Sixth Special Report
On 24 October 2025, the Scottish Affairs Committee published its Fourth Report of Session 2024–26, The future of Scotland’s oil and gas industry (HC 459). The Government Response was received on 23 December 2025 and is appended below.
Appendix: Government Response
The government welcomes the report1 from the Committee.
Since publication of the report, the government published its North Sea Future Plan2 and 2025 Budget3 on 26 November 2025. The Plan sets out a new course for the North Sea, providing a global blueprint for a fair, managed and prosperous transition to future proof the sector. It explains how we will grow clean energy industries, support the management of existing oil and gas fields for their lifespan, and help North Sea workers and communities make the transition. Many of the issues highlighted by the committee have been set out in the Plan and in HMT’s summary of responses to the Oil and Gas Price Mechanism consultation. The government recognises the important role of the oil and gas industry and has been clear that oil and gas will remain an important part of our energy mix for decades to come.
Below, we have set out our responses to the Committee’s recommendations and conclusions.
Recommendation / Conclusion 1
We are concerned that clean energy jobs are not being created at the pace or scale required to match the heavy job losses arising from the decline of the North Sea oil and gas sector. The scale-up of clean energy is progressing more slowly than the decline of the oil and gas sector. The Government should avoid accelerating the decline of North Sea oil and gas production through its policy environment while this remains the case. (Conclusion, Paragraph 52)
The Government should urgently address this gap with increased Government investment proportionate to the scale of the challenge. The Government must set out clearly how its investments and policy environment will create the jobs and revenue necessary to replace the jobs being rapidly lost in North Sea oil and gas. (Recommendation, Paragraph 52)
The government partially agrees with this recommendation.
To that end, in October we published the Clean Energy Jobs Plan, a first for UK government, marking a major step forward in supporting the clean energy transition. Delivering our Clean Energy Superpower Mission could see our clean energy workforce nearly double from around 440,000 in 2023 to around 860,000 jobs supported across clean energy sectors and their supply chains by 2030. The Plan sets out clear actions to ensure that both the necessary workforce is in place to support the transition and that clean energy jobs are high quality jobs, with fair pay and good working conditions.
We are backing the clean energy transition with the most significant programme of clean energy, climate, and nature investment in British history - allocating £63 billion in capital funding in the most recent Spending Review. This includes £9.4 billion for CCUS, including development funding for Acorn in Scotland and Viking in the Humber, which industry expect to support 15,000 and 20,000 jobs respectively at peak. At the Spending Review, the government also confirmed over £8.3 billion in capitalisation for Great British Energy and Great British Energy – Nuclear to invest in homegrown clean power. Great British Energy’s £1 billion Supply Chain Fund will support the North Sea transition through strategic funding and a focus on utilising the UK’s existing industrial strengths in oil and gas to deliver the next generation of clean energy technologies. The National Wealth Fund will commit at least £5.8 billion in five clean energy and advanced manufacturing sub-sectors over this parliament, including CCUS, gigafactories and electric vehicle supply chains, hydrogen, steel, and ports and their supply chains. In addition, our clean power mission has already attracted over £62 billion of private investment in clean energy technologies.
The plans set out in the North Sea Future Plan, published in November strike a balance. They enable us to provide global leadership in climate action in line with the science while ensuring a managed, prosperous and orderly transition, recognising the importance of oil and gas production for workers, supply chains and communities as we make that transition. We are introducing new Transitional Energy Certificates to help maintain existing fields and help ensure they remain economically viable. Continued oil and gas production from existing fields will support a smoother transition and retain the skilled workforce we need in the UK as we ramp up cleaner technologies.
Conclusion 2
Such an approach is the minimum necessary for a smooth transition of workers, and to avoid the risk of harming UK tax revenues, economic activity, and employment in many Scottish communities, where the effects of the transition will be disproportionately felt. The loss of jobs abroad has detrimental impacts to the UK. This represents not only the loss of world-renowned skills and expertise in the energy sector, but also a significant hit to regional economies, population dynamics, demographics and communities. (Conclusion, Paragraph 53)
The government is committed to achieving a fair and inclusive transition. Managing our existing fields for their lifespan will support a smoother transition and retain the skilled workforce we need in the UK as we ramp up cleaner technologies.
In addition to record levels of investment, the government is bringing about policy clarity and consistency through key strategies such as the Clean Power 2030 Action Plan, the Clean Energy Industries Sector Plan and the Centralised Strategic Networks Plan. The Clean Energy Map is a live tool that plots a range of active clean energy projects supported by the government since July 2024, to showcase the jobs and investment benefits of the Clean Energy Superpower Mission across the UK. The North Sea Future Plan made a commitment for the government and the NSTA to work with industry and other organisations to develop a ‘basin-wide plan’ that will improve the visibility of the project pipeline across sectors in the North Sea.
