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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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Report

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 24o thousand jobs, on average throughout the period to 2035.

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.

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

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Report

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

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.

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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Report

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.

See also:

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Uncategorized

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

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:

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

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Report

Wales TUC: Infrastructure investment could create 59,000 jobs and boost economic recovery

Research carried out for the Wales TUC by Transition Economics shows that almost 60,000 jobs could be created in Wales in the next two years through government investment in key infrastructure projects.

Broken down by sector, projected job creation from a £6bn investment in infrastructure would mean: 

●           27 thousand jobs in housing construction and energy efficiency retrofits

●           18 thousand jobs in transport upgrades

●           9 thousand jobs in energy, manufacturing, and broadband infrastructure upgrades

●           5 thousand jobs in land, forestry, and agriculture improvements   

These jobs would benefit some of the sectors and demographics hit hardest by the COVID19 emergency. Over 75% of the jobs would be created in sectors that traditionally employ non-graduate workers.

Shavanah Taj, Wales TUC General Secretary, said:

“The best way to protect our economy is to keep people in work. And that’s why we’ve been calling for an extension to the job retention scheme beyond October.

“But we also need urgent action to create equitable and inclusive new job opportunities for all workers in Wales. We have suffered from long-term under-investment in our nation’s infrastructure. Investing in green and ambitious projects now will not only create work for thousands of people in Wales but will also provide huge long term benefits to the Welsh economy, which is particularly crucial as we set to leave the EU.

“The costs of inaction far outweigh the costs of making these investments. We need the UK Government to provide the level of funding that Wales needs”.

Commenting on the publication of the report, the Future Generations Commissioner, Sophie Howe, said:

“This analysis from Wales TUC shows the potential of investment in key sectors to enable a green, fair and prosperous recovery from COVID-19.

“We urgently need a recovery that increases equality, provides skills, training and employment opportunities in industries of the future, while incentivising every sector in Wales to meet the well-being goals of the Well-being of Future Generations Act.

“This analysis shows this is within reach through wise investment and bold stimulus decisions.”

Read the report here.

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Event

What next for workers?

Transition Economics’ Mika Minio-Paluello is speaking at a webinar organised by CLASS (Centre for Labour and Social Studies) on Thursday 16 July.

Here are her slides.

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Report

TUC: Can an infrastructure stimulus replace UK jobs wiped out by COVID19 crisis?

An analysis of infrastructure investment options to build back better

New research carried out for the TUC by Transition Economics reveals that fast tracking spending on projects such as broadband, green technology, transport and housing could deliver a 1.24 million jobs boost over the next two years.

Read more: TUC’s Rebuilding after recession: a plan for jobs

Our full analysis:

Our analysis recommends 19 infrastructure projects totalling £85 billion public investment, based on investment and employment modelling and ten World Bank-derived criteria including long-term job creation, resilience and sustainability. 

Broken down by sector, projected job creation (direct and supply chain) is as follows:

  • 735 thousand jobs in housing construction and energy efficiency retrofits
  • 289 thousand jobs in transport upgrades
  • 98 thousand jobs in energy, waste, and manufacturing infrastructure upgrades
  • 81 thousand jobs in land, forestry, and agriculture improvements
  • 42 thousand jobs in broadband upgrades

These jobs benefit sectors and demographics hit hardest by the COVID19 emergency. Over 75% of the jobs would be created in sectors that traditionally employ non-graduate workers.

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Work in progress

Our analysis for Scottish TUC shows potential for a £13bn green stimulus package to create 150,000 jobs

May 31st 2020 press release by Scottish Trade Union Congress

Provisional analysis of clean infrastructure projects has outlined the massive benefits of a government funded green stimulus for Scotland, with a £13 billion investment creating almost 150,000 jobs and re-absorbing workers who have lost employment due to the Covid 19 crisis.

The STUC has today published provisional research by Transition Economics into the potential for clean jobs creation in the context of the COVID 19 crisis. The analysis draws lessons from the 2008 Great Recession – including the need to prioritise shovel-ready projects.

Upwards of 50,000 jobs could be created in building retrofit, 40,000 in transport and 20,000 in manufacturing and offshore wind infrastructure. The longer-term supply chain benefits in Scotland would be enormous.

The research is released following the announcement of the paring back of the Job Retention Scheme, threatening a massive increase in redundancies across the economy, ongoing concerns about the future of the North Sea, and while low-carbon supply chain decisions such as the future of the Bi-Fab renewables facility hang in the balance.

In its submission to the Scottish Government’s Advisory Group on Economic Recovery submitted today, the STUC argues for a wide range of measures including “Funding emergency infrastructure stimulus to support Scotland’s economic recovery, including a comprehensive housing programme … and the creation of a national construction and infrastructure company to drive forward change and support high quality employment.” It also calls for investment to support national and municipally owned public transport.

STUC General Secretary Designate Roz Foyer said:

“The need for major infrastructure stimulus becomes more urgent by the day. This research we are publishing is drawn from a wider report on the potential for creating green infrastructure jobs which will be published later in the year. But given the crisis we face there is no time to be lost. We thank the authors Mika Minio-Paluello and Anna Markova for bringing forward these interim conclusions.

“Their analysis shows just that almost 150,000 good quality jobs could be created at the same time as making a real impact on emissions and strengthening Scotland’s renewables supply chain.

“We know that it will still be some time until Scottish industry will emerge from lock-down, so these are the weeks in which we should be planning, and planning big.

“The measures outlined in this report sit along a range of other necessary investments including in key services such as social care. Clearly the level of stimulus we are proposing will require inter-governmental co-operation, but now is the time for those discussions to begin in earnest.”

For further details contact: Dave Moxham 07891 026879

Notes:

Download Provisional Report

The report attached scores potential projects against a range of criteria:

Shovel Readiness; direct Job Creation/Protection; Focus on held-back regions; Builds domestic low-carbon technology & manufacturing; Supports climate transition in hard-to-decarbonise sectors; Contribution to resilience to climate change; Improves economic productivity; Develops domestic skills base; Resilient to re-instated lockdown; Supports health, public services and social fabric