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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.

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.

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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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.

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

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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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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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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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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The UK North Sea as a Global Experiment in Resource Extraction

This report by Juan Carlos Boué was published by ScotE3 with support from PCS and Platform, and edited by Transition Economics’s Mika Minio-Paluello.

Juan Carlos Boué’s report (pdf download) analyses the UK’s North Sea oil tax regime, which has handed super-profits to international oil companies while the taxpayer now foots the bill for decommissioning.

Boué argues that, since the 1970s, these tax arrangements have been “at the forefront of the process of redefinition of the economic frontiers of the State”. These “neoliberal governance structures”, designed in the UK, were exported across the world in the 1980s and 1990s, along with privatisation and “market liberalisation”. The global spread of the UK governance model did produce oil production gains, Boué concludes, “but also destabilised many key petroleum producers, whose governments found themselves starved of fiscal income”.

Boué brings the story right up to date, showing how, as North Sea oil production declines, the government has pushed the burden of decommissioning costs on to the public purse, while the oil companies eke out every last drop of oil, and of profit, from their operations.

Download report: https://tinyurl.com/udpqncd

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Who Owns the Wind, Owns the Future

Offshore wind is going to play a central role in the UK’s energy and industrial future in the 21st century. The UK has one of the richest offshore wind resources in the world. Turbine installation will continue apace, heading for 30, 40 or 50 GW in the next two decades.

Research carried out by Transition Economics for Labour Energy Forum reveals the first breakdown of the UK’s offshore wind by country and ownership status:

Out of 10.4 GW of offshore wind (operating and under construction)

  • 92.7% is owned by non-UK entities
  • 7.3% is owned by UK entities (excl GIB)
  • 51.2% of UK offshore wind is publicly-owned
  • 0.07% is owned by UK public entities

“Who Owns the Wind, Owns the Future” lays out how public ownership of the UK’s offshore wind can

  • Speed up deployment of offshore wind
  • Help deliver a Just Transition for workers and communities
  • Capture the value offshore wind creates for the British public, including residents, firms and workers
  • Revitalise UK industry and create institutions to drive industrial strategy
  • Minimise costs to energy users, including households and industry

21st century public ownership of wind means a diversity of institutional forms, accountable to local residents, able to support and shape local economies, deliver energy justice and accelerate the transition.

We recommend that devolved governments, councils and central government co-operate to set up the most appropriate entities to invest into, develop, build and/or maintain offshore wind farms.