The workforce is at the heart of our approach, which is why the government has taken active steps in ensuring all workers are able to benefit from the transition. The government will work with industry and trade unions to support workers to secure good jobs, through a package of measures including the North Sea Jobs Service. This will be a world-leading national programme offering end-to-end career transition support for oil and gas workers looking to move into secure jobs in growing industries. It will be the most comprehensive national programme to do this and will set a new global standard for a fair transition for oil and gas workers. The North Sea Jobs Service will be tailored to workers’ individual needs, for example by helping applicants assess their existing skills and experience, identify target career pathways and potential vacancies, and understand whether any training is required
The export opportunities provided by the North Sea industries are immense and the government is committed to supporting SMEs to be able to take advantage of them and highlight the UK as a leader in the energy transition. UK Export Finance (UKEF) has up to £80 billion of finance capacity available to support UK exporters, including in our growth-driving sectors and is aiming to support £10 billion of clean growth finance between 2024 and 2029. To provide practical advice and support for businesses wanting to access an expansion into new markets, through DBT, the government provides a range of export support services. The UK will continue to work closely with our international partners, such as through the North Seas Energy Cooperation – continuing to unlock opportunities and growth potential for UK businesses.
Conclusion 3
We recognise that with time moving to clean energy improves the UK’s overall energy security. However, as fossil fuels are to continue to form part of the UK’s energy mix for decades to come, there are compelling arguments to meet as much of that need as possible from domestic sources. Easing the gradient of production decline means higher economic returns, lower emissions, and anchors jobs and skills in the northeast of Scotland, which will be necessary for the rapid growth of clean energy sectors. (Conclusion, Paragraph 54)
The North Sea basin is highly mature. Oil and gas production has seen a natural decline of 75% between 1999 and 2024. As a result, the industry has lost around a third of its direct workforce over the last decade. This is why we are planning for the North Sea’s energy future, to ensure that the people and communities at the heart of its success continue to play a leading role for decades to come as we scale up new technologies.
New licences for oil and gas awarded in the last decade have made only a marginal difference to overall production. Additional oil and gas licensing would not reverse the natural decline of oil and gas production in the North Sea basin or change the UK’s status as a net importer.
To go backwards and issue new oil and gas exploration and production licences would not help our energy security. We want to show global leadership in climate action in line with the science and embrace the opportunities of the future as we drive forward the clean energy transition.
In addition to not issuing new licences to explore new fields, the government has committed to managing existing oil and gas fields for the entirety of their lifespan and this will help to ease the gradient of decline.
To meet this commitment, we are introducing new Transitional Energy Certificates to enable some oil and gas production in areas adjacent to already licensed fields, to help ensure they remain economically viable.
This is a pragmatic step to help deliver a managed, orderly and prosperous transition in the North Sea’s declining oil and gas basin.
Recommendation 4
The Government should set out how it intends to address the issue of the North Sea oil and gas industry’s decline outstripping the scale-up of clean energy. We urge the Government to take a pragmatic approach to its licensing policy as an outcome of its consultation, Building the North Sea’s Energy Future. In its response to this report, the Government should clarify how developers may be permitted to undertake additional drilling activity under existing exploration licences. (Recommendation, Paragraph 55)
The government agrees with the importance of taking a pragmatic approach.
Transitional Energy Certificates will enable some oil and gas production in areas adjacent to already licensed fields. For a Transitional Energy Certificate to be awarded, the NSTA must be satisfied that any eventual development on that site:
- Will not undertake any exploration, and
- Is for a block of acreage which is part of, or adjacent to (linked by a tieback), an existing field, and
- The activity is necessary for a managed, prosperous and orderly transition.
Given that no exploration is permitted, the area should already be well-understood.
These certificates recognise the often-iterative nature of oil and gas developments by allowing the often-used methods for maximising existing fields to continue - such as ‘tying back’ to other areas or drilling ‘infill wells’. It will help to maintain existing fields for the entirety of their lifespan and ensure they remain economically viable.
Recommendation / Conclusion 5
We recognise that maximising economic return from clean energy investments requires supporting and expanding UK-based supply chains. (Conclusion, Paragraph 56)
The Government should set out how it intends to increase the proportion of UK-based supply chains used by clean energy generators. (Recommendation, Paragraph 56)
The government agrees with this recommendation.
The importance of attracting and sustaining investment into domestic supply chains was reiterated in the Government’s North Sea Future Plan, published 26 November. We announced several new policy interventions aimed at supporting the North Sea supply chains futureproof and diversify their activities. These are:
- A new North Sea Future Board will convene people with the experience and levers to manage the energy transition across the North Sea. Establishing a supply chain workstream will be one of the first tasks for the Board.
- To develop a comprehensive guidance package for supply chain businesses and investors
- Working with the NSTA to develop a Basin Wide Plan to support greater transparency regarding upcoming activity in the North Sea.
- To work with GBE to ensure that their £1bn Supply Chain Fund will support the North Sea transition through strategic funding and a focus on utilising the UK’s existing industrial strengths in oil and gas to deliver the next generation of clean energy technologies.
We also reiterated that industry-led local content requirements are critical to providing the demand certainty for British clean energy manufacturers and enabling the UK to reach its productivity and Growth ambitions. Our paper underscored how Government is putting local workforce at the heart of the supply chain transition. UK supply chain growth means both securing good jobs for the workforce now and creating good British jobs into the future.
