With plans for a green transition, millions of workers in the oil, gas, and coal sectors have become concerned for their jobs, with news of massive cuts as the energy reliance in several countries shifts away from fossil fuels. However, there could be significant potential for these workers to be retrained for positions in the renewable energy sector, based on their existing skills and experience. Further, taxing the oil industry could help provide the money needed to fund this move.

During the Covid-19 pandemic, when global oil production fell to a record low due to a decrease in demand coupled with widespread government orders to stay at home, oil and gas jobs began to decline. Several oil and gas companies went bankrupt during the pandemic, leading to a sharp decline in jobs. Meanwhile, oil companies began to invest heavily in advanced technologies, such as robotics and artificial intelligence, to allow operations to continue running with fewer workers.

Despite the increase in oil and gas output since the pandemic, jobs are still being cut across the sector. In the United States, while crude output soared, employment figures fell during five of the first six months of 2024 due to improved operational efficiencies. This trend is expected to continue as companies invest further in advanced technologies and efficiency improvements across the industry. In addition, the eventual global shift away from fossil fuels to renewable alternatives will contribute to a reduction in oil, gas, and coal jobs as roles in the renewable energy and nuclear power industries increase.

A May publication from Oil Change International (OCI) suggests that making the U.K. windfall tax on oil and gas companies permanent could provide enough financing to help North Sea workers transition to jobs in the renewable energy sector. By cutting subsidies to oil and gas producers, enough money could be raised to spend on the transition to a low-carbon economy, the report states. Approximately $2.5 billion a year is required to support the retraining of oil and gas workers, as well as to establish new infrastructure and green jobs in a “just transition”.

The report suggests that $1.46 billion would contribute to developing the wind industry and creating new green jobs, while $585 million would be invested in adapting ports to make them capable of building and maintaining offshore wind turbines, and $432 million would go towards training oil and gas workers.

The U.K.’s windfall tax is a levy on oil and gas producers that was introduced in 2022 when oil profits were soaring. The Labour government has said that the tax, also known as the energy profits levy, will be extended to March 2030, instead of expiring at the end of 2025 as originally planned. The government increased the tax to 38 percent in November, much to the dismay of many oil and gas companies.

The recent report suggests that making the windfall tax permanent could raise as much as $2.66 billion a year. Rosemary Harris, a senior campaigner at OCI, stated, “Transitioning to a renewable energy economy is one of the greatest opportunities the U.K. has to create secure, well-paid jobs for energy workers and build a fairer future.” Harris added, “But right now, the government is failing to meet the challenges facing workers and communities. As jobs disappear and the cost of living soars, communities are being left behind. This plays right into the hands of those who wish to weaponise the government’s inaction for their own profits, under the guise of caring about workers.”

OCI also wants the government to close tax loopholes, such as the “carried interest” provision in capital gains tax, which allows private equity fund managers to pay a much lower investment tax rate than they would if they had to pay income tax on it. This could raise around $651.7 million a year, according to the analysis.

In May, the U.K. Energy Ministry Ed Miliband secured a Green Industrial Partnership with his Norwegian counterparts, Ministers Terje Aasland and Cecilie Myrseth. Miliband met with several energy companies to deepen bilateral relations and boost clean energy investment in the U.K. The Plan for Change, a partnership between the two European powers, outlines plans to develop new clean energy manufacturing jobs. It also supports the development of the U.K.’s renewable energy capacity, including offshore wind and grid development. Research suggests that closer cooperation on the clean energy transition in the North Seas could lower bills, create up to 51,000 jobs, and add up to $47.9 billion to the U.K. economy.

With fossil fuel jobs in decline, governments worldwide must prepare for a just transition, supporting the retraining of oil, gas, and coal workers to prepare them for roles in the clean energy sector. However, achieving this shift will require high levels of funding for retraining programmes and related infrastructure. Recent research suggests that, in the case of the U.K., financing could be raised by making the windfall tax on oil and gas companies permanent.

By Felicity Bradstock for Oilprice.com

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