Committee publication · Report · 24 October 2025 · HC 459
4th Report - The future of Scotland’s oil and gas industry
From: Scottish Affairs Committee
Inquiry: GB Energy and the net zero transition
Government response deadline: 24 December 2025
Summary
This interim report by the Scottish Affairs Committee examines the future of Scotland's oil and gas industry amid the UK's transition to clean energy. The report acknowledges North Sea production is in long-term decline due to geological maturity but argues the pace of decline is outstripping job creation in renewable energy sectors. The committee calls for pragmatic licensing policy, tax reform, and better management of the transition to protect jobs and communities dependent on offshore energy.
Key findings
- North Sea oil and gas production has declined 75% from its 1999 peak and is projected to fall 89% by 2050 compared to 2024 levels, with the regulator forecasting 7% annual oil decline and 11% gas decline between 2025–2030.
- Clean energy job creation is not matching oil and gas job losses: the UK oil and gas workforce declined by 75,000 jobs (2016–2024) to 115,000, with nearly 1,000 jobs lost monthly until 2030, while renewable energy jobs remain insufficient to offset losses.
- Scotland accounts for 56% of UK oil and gas economic output (£14 billion in 2023) and 57% of employment (66,000 jobs), with one in six northeast workers reliant on the offshore energy sector, making regional transition particularly critical.
- Total UK oil and gas tax revenues fell to £4.5 billion in 2024–25 (27% annual decline) with Office for Budget Responsibility forecasting further decline to £2.3 billion by 2029–30; the current tax regime may accelerate industry decline without reform.
- The Grangemouth oil refinery closure exemplifies poor transition planning: UK and Scottish governments failed to prepare for job losses or plan future industries early enough, establishing it as a cautionary case study for managing industrial transition.
Recommendations
- The Government should issue explanatory statements after assessing oil and gas developers' revised environmental impact assessments for new fields (Rosebank and Jackdaw) to ensure public confidence in North Sea stewardship.
- The Government must set out how it intends to address the mismatch between declining oil and gas jobs and insufficient clean energy job creation, taking a pragmatic approach to North Sea licensing policy.
- The Government should define the conditions and actions constituting a 'just transition' for workers and communities to guide management of future industrial transitions.
- The Government should outline lessons learned from Grangemouth's closure and establish measures to ensure comparable transitions are better managed in future.
- The Government should reform the current tax regime to reflect that the UK will require oil and gas in its energy mix for decades to come, preventing acceleration of North Sea industry decline.
- The Government should establish long-term agreements with local manufacturers to stabilize demand and incentivize domestic production of wind turbine components through policy support, tax incentives, and targeted interventions.
Tone
CriticalTopics
Key actors
Michael Shanks MP, Patricia Ferguson, Paul de Leeuw, Gavin Templeton, Climate Change Committee, North Sea Transition Authority, Offshore Energies UK, Scottish Government
Notable line
“… a just transition will happen, but it will happen somewhere else; it will not happen here because we will have lost all those jobs and that experience.”
Key Quotes
“The exploration of new fields will not happen, but there are, of course, complexities in how licences are currently operating near fieldwork that for all intents and purposes, you would perhaps consider to be related to a field that is already extracting.”
“There is some significant investment coming through, and the jobs will follow. I am not going to sit here and say that, in a year, we have turned all of this around. Of course we have not, but we have laid the foundations, and tens of thousands of jobs will come from some of those decisions.”
“I am really worried that a just transition will happen, but it will happen somewhere else; it will not happen here because we will have lost all those jobs and that experience.”
“Energy Future , March 2025, p.17–18 9 comes from the North Sea or elsewhere, is the main cause of high energy bills for consumers.”
Source · parliament.uk record ↗