In addition to these announcements, we described several sector-specific activities that will also help to ensure that we grow and make the best use of our domestic supply chains.
The Clean Industry Bonus will support manufacturing in coastal and energy communities and cleaner, more sustainable supply chains, while increased transparency and predictability in future Contracts for Difference (CfDs) allocation rounds will support investment. CfDs incentivise investment in renewable energy by providing developers of projects with high upfront costs and long lifetimes with direct protection from volatile wholesale prices, and they protect consumers from paying increased support costs when electricity prices are high.
The government will work with the Offshore Wind Industry Council (OWIC) and Industrial Growth Plan (IGP) Strategy Board to introduce new metrics by the end of 2025 to determine the health and success of the supply chain, based on the detailed supply chain analysis conducted for the IGP. Building on the industry’s previous work to develop a UK-content methodology, these metrics can provide the underpinning for industry-led UK local content goals for the offshore wind sector.
The Contracts for Difference Clean Industry Bonus Allocation Round 7 (end 2025/start 2026) will be allocating extra Contracts for Difference (CfD) funding to developers investing in the offshore wind supply chain, including reserved funding for investments in the floating offshore wind supply chain, through CfD Allocation Round 7 projects. This policy will enable investments to be concentrated in the UK’s poorest communities – ex-industrial, port and coastal towns - and in cleaner manufacturing facilities. Funding will be confirmed after Allocation Round 7 results, which are expected end 2025/early 2026.
The government has awarded more than £55 million Floating Offshore Wind Manufacturing Investment Scheme (FLOWMIS) funding to Port of Cromarty Firth to secure critical facilities needed for the rapid development of new floating offshore windfarms and ensure they are built from the UK.
Following the Spending Review, the government and Great British Energy joined forces with industry and The Crown Estate to invest £1 billion in offshore wind supply chains. This includes:
- Up to £300 million from GBE to build UK manufacturing capacity for key constrained components for offshore wind and enabling networks.
- The Crown Estate will invest up to £400m of capital in the offshore wind supply chain, focusing on direct investments to fund the construction of port and supply chain facilities which enable offshore wind deployment and support local jobs.
- £300 million being developed by the offshore wind industry to deliver new investments into supply chains such as advanced turbines technologies, foundations and substructures.
CCUS is essential to the future green economy, tackling climate change, and meeting the UK’s target to reach net zero emissions by 2050. CCUS will complement our transition to homegrown clean energy, safeguarding our energy security and decarbonise power and industry in a way that drives growth.
The benefits CCUS offers for the UK’s growth and clean power missions are significant. It has the potential to deliver a stronger, greener UK by levelling up our industrial heartlands, supporting clean growth, attracting significant foreign investment and providing new economic opportunities for UK-based companies across the world.
Government renewed its commitment to the sector with £9.4 billion in capital allocation announced during the Spending Review. This first tranche of capital will unlock CCUS’s critical role in decarbonising industry and supporting energy security.
Developing and scaling up the CCUS supply chain in the UK will deliver long-term well-paid jobs across the country and is a priority of the government. The CCUS industry has a voluntary industry-led 50% UK Content target, matching the NSTD’s 50% UK content target. We are considering how we can drive further investment in UK CCUS Supply Chains to ensure the UK secures the economic benefits of the investments it is making in the sector.
The CCS Association (CCSA) has also produced a Good Practice Guidance Document to outline how the UK can build a domestic CCUS supply chain which maximises both the local and national economic benefits of the CCUS cluster programme. The document set out a series of industry-led commitments (i.e. 50% UK content), including their approach to promoting UK supply chain opportunities, jobs created and sustained through CCUS projects and investment in training and skills.
The hydrogen supply chain represents a critical growth opportunity for the UK. Suppliers are generally located in our industrial heartlands, including North Sea communities, making hydrogen a key transitional sector for suppliers in high-emitting sectors. Hydrogen will benefit from the Public Finance Initiatives set out earlier in this document, which will deliver catalytic public investment into the hydrogen supply chain. This will allow the government to leverage investment and boost growth in our North Sea communities.
The Government has confirmed over £500 million to support hydrogen infrastructure, which will enable the development of the first regional hydrogen network to be in operation from 2031, with FID expected to be reached during this Parliament. We will launch new investment rounds, with the first transport and storage allocation round launching in spring 2026, and the Hydrogen to Power business model launching in 2026. The Government is also continuing the HAR rounds, which allocate revenue support to low carbon hydrogen production projects across the UK. We aim to launch HAR3 in 2026 and HAR4 from 2028, and offshore projects are welcome to apply into the HARs. The supply chain and skills required to construct and operate the hydrogen network will likely be concentrated in industrial heartlands including in North Sea communities, offering a clear growth opportunity for the North Sea.
UK companies are at the forefront of the clean energy transition and are already exporting their innovative technologies and world-renowned services to projects across the globe. We are working hard to ensure UK hydrogen and fuel cell companies continue to capitalise on the opportunities of the global clean energy transition, and to access high value opportunities in international markets. This includes working to remove trade barriers, as well as championing our world-leading hydrogen companies overseas.
