneside and Teesside)

  • Domestic energy efficiency retrofit: 61,800 – 93,200 jobs
  • Offshore Wind: 30,500 – 38,200 jobs
  • Hydrogen electrolyser exports: 5,500 – 7,500 jobs

Transforming these jobs from potential numbers into reality will depend on the climate transition being delivered on schedule, alongside supportive policy frameworks and public sector investment. There are jobs-rich and jobs-poor models for decarbonisation. Reducing carbon emissions will in itself not automatically lead to significant job creation, and green jobs are not necessarily quality jobs.

However, place-based policies that stimulate job creation and learn from successes elsewhere can ensure that the sectors identified in this study create significant numbers of good quality jobs in the regions by 2032. By advocating for this future, local policy-makers can enable quality clean jobs for local residents.

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The Scotwind lease round: Analysis of ownership and potential job creation in offshore wind

Crown Estate Scotland announced the outcome of the ScotWind Lease round in January 2022, with 17 projects awarded option agreements. The 17 projects have a potential total capacity of almost 25 GW of offshore wind – both floating and fixed.

Transition Economics has analysed the ownership and jobs potential outcomes of ScotWind lease round for the Scottish Trades Union Congress. This analysis was covered by The Herald’s here.

  1. Potential Job Creation from ScotWind leases

Transition Economics has modelled the potential job creation from the 17 proposed offshore wind projects, over the lifetime of the projects during pre-development, construction and the operational phase. In our low estimate, we also broke this down into job creation during the construction phase.

In a scenario with high levels of local content and significant domestic fabrication, 14,400 jobs could be created in Scotland across the lifetime of offshore wind farms.

However, in a scenario with limited local content – primarily focused on pre-development, operations and maintenance and limited installation – the 17 offshore wind farms could deliver less than 2,500 Scottish jobs over the same period.

Our methodologies for estimating job creation from new offshore wind projects was developed in our analysis for the Scottish Trades Union Congress, and published in the Green Jobs in Scotland report in April 2021. Jobs “over lifetime” include pre-development, construction and installation, operations & maintenance, and decommissioning.

Crucially, reaching the medium or high end estimates will require significant pro-active government measures to drive investment and expansion of the Scottish offshore wind supply chain – beyond current government policies. 

In response to the ScotWind lease results being announced, the Scottish Government said that  “Because Scotland’s workers are superbly placed with transferable skills to capitalise on the transition to new energy sources, we have every reason to be optimistic about the number of jobs that can be created.  

That means, for example, that people working right now in the oil and gas sector in the North East of Scotland can be confident of opportunities for their future.”

“The spread of projects across our waters promises economic benefits for communities the length and breadth of the country, ensuring Scotland benefits directly from the revolution in energy generation that is coming.”

To ensure the desired job creation becomes a reality, the Scottish Government should enact appropriate policies, such as:

  • Public investment of £2.5 billion – £4.5 billion to 2035 in ports and manufacturing to supply large scale offshore renewables 
  • Setting up a Scottish National Energy Company, to participate in developing and deploying new offshore wind farms
  • Expand local content (as practiced in France, Turkey, Taiwan and elsewhere) and local hiring requirements, with stronger accountability measures to ensure targets are met
  • Skills programmes to address shortages, and remove barriers to renewables jobs for oil and gas workers. 

2. Analysis of Ownership

Transition Economics has analysed the ownership structures and countries of origin for the 26 parent companies behind the joint ventures acquiring the 17 ScotWind leases. This enabled us to create a breakdown of the proposed offshore wind capacity (in GW) by location and by public or private ownership structure.

The best majority of the leases are owned by companies ultimately based outside Scotland: over 23GW, representing 95% of the total. Only 1.3GW are owned by companies based in Scotland.

2.5 GW of proposed capacity (10% of the total) are controlled by publicly-owned entities, from Sweden, Denmark, Belgium and Germany. The remainder (90%) is owned by private companies. None of the proposed new wind farms have ownership participation from public UK or Scottish entities.

