North Sea drilling debate risks missing the bigger picture on jobs in places like Aberdeen and Grimsby

Living standards in Aberdeen are now below the UK average for the first time since 2003, with the city’s wage premium having fallen by three quarters since the early 2010s. Debates about extracting the final oil and gas reserves therefore risk missing the bigger picture on where the city’s future employment will come from, the Resolution Foundation said today (Thursday).

Major new research – funded by the European Climate Foundation – examines the impact of the net zero transition on local economic growth. It zooms in on Aberdeen and Grimsby, two places impacted acutely by the UK’s shifting energy mix.

Aberdeen needs to replace good jobs that dwindling natural resources cannot maintain. Oil and gas production is down 76 per cent on its 1999 peak and is set to fall another 40 per cent by 2030. Crucially the link between output and jobs has broken: North Sea production rose by a fifth between 2014 and 2019, while employment in Aberdeen’s oil and gas sector fell by 11 per cent, suggesting that more production no longer means more jobs.

Meanwhile Grimsby is looking to net zero to revive its ‘left behind’ economy, where hourly wages remain 11 per cent below the national median, and around one-in-eight employees (12 per cent) are paid at or near the minimum wage.

The Government’s plans are ambitious, with its Clean Energy Jobs Plan aiming for “860,000 good jobs” by 2030 – representing a doubling of employment in low-carbon sectors.

The report estimates around one-in-ten of these jobs will be permanent roles in industrial hubs, with the rest either dispersed around the country or temporary. Concentrated in a handful of places, these could be transformative, anchoring high-productivity powerhouse clusters, raising incomes and improving living standards. However, realising that potential means choosing where they are located. If they are spread across the 18 areas promised these industries, the permanent roles amount to just 2.6 per cent of their combined jobs.

Aberdeen’s problem is timing: grid bottlenecks mean the nearest wind farm was ordered to switch off for more than 70 per cent of the time it could have been generating last year. With upgrades still years away – first to fix this and then to allow new wind farms to generate efficiently – decommissioning the North Sea’s ageing infrastructure can act as a bridge for workers. But the Government will need to attach conditions to this work to ensure that more of it is done from Aberdeen, rather than Norway or Denmark, and sequences it against wind and transmission timetables.

For Grimsby, the issue is scale. The town operates around a third of Britain’s built offshore wind capacity, and the electricity sector has driven most of the area’s output growth since 2018. But operations hubs employ few people once wind farms are built, and the manufacturing and supply-chain jobs that could anchor the local economy have been spread around the east coast instead. Local colleges have reportedly scaled back training as the opportunities they planned for failed to appear.

 To avoid these setbacks the Foundation urges the Government to identify the places it wants to win from the net zero transition and back them with long-term investment and the consistent policy signals firms need to commit. It should also sequence when activity arrives so that work materialises while local workforces are still intact. And where new infrastructure is needed for regional economic development, it should be funded through general taxation rather than energy bills.

Esbjerg – Denmark’s major offshore wind hub – shows the benefits of concentrating green industries extends beyond local labour markets. A port town similar in size to Grimsby, it supports over 10,000 jobs across the value chain and exports expertise across the North Sea. Agglomeration of this kind maximises the productivity of clustered industries and reduces the cost of the clean energy transition for all.

Jonathan Marshall, Principal Economist at the Resolution Foundation, said:

“As decisions on Rosebank and Jackdaw steal the headlines, politicians on all sides risk missing the bigger picture when it comes to jobs and the impact of net zero. The transition already underway is being poorly coordinated, leaving local economies planning for a net zero jobs boom that risks never arriving.

“This next phase of the transition is set to double employment in low-carbon sectors. For places like Aberdeen and Grimsby, which already have a foothold in these industries, there is a real opportunity to become net zero powerhouses, but the results so far have been underwhelming.

“To make the most of the opportunities for growth and regeneration, and to bring the costs of electricity generation down for all, the Government must be more hands on in directing investment and willing to pick regional winners.”