The Clean Energies Industry Sector Plan also confirmed we are welcoming the industry-led voluntary ambition of 50% UK local content for hydrogen across the value chain from 2030. We will work with industry to introduce monitoring and evaluation to determine the health and success of the supply chain in relation to the existing industry voluntary content ambition, which could include exploring stronger incentives around reporting.
Conclusion 6
We welcome the Government’s acknowledgement that it now needs to take action on the oil and gas industry’s fiscal environment. However, a lack of clarity on the fiscal regime beyond 2030 has created uncertainty for industry in the North Sea. The Energy Profits Levy at its current rate of 38%, which brings the headline rate of tax to 78%, is seen by many in industry as no longer proportionate. We are concerned that without reform the levy will accelerate the decline of the North Sea oil and gas industry and its associated supply chain, resulting in job losses. The UK will require oil and gas in its energy mix for decades to come and the fiscal regime should reflect that. (Conclusion, Paragraph 66)
The government is committed to managing the North Sea in a way that ensures a fair, orderly and prosperous transition, while recognising domestic oil and gas will continue to have a role in the energy mix for decades to come. On tax, we are taking a responsible and proportionate approach which recognises the ongoing role of the oil and gas industry and workforce in our current energy mix while ensuring the sector contributes more towards our energy transition.
The Autumn Budget 2025 set a clear path for the Energy Profits Levy (EPL) to end by March 2030 at the latest, or earlier if the EPL’s price floor, the Energy Security Investment Mechanism (ESIM), is triggered. The EPL ESIM will be triggered if the average oil price and the average gas price, over a period of 6 months, both fall below set threshold prices. The ESIM threshold prices which apply for the 2025–26 financial year are $76.12/barrel (oil) and 59p/therm (gas). These threshold prices are adjusted annually in line with inflation.
While we recognise that oil and gas will continue to have a role in the energy mix during the transition, we also need to drive public and private investment towards cleaner energy. EPL revenues contribute to this objective and help support the funding of wider public services. As of December 2025, the levy has raised just under £12bn and is projected to raise around £8.5bn between 2025/26 and 2030/31.
The EPL continues to include attractive tax relief to encourage ongoing investment in the oil and gas sector. Tax relief worth £84.25 is available for every £100 of private investment. This tax relief increases to £109 where the investment is targeted towards decarbonisation activities such as electrification.
The government also recognises the importance of building long-term stability and certainty in the oil and gas fiscal regime. That is why Autumn Budget 2025 announced a new Oil and Gas Price Mechanism (OGPM) will replace the EPL when it ends, giving the oil and gas sector the long-term certainty and predictability it needs to plan future investments.
Recommendation 7
In its response to this report, the Government should commit to a publication date for the outcome of its consultation on the new fiscal regime. To provide much-needed clarity and confidence to the sector, the successor regime should be brought into effect as soon as possible, rather than replacing the Energy Profits Levy from 2030. (Recommendation, Paragraph 67)
The government partially agrees with this recommendation.
We recognise the importance of building long-term stability and certainty in the oil and gas tax regime. Autumn Budget 2025 announced that a new OGPM will replace the EPL when it ends in March 2030, or earlier if the EPL price floor triggers. A summary of stakeholder responses to the March 2025 consultation on the OGPM was also published alongside the Budget.
The OGPM will adopt a revenue-based approach and deliver a fair return to the UK public when oil and gas prices are unusually high. The rate of the new tax will be 35%, For the 2026/27 tax year, the threshold prices which must be exceeded for the new tax to activate are $90/barrel (oil) and 90p/therm (gas). These thresholds will be adjusted annually in line with inflation. The government will also legislate for OGPM in next year’s Finance Bill to give the oil and gas sector further certainty and reassurance EPL is temporary.
When the EPL ends, the headline rate of the tax regime will return to 40%, along with the introduction of the new OGPM which will only apply when prices are unusually high.
Conclusion 8
We welcome the Government’s publication of updated guidance on environmental impact assessments for new oil and gas fields, providing greater certainty to the sector. Given that each application will be considered on a case-by-case basis and the Government has not shared how factors will be weighted in its assessment, transparency surrounding the process could be improved, especially as this is an area of public interest. (Conclusion, Paragraph 75)
Each individual project will be considered on its merits, in line with the applicable Regulations and relevant guidance.
When reaching a decision as to whether agreement should be given to the grant of consent the Secretary of State will consider the environmental effects of the project (as required by the Offshore EIA Regulations) and will form a view of the overall balance of advantage between any potential significant effects on the environment and wider benefits to the interests of the nation and any other relevant factors in proceeding with the project. In reaching this view the Secretary of State will usually consider, amongst other matters, the severity, extent, understanding and duration of the significant effects, the Government’s overall energy and environmental objectives, and the potential economic and other advantages of the project proceeding. This includes an assessment of the extent to which the project aligns with the Government’s stated objectives for the future of the North Sea
The EIA process already provides transparency. Relevant environmental information received from developers is subject to public notice where appropriate, to enable representations to be made by the public and civil society, and factored into the decision-making process.