Table 1: Scotland Ownership: Capacity (GW) by ownership structure & location

Table 2: Scotland Ownership: Percentage by ownership structure & location

Table 3: UK Ownership: Capacity (GW) by Ownership structure & location

Table 4: UK Ownership: Percentage by Ownership structure & location

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UNISON launches blueprint for climate-friendly public services

Public services can lead the way in meeting the UK’s climate targets and creating the jobs of the future – if government funds climate action adequately.

UNISON’s new report, with economic modelling by Transition Economics, shows how the bulk of climate action measures needed in public services can be achieved by 2035 with £143 billion in capital investment.

In our estimate, £120 billion should be provided by central government – in comparison to only £8 billion already committed.

These climate action measures – including insulating public buildings, offices, and social homes, installing electric vehicle chargers and heat networks, and decarbonising wastewater treatment – will generate an additional 240 thousand jobs, on average throughout the period to 2035.

Download report (pdf)
Watch launch event video

Out of the public service sectors examined, local government required both the largest up-front investment (£68 billion) and the largest additional operational expenditure (£0.5billion a year), because of their responsibility for building retrofits, pedestrian and cycling infrastructure, and the need for enhanced waste collection and processing services.

Many of the additional capital investment and ongoing expenditure will be offset by savings over time. For example, recent public sector energy efficiency projects report a pay-back time of 9 years. Other measures, such as some ‘circular procurement’ practices, represent immediate budget savings.

Transition Economics delivered the quantitative analysis, investment and jobs modelling for this report. The policy analysis and case studies were produced by Dr Vera Weghmann of the Public Services International Research Unit (PSIRU) at the University of Greenwich.

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STUC: major new green jobs report estimates up to 367,000 jobs in Scotland

STUC Green Jobs Report cover page

With the right policies, decarbonising Scotland’s economy could create up to 367,000 jobs, according to a major new report by Transition Economics. However, without the right policies, job creation will be less than 131,000.

The report, commissioned by the STUC, looks at how energy, buildings, transport, manufacturing, waste, agriculture and land-use need to be decarbonised, and sets out how Scotland can maximise green job creation, as well as fair work and effective worker voice in these jobs. It calls for an active industrial strategy, far greater levels of public ownership and significant public investment. Among its specific recommendations are a street-by-street programme of energy efficiency upgrades; a national energy company that builds and generates renewables; and much greater investment in local authority bus services.

DOWNLOAD report (pdf)

The report estimates the following future green job creation by sector:

• Energy: 30,000 – 95,000 jobs over 15+ years in zero carbon energy (including renewables, hydrogen and storage) – but potentially only 16,000 without the right policies.

• Buildings: 61,000 – 136,000 jobs over 10+ years in decarbonising buildings and broadband, plus a further 22,000 – 37,000 jobs over 3 years in building new social housing.

• Transport: 26,000 – 60,000 jobs over 10+ years in upgrading and expanding transport (railways, metros, EV charging and batteries, cycle and walking infrastructure, and zero-emissions freight & shipping), with a further 11,000 – 13,000 ongoing jobs in operations.

• Manufacturing & Industry: 5,000 – 9,000 jobs new and ongoing jobs in manufacturing (including steel, CCS and re-manufacturing), alongside protecting existing employment numbers in chemicals and refining.

• Waste: 17,000 – 23,500 jobs new and ongoing jobs in circular economies and waste management.

• Land-Use: 17,000 – 43,000 jobs over 12+ years in nature restoration, reforestation and sustainable farming.

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Friends of the Earth: An emergency plan on green jobs for young people

There are over 500,000 young people aged 16-24 out of work, and numbers are expected to grow substantially with the end of the furlough scheme. This is a youth unemployment emergency.
Friends of the Earth commissioned Transition Economics to identify how to create green jobs quickly, with a focus on green apprenticeships, and to identify the scale of funding needed.

