Has Net Zero been the cause of job losses in offshore oil and gas?

As in the oil refinery industry, net-zero policies are blamed for job losses in the offshore oil industry. Is this fair?

Between 2015 and 2025 around 260,000 jobs related to offshore oil and gas were lost in the UK. Those directly employed in offshore oil and gas are in the tens of thousands. However, the industry supports a range of jobs through induced and indirect employment. The bulk of such related employment is in supply chains and hospitality. At its peak in 2014 there were 453,000 jobs in the sector. As the industry continues declining, some companies look to diversify (e.g. in hydrogen production, renewables, carbon capture). Nevertheless, only 7 out of 87 companies are investing in renewables.

How are net-zero policies, in theory, impacting the industry? The North Sea Transition Deal, for example, commits the upstream sector to halving its production emissions and eliminating routine flaring by 2030; a recent judgement in the Supreme Court requires oil and gas companies to assess and mitigate downstream emissions as part of their Environmental Impact Assessments; and the Labour government has largely remained committed to no new oil or gas exploration licenses. Industry bosses also blame the Energy Profits Levy (initially introduced as a windfall tax in 2022), which now taxes upstream profits by 78%, for driving away further investment in oil and gas.

However, these claims about tax and net-zero policies leading to job losses are at odds with what consultancy firms, analysts and industry bosses themselves say. In 2014 oil prices fell to $50 a barrel. Between the start of the oil price drop and the end of 2016, over 120,000 jobs were lost. Between 2016-2017 a further 40,000. The job losses resulted in increased workloads for remaining staff to the extent that bosses boasted of productivity increasing by 42% per worker compared to 2014. Between 2017 and the start of 2020 jobs in offshore oil remained relatively stable - personnel directly employed on oil rigs remained at 50,000.

In the first year of the pandemic roughly 35,000 jobs were lost - this was again due to a fall in oil prices as demand fell. Following the pandemic there was a rebound for the industry which was helped along by Russia’s full-scale invasion of Ukraine. To some degree this rebound was blunted by another fall in prices. By 2023 the industry supported around 200,000 jobs. Despite the oil-price increases due to the US-Israeli war on Iran and Iran closing the Strait of Hormuz in retaliation, the industry in the UK has continued to decline. On balance many more jobs have been lost to bosses’ reactions to trends in the global oil and gas market and the lack of any serious state intervention to develop good alternative jobs. Net zero and windfall taxes hardly even register.

You could argue the counter-factual that had the government cared more about ensuring the continuation of the industry and focussed less on renewables and net-zero fewer jobs would have been lost. However, you could then also argue that had governments done this then fewer people would be employed in the growing renewable energy sector and fewer people retrained and redeployed in renewables or in oil and gas decommissioning. The previous Tory government handed out hundreds oil and gas licenses - this also did very little to counteract the decline in the industry.
Even if the government planned to undo its net-zero commitments, hand out hundreds of new oil and gas licenses, and commit to more investment in the sector, this would do very little to see off the overall decline given the wider global trends in oil and gas.

A transition in the UK is under way but to say, as the Unite officialdom does, that net-zero targets and the current transition plans by the government are the main reason for job losses disorients and lets down oil and gas workers. It also lets oil and gas companies off the hook. Unite is effectively saying to these workers run into the arms of the same bosses that have cut hundreds of thousands of jobs and ask them to save you.

Instead of calling for “no ban without a plan”, Unite should seriously campaign for nationalisation of North Sea Oil and the wider energy industry in the UK, come up with its own serious plan for transition, and level its criticisms at a global fossil fuel industry that treats workers with contempt. This is the only reasonable and responsible way to stop and mitigate job losses. As heatwaves continue to smash records, the stakes are only getting higher.