Once the Secretary of State has reached a decision, the developer will be notified and the decision published which will set out reasons for the decision.
Recommendation 9
We recommend that the Government commit to issuing an explanatory statement after assessing each application, setting out how it has balanced the environmental impact against the economic and energy security benefits of oil and gas fields in its assessment. A justification is vital to ensure the industry and wider public can understand and be confident in the Government’s stewardship of the North Sea continental shelf. (Recommendation, Paragraph 76)
The government partially agrees with this recommendation.
Once the Secretary of State has reached a decision, the developer will be notified and the decision published which will set out reasons for the decision.
OPRED decisions can be found on the OPRED website.
Conclusion 10
Given what is at stake if transition is mismanaged, we are disappointed that Unite the Union has been unable to share, as promised, its plan to create 35,000 energy transition jobs. The plan might have been a valuable and timely contribution to our inquiry and could have assisted us in developing our recommendations to the Government while it develops its own North Sea transition plan. Unite’s clear failure to supply the plan ultimately casts doubt over its existence. (Conclusion, Paragraph 83)
We have published our Clean Energy Jobs Plan, which sets a pathway for the clean energy workforce to nearly double from around 440,000 in 2023 to around 860,000 jobs supported across clean energy sectors and their supply chains by 2030, in order to deliver our Clean Energy Superpower Mission. In the recently published North Sea Future Plan, we have set out a suite of measures, including a new North Sea Jobs Service, to deliver a fair and prosperous transition for the oil and gas workforce.
We worked closely with Trade Unions in the development of the Clean Energy Jobs Plan, and will continue to work with them as we deliver our policies, including the North Sea Jobs Service.
Conclusion 11
A coherent transition plan for the North Sea is urgently needed. While we recognise that the Government has been in power for 15 months, plans are not yet in place and the transition is already well underway. The Government’s consultation, Building the North Sea’s Energy Future, which commits to producing a plan in dialogue with industry, trade unions and communities, is a welcome start but is moving too slowly. (Conclusion, Paragraph 89)
Recommendation 12
The Government should recognise the urgency of the need for a coherent plan for the North Sea by committing to dates for the publication of its consultation response and consequent transition plan. The transition plan should be long-term in scope, provide certainty to the sector, and speak directly to the challenges faced by the communities in the northeast of Scotland, who are disproportionately affected by the UK’s transition away from oil and gas. We recommend that the Government’s transition plan contains specific and measurable outcomes on increasing the transfer of skills from the oil and gas industry to new sectors, with clear commitments from both governments and industry on how to achieve them. This could include target figures for oil and gas workers transitioning into specific industries, for clean energy job creation, and data on the UK supply chain content in both oil and gas and renewable energy activity. (Recommendation, Paragraph 90)
The government partially agrees with recommendation 12.
The government agrees with the importance of delivering a coherent transition plan. We committed in our manifesto to securing a long-term future for the North Sea. Following the consultation, “Building the North Sea’s energy future” we published our government response - the North Sea Future Plan - in November. This sets out pragmatic steps to secure and renew the North Sea’s place as Britain’s powerhouse that will both protect good jobs in our oil and gas heartlands and build the next generation of good jobs.
The North Sea is one of Britain’s greatest industrial success stories, with world-renowned offshore expertise that has powered the country for over 60 years. But declining oil and gas reserves and 70,000 jobs lost in the last decade means there is an urgent need to act now to manage the declining North Sea basin and retain its world-class offshore expertise.
After years of inaction, we are taking pragmatic steps that will ensure existing oil and gas production continues as an essential part of our energy mix for decades to come – while actively scaling up clean energy industries here in the North Sea. The North Sea Future Plan sets out a clear path to grow clean energy industries, support the management of existing oil and gas fields for their lifespan, and help North Sea workers and communities make the transition.
As part of this Plan, we have also set out a suite of measures to help the oil and gas workforce transition into new sectors, set out in the response to recommendation 13. These measures build upon the package of support set out in the Clean Energy Jobs Plan, set out in the response to recommendation 18. As part of the Clean Energy Jobs Plan we will monitor clean energy jobs and skills trends from publication and provide regular updates in delivering the objectives of the Jobs Plan.
We are determined to maintain momentum. That is why the Plan includes a commitment to set up a minister-led delivery board to oversee the progress, coordination and long-term planning of the North Sea’s industrial transition. The new North Sea Future Board will be made up of experts from the oil and gas industry, renewable industries, trade unions and local government. It will include representation from geographical areas affected by the North Sea’s energy transition, including the northeast of Scotland, who will be able to speak directly to the challenges faced by these communities. The Board will meet for the first time in early 2026. One of the Board’s objectives will be to review progress against the actions in the North Sea Future Plan.