The report – An emergency plan on green jobs for young people – finds:

  • The economic scarring impact of one year’s unemployment for an 18-20 year old comprises lost earnings of £42,000 – £133,000 over the next twenty years.
  • Current levels of youth unemployment could lead to £32 – £39 billion in wage scarring across the UK, if all currently unemployed 16-24 year olds stayed unemployed for 1 year. For an average-sized local authority area in England and Wales this represents £86 – £105 million in lost local earnings.
  • There are 161 existing apprenticeships standards in England that can support decarbonisation, out of a total of 571 approved for delivery. However, new standards need to be developed (e.g. whole-house retrofits), whilst others need important updates and/or numbers to be expanded significantly (e.g. heat pump installers).
  • The government could create 250,000 green apprenticeships across England and Wales for £6.2 – £10.6 billion in total funding over 5 years. This covers wages subsidies at 50% or full cost, training costs and diversity bursaries.
  • Funding the green infrastructure needed to meet climate goals – such as retrofitting existing homes and building new green homes, upgrading the railways, and afforestation – could create over 1 million jobs over the next two years, and provide the basis for recruiting and training green apprentices.

The report makes the case for a ‘green opportunity guarantee’ that commits to ensuring all young people are offered a job, an apprenticeship, or training. This includes

  • A government funded £40 billion a year green infrastructure programme would create over 1 million jobs.
  • Up to £10 billion over the next 5 years to create 250,000 green apprenticeships in England & Wales, with wage subsidies of 50-100% depending on need. Devolved nations should receive equivalent funding for programmes within their borders.
  • Strategic funding alongside a 10-year funding settlement for Further Education, to enable colleges to update curricula and massively expand the provision of green courses, traineeships, and apprenticeships.
Download report

See also:

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£2bn lost to UK local authority pensions due to oil investments

Value lost to 56 UK local government pension funds due to oil investmentsDownload

This analysis, commissioned by Platform London, shows that UK local authority pension funds that are not divesting from fossil fuel companies could have lost at least £1.75 billion in value over the past three years as a result of investments into just nine oil & gas companies.

56 pension funds were identified as holding direct investments into oil companies and not having made public commitments to reduce direct fossil fuel holdings. These funds’ combined direct investments into nine oil companies were valued at £3.6 bn in spring 2017, and would have dropped to £1.8 bn by November 2020.

The three funds losing the most value have all publicly opposed divesting direct holdings. 

  • Greater Manchester Pension Fund was the most exposed, potentially losing £375 million in value, or 2.2% of its total holdings. This is equivalent to £1,000 per pension member. 
  • West Yorkshire Pension Fund was second most exposed in terms of total value, losing £211 million in value. This is equivalent to £740 per pension member. 
  • Nottinghamshire was third with £81 million, equivalent to £1,070 per pension member.

In early 2020, Reuters reported Greater Manchester and West Yorkshire funds as claiming they would have lost £400m and £160m respectively over 3 years to 2019, if they had divested from fossil fuels. The losses by 2020 on only the nine top oil companies almost entirely eradicate this gain.
Share values are volatile, and regularly rise and fall. However, repeated Financial Times reporting on the falling asset values and impairments amongst big oil companies describes this not as a temporary downturn, but as “the direction of travel” . Despite the expected continued use of fossil fuels in some industries for many years, the push to net zero will hit the underlying business model of large oil & gas companies significantly – especially those that rely on high oil prices to turn profits.

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Regional job creation from a clean infrastructure stimulus in England & Wales

Analysis and modelling carried out by Transition Economics for the TUC’s Voice and Place report provides a regional analysis of clean infrastructure investment options, and the resulting potential for direct job creation.

This analysis demonstrates the regional distribution (at NUTS1 level) of 506,000 English and Welsh potential direct jobs, including in rail upgrades, EV charging, cycles lanes and pedestrianisation, home energy efficiency retrofits, social housing construction, and reforestation.

It also provides job creation estimates for priority industrial policy proposals for a just climate transition in England and Wales identified in the TUC’s Voice & Place report, including battery gigafactories, manufacturing for offshore wind, steel and district heating.

Transition Economics analysis:

Regional employment creation from a clean infrastructure stimulus-Download

The full TUC report: Voice and Place: How to plan fair and successful paths to net zero emissions

TUC regional press releases:

North East TUC regional secretary urges the Government to invest in the region to unlock 30,000 new green jobs

We can create 60,000 green jobs for Yorkshire in less than two years, says TUC

TUC plan would mean more than 46,000 new green jobs for the West Midlands over next 2 years