Net zero sector worth over £10bn to economy, report finds

Scotland’s net zero sector is now worth £10.2bn per year to the economy, fresh analysis has found.

A report commissioned by the Energy and Climate Intelligence Unit (ECIU) has said 3,000 businesses are now involved in the net zero-related economy, supporting over 105,000 jobs.

Energy minister Michael Shanks has said this proved the UK Government is securing the “next generation of good jobs”.

But the report comes out the day after Aberdeen and Grampian Chamber of Commerce (AGCC) warned ministers were accelerating the decline of the North Sea oil and gas industry.

Findings from its own report on the energy transition revealed 93 per cent of businesses in the area felt oil and gas still had a future – if the UK Government pursued the right fiscal and regulatory frameworks.

But it warned that a lack of fiscal stability, planning delayed, transmission charging and slow project consenting was acting as a drag on the industry.

Legislation announced in the King’s Speech last week included an Energy Independence Bill, which will seek to promote alternative forms of energy such as renewables and nuclear power.

Despite renewed pressure to open up new areas of exploration in the North Sea, the bill will also look to firm up Labour’s 2024 manifesto pledge not to issue any new licences to explore new oil and gas fields.

The ECIU report found the net zero economy was highly productive and delivered salaries higher than the Scottish average.

Small and medium sized businesses made up the majority of firms involved in the sector. While these operated across the country, the report also found particular hotspots.

In Perth and Kinross, the sector makes up more than a tenth of the local economy (12 per cent), while in Aberdeen it supports 9.4 per cent and in East Lothian 6.8 per cent.

Laura Anderson, senior associate at the ECIU, said: “It’s Scotland’s small businesses that are helping to drive its clean economic growth. As North Sea oil and gas output continues to decline, whether new drilling occurs or not, without faster scaling of these new industries workers and communities risk being left without the opportunities they deserve.”

The UK Government has said the ongoing instability on the Middle East has proven the UK needs to move away from fossil fuels, in addition to its climate ambitions.

Shanks said: “Britain’s dependence on global fossil fuel markets leaves working people exposed to price shocks they cannot control. That is why this government is moving faster to deliver clean, homegrown power – strengthening our energy security and protecting families from the rollercoaster of fossil fuel prices. In Scotland, that mission is already delivering.”

However, the AGCC said while traditional oil and gas firms are diversifying into these new sectors, delays to infrastructure and policy uncertainty are creating a “transition gap”.

It is calling for a more competitive and stable policy environment.

Chief executive Russell Borthwick said: “The North Sea remains one of the UK’s greatest industrial assets. The same workforce, engineering expertise and supply chain capability built over the last five decades will also be critical to delivering offshore wind, carbon capture, electrification and wider transition infrastructure.

“But investment follows stability, and right now too many businesses believe the UK is losing ground to international competitors offering clearer policy, faster consenting and more predictable long-term conditions.

“The message from industry is becoming increasingly clear – you cannot deliver energy security, economic growth and the energy transition while simultaneously hollowing out the industrial base required to achieve all three.”