Conclusion 13
It is vital that the skills of workers who have made Scotland’s oil and gas industry successful are not lost. We welcome the efforts of both governments to support the development of clean energy jobs and the transfer of skills from the oil and gas sector to other industries. In particular, we welcome the establishment of the Oil and Gas Transition Training Fund. Access to an effective training fund will serve as an incentive for workers to transition and shows that the Government is serious about supporting people into the jobs of the future. A Government-led training fund will also improve ministerial accountability and coordination of the North Sea energy transition at a national level. (Conclusion, Paragraph 98)
The Oil and Gas Transition Training Fund is an important programme in helping to create a just, fair and prosperous transition for workers in the sector looking to retrain into new roles and for their communities. This will give our existing skilled workforce the opportunity to play a central role in future energy security through roles in clean energy industries.
In future years, we will substantially scale up this work, with up to £18 million, jointly funded between the UK and Scottish governments, to extend and broaden the Oil and Gas Transition Training Fund from 2026–7 to 2028–9, providing thousands more of Scotland’s valued offshore oil and gas workers with access to bespoke careers advice and funding for the training they need to access roles in sustainable energy. Both governments will work with trade unions and industry to develop and promote this scheme and explore opportunities for additional private investment.
In the North Sea Future Plan, we announced the North Sea Jobs Service, which will wrap around the Transition Training Fund to provide end-to-end career transition support for oil and gas workers looking to move into secure jobs in growing industries. It will work closely with industry to identify vacancies and match eligible workers to prospective employers.
Recommendation 14
The forthcoming transition plan should set out how the UK and Scottish governments will work together to deliver the Oil and Gas Training Transition Fund. It should clarify the duration of the funding available and the degree of UK Government involvement in the scheme, to ensure sufficient accountability at a UK level. In its response, the Government should outline whether it has considered how co-investment plans with the private sector or the revenue generated by the Energy Profits Levy could finance the transition fund in the long term. (Recommendation, Paragraph 99)
The government partially agrees with this recommendation.
As set out in the Clean Energy Jobs Plan, the Oil and Gas Transition Training Fund will be extended and expanded from 2026–7 to 2028–9 with up to £18m provided by UK and Scottish Governments. We will also be exploring opportunities for additional private investment.
The current Oil and Gas Transition Training Fund is jointly delivered by UK and Scottish Government with Skills Development Scotland as delivery partner. UK Government were actively engaged in the design and scope of the fund and are monitoring delivery. The UK and Scottish Governments are committed to working together to deliver the expansion.
We will share further information on the scope of the Transition Training Fund in due course.
The government is committed to managing the North Sea in a way that ensures a fair, orderly and prosperous transition, while recognising domestic oil and gas will continue to have a role in the energy mix for decades to come. On tax, we are taking a responsible and proportionate approach which recognises the ongoing role of the oil and gas industry and workforce in our current energy mix while ensuring the sector contributes more towards our energy transition. While the Energy Profits Levy (EPL) remains, the regime continues to provide attractive tax relief for investment of up to around £84 for every £100 of private investment, with even more tax relief (up to £109) for investment in decarbonisation activities such as electrification.
However, the Government would have considerable fiscal sustainability concerns with regards to the use of taxation revenues from oil and gas production profits for a hypothecated fund for the energy transition in the long term. This is mostly due to the expectation that production from the basin will continue to decline over the longer-term and because of the significant volatility of projected oil and gas receipts, which depend on a range of factors including commodity prices and wider market conditions. Given this, earmarking revenues this way significantly limits the Government’s ability to manage the public finances flexibly.
Conclusion 15
There has been a failure of communication from consecutive governments to oil and gas workers about the transition and what they need to do to prepare and benefit from it. Government action is required to ensure the visibility and promotion of clean energy jobs, as well as to ensure existing workers are aware of the reality of transition and that these new opportunities are available to both prospective and existing workers. (Conclusion, Paragraph 103)
In the Clean Energy Jobs Plan, we set out how awareness of clean energy jobs is a key barrier to achieving our Clean Energy Superpower Mission. Energy & Utility Skills, with support from the Department for Energy Security and Net Zero and organisations including BEAMA, ECITB, Energy UK, EngineeringUK, and RenewableUK, are leading a UK-wide industry-led awareness and attraction campaign on job and career opportunities, launching next year. In parallel, a deep dive will be undertaken on several priority occupations with critical workforce needs to improve understanding of, and overcome, specific barriers to entry, whether that be lack of visibility of career pathways or attractiveness of roles.
In the Nuclear sector specifically, the Destination Nuclear communications campaign is raising awareness about the wide range of opportunities available across the sector, helping to attract a broader and diverse range of new talent by raising awareness and reshaping public perceptions of careers in nuclear. This campaign also includes a careers portal bringing nuclear sector jobs to one place.
The Department recently worked with the Port of Tyne and the North East Combined Authority to host a Clean Energy Jobs Fair on the 11 December. The event showcased the growing range of clean energy careers across the North East, and featured major employers including Equinor, National Grid, Siemens Energy and JDR.
Recommendation 16
As part of its North Sea transition plan, we recommend that the Government conduct a communications campaign about the scale of the energy transition and the employment opportunities available, directed at both oil and gas workers and new entrants to the sector. This should include information about skills transferability between oil and gas and other sectors and should also signpost how to find relevant job opportunities. (Recommendation, Paragraph 104)
The government agrees with this recommendation.
As set out in the response to conclusion 15, the Department is working with industry to leading a UK-wide industry-led awareness and attraction campaign on clean energy job and career opportunities, launching next year.
As part of the North Sea programme, which includes the North Sea Jobs Service and Oil and Gas Transition Training Fund, a strong communications approach will be embedded at the heart of it to ensure that workers are aware of the offer that is available to them to help them transition into new roles. The North Sea Jobs Service will utilise jobs boards and apps to identify new roles of interest, and provide job-matching to help oil and gas workers identify roles of interest. Some avenues may provide guaranteed interviews or placements with prospective employers.
Conclusion 17
The Grangemouth case is the energy transition’s canary in a coalmine. It has illustrated the need for Government’s active stewardship in the energy transition. Petroineos advised the Committee that the UK and Scottish governments were aware of its plans to cease operations at the refinery five years ago. Both the UK and Scottish governments should have acted sooner to prepare for the resulting job losses and set in motion a feasibility study for future industries at the site at a much earlier point. This lack of action created an employment gap and trauma for the local community that could have been avoided. Petroineos, in collaboration with the Government, local authorities and trade unions, ought to have produced a comprehensive exit plan. (Conclusion, Paragraph 124)
We agree with the Scottish Affairs Committee’s conclusions on preparation for Grangemouth. Petroineos’ first made its intention to cease refining operations public in November 2023 ahead of the company confirming this position in September 2024. Despite this the previous government had not undertaken planning for the future of the Grangemouth refinery, and no efforts were made to prepare for the refinery’s closure and the impacts on the community and workforce.
Within weeks of this Government being elected, working closely with the Scottish Government, we put together a £100 million package to support the community, and invest in the local workforce, along with tailored support to secure good alternative jobs. To date the Grangemouth Training Guarantee has supported 269 ex-refinery workers with training.
Alongside this, we launched the Project Willow feasibility study to identify low carbon and clean energy business models that could be developed at the site. This study drew on expertise from the workforce, local community and key stakeholders with an interest in Grangemouth to identify the site unique competitive edge and how it can be transformed into a low carbon and clean energy hub.
We continue to work closely with the Scottish Government on options for investment in Grangemouth having established the Grangemouth Investment Taskforce which has received over 140 enquiries to date. We are calling on investors to come forward to seize the opportunity that Grangemouth presents to transform it into a low carbon and clean energy hub. To deliver this, we have announced a £14.5 million seed fund to support these projects, which will work alongside the National Wealth Fund’s £200 million commitment for co-investment opportunities at Grangemouth.
Recommendation 18
In its response to this report, the Government should outline what has been learned from this case and what can be done to ensure that comparable industrial transitions will be better managed in future. Having consulted trade unions and communities during its consultation on Building the North Sea’s Energy Future, we recommend that the Government set out principles in its consultation response which outline the conditions and actions that constitute a just transition for workers and communities and draw on best-practice examples. These principles can act as a guide and create an expectation for transitioning high-carbon companies to produce an exit plan that benefits workers and communities. We recommend principles that emphasise the importance of early government intervention in industrial transition, proactive engagement with workers and communities, and which aim to maximise good, long-term and well-paid jobs. (Recommendation, Paragraph 125)
The government agrees with this recommendation.
We agree that lessons should be learned from Grangemouth to manage the impacts of industrial transitions on workers and communities. The UK government recognises the economic opportunity that the clean energy transition presents to the UK in, and the government’s Plan for Change sets out our ambition to make Britain a Clean Energy superpower. We are committed to delivering a fair and equitable transition for our highly skilled workforce and by enabling workers to seize new opportunities in clean energy we will ensure that no community is left behind. At the same time, we will continue to support the vital role that oil and gas will play in the coming decades, recognising its importance in maintaining energy security during the transition.
As set out in our responses to Recommendations 12 and Conclusion 13, the North Sea Future Plan and Clean Energy jobs plan provide clear actions to support the transition, including measures to ensure jobs are high-quality, well-paid, stable, inclusive and safe, with good training, progression opportunities, and voice at work. These plans detail how this government is working with industry and unions on initiatives like the joint UK and Scottish Government package to support the transition of North Sea workers, the expansion of the Energy Skills Passport, and the development of a fair work charter to ensure clean energy jobs are always good jobs. Oil and gas workers’ skills are a powerful asset for the country that is vital to our energy security and foundational to driving future growth.
Thanks to the clarity and ambition of our Clean Energy Superpower Mission, the number of jobs supported by clean energy industries could almost triple in Scotland. As skills policy is delivered by national governments, the UK government has committed to working with devolved governments to support this and has already supported workers through funding a bespoke Training Guarantee in Grangemouth.
In our North Sea Future Plan, we set out a plan to secure and renew the North Sea’s place as Britain’s powerhouse – that will both protect jobs in our oil and gas heartlands and build the next generation of good jobs. For further details on how we are actively scaling up our North Sea clean energy industries, supporting supply chains and delivering a fair and prosperous transition for the oil and gas workforce through the North Sea Jobs Service, please refer to our responses to Recommendation 12 and Conclusion 13.
We are also commencing work on a Future of Fuels programme for the downstream oil sector, which will guide how we manage the transition, protect energy security, and support jobs and local communities. As announced in the Budget, we will shortly launch a call for evidence to help inform the UK’s long-term strategy for the sector. This will seek industry views, including those in the wider supply chain, on the opportunities and barriers to the transition, the risks facing the sector, and the types of support needed to deliver a managed and competitive transition.
The government recognises that gas will still play a significant role in our energy make up for years to come, continuing to provide energy to homes and businesses and underpinning our energy security across the net zero transition. We are however committed to planning ahead and taking a proactive approach as the energy landscape changes. We will therefore be publishing a call for evidence on the longer term transition of the gas system in 2026, as outlined in our June 2025 Midstream gas system update to the market. The call for evidence will gather further evidence on how the government can ensure that there is a fair and orderly transition away from gas when and where it is no longer needed.
Alongside this, the Government will bring forward a clear plan for industrial decarbonisation in due course. This plan will set the strategic direction of our approach to working with industry towards a competitive and industrial base in the UK, ensuring growth is captured in parallel to emissions reductions.
Conclusion 19
Continued momentum on the future of Grangemouth is vital. Project Willow must not be left to gather dust while jobs are at stake. We welcome the Scottish Government’s £25 million Just Transition Fund and the UK Government’s commitment of £200 million in ringfenced National Wealth Fund funding to leverage private investment in Grangemouth’s future. However, more clarity is needed on how decisions about investable proposals will be made, and how the Government’s taskforce on Project Willow recommendations will feed into the investment taskforce. This is crucial as it is potentially in the Government’s gift to unlock certain projects through regulatory changes. (Conclusion, Paragraph 137)
We agree that it is important to maintain momentum at Grangemouth and we are leaving no stone unturned to transform Grangemouth into a low carbon and clean energy hub. To support this goal, at the Autumn Budget 2025 the Chancellor announced up to £14.5 million of UK Government funding for Grangemouth to support future projects and back Grangemouth’s transition to a hub for low carbon technologies as the UK Government cements Scotland’s place as the home of the UK’s clean energy revolution. The investment agencies of the UK and Scottish Government – the Office for Investment and Scottish Enterprise – are undertaking due diligence on all enquiries that the Grangemouth Investment Taskforce receive. The funding announced at Budget will be used to support these projects.
On 11 December, the first project to benefit from this funding was MiAlgae – a Scottish sustainable biotechnology company. A reflection of the ongoing close collaboration between the UK and Scottish Governments, and we have jointly backed with up to £3 million grant funding for the company to enable it to establish its first commercial manufacturing facility at the site. Securing this investment is a landmark moment as the Grangemouth Investment Taskforce works at pace to unlock more opportunities at Grangemouth having received around 140 enquiries for the site. We are working closely with several other projects with further announcements expected soon. Due to commercial sensitivity we cannot provide further information on those projects at this point in time.
As projects emerge through the Grangemouth Investment Taskforce we will work as quickly as possible to understand what we can do to support investors in developing projects at Grangemouth, including what policy or regulatory support is needed to enable investment.
Recommendation 20
The Government should explain in its response to this report how its taskforce on regulatory recommendations will feed into decisions taken by the National Wealth Fund. The Government should make clear the role and influence of the Grangemouth Investment Taskforce Board in relation to the allocation of the £200 million National Wealth Fund funding. It should clarify whether the speed at which a new project at Grangemouth can begin, as well as the number and quality of jobs to be created, will be taken into account when making decisions about investable proposals. (Recommendation, Paragraph 138)
The government partially agrees with this recommendation.
The Grangemouth Investment Taskforce established jointly by the UK and Scottish Governments is being led by our investment agencies – the Scottish Enterprise and Office for Investment – which assess all proposals for Grangemouth. As projects emerge through this Taskforce we are working as quickly as possible to understand what we can do to support investors in developing projects at Grangemouth, which includes what policy or regulatory support is needed to enable investment.
As a member of the Investment Taskforce, the National Wealth Fund will be aware of projects that are emerging through the investment pipeline and any regulatory or policy requests that accompany proposals. The National Wealth Fund stands ready to invest the £200 million to support new opportunities at Grangemouth which is designed for co-investment with the private sector once investable propositions are identified. The Fund acts as an impact investor and adheres to its investment principles before making decisions on investment, which are whether the project supports the government’s growth and clean energy missions, is in capital intensive projects, delivers a positive financial return and whether it can crowd in significant private capital over time.
To date, the Investment Taskforce has received around 140 enquiries and whilst we can confirm that we are working closely with several other projects with further announcements expected soon due to commercial sensitivity we cannot provide further information on the timings of investment decisions at this point in time.
We are working as quickly as possible to support investment decisions, and the £14.5 million seed fund announced at Budget is designed to support these projects. Our priority is to ensure that projects are delivered efficiently and in way that secures a long term sustainable economic future for Grangemouth.
Footnotes
1 The future of Scotland’s oil and gas industry