A £62 million energy transition fund has been set up to help protect the oil and gas industry from the dual economic impacts of a global downturn in demand and coronavirus.
Announcing the new multimillion-pound boost at the Scottish Government’s daily briefing on Friday, First Minister Nicola Sturgeon said the sector was in “crisis” but the new cash would help support jobs and businesses over the next five years.
The investment, which is focused particularly in the north east, underpins the region’s ambitions to become a world leader in the transition to net zero – and ministers hope it will attract significant private sector investment.
The announcement came as new GDP figures revealed the UK’s economy shrank by a “historic” 20.4% in April, the largest monthly contraction on record.
Ms Sturgeon said the Scottish Government wanted to do “everything we can” to support the oil and gas industry, and highlighted the importance of a recovery programme which recognises the value of individual sectors regionally.
“The impact of this crisis is being felt across our economy but we know that some sectors are particularly affected,” she said.
“For example, Scotland’s energy sector is facing a massive decline in global demand. And that is having a very serious impact on our economy.
“The Scottish Government is determined to do everything we can to support our energy sector through this crisis. We want to protect jobs and businesses – in the north east, and across the country.”
Major projects to be considered for funding under the scheme include a global underwater hub, net zero solution centre projects, a hydrogen hub, the Acorn project and an energy transition zone.
The Scottish Government hopes the investment will also benefit the wider Scottish energy sector and supply chain, working with local businesses to support sustainable jobs and maximise inclusive economic growth.
Ms Sturgeon said the global underwater hub will bring together engineering expertise from academia and industry and “help our oil and gas sector to use its existing sub-sea and underwater expertise in new areas, such as marine renewables”.
The energy transition zone – a new business park adjacent to the Aberdeen South Harbour – will provide “state of the art facilities for the manufacturing and development of renewable and low-carbon technologies,” Ms Sturgeon said.
Addressing the GDP figures, the first minister called on the UK Treasury to issue a further signal of extended support for businesses and workers.
She said the only alternatives to extended support would be businesses forced to reopen before it is safe, or staying closed and risking jobs.
Statistics will be published on Scotland’s labour market on Tuesday that will take into account the first full month of lockdown and the first minister warned there is likely to have been a “significant impact” on jobs.
Ms Sturgeon repeated her call for an extension to the Brexit transition period so businesses are able to concentrate on the post-Covid recovery and revealed she had joined with the Welsh First Minister, Mark Drakeford, in writing to Boris Johnson to request a delay.
She also used Friday’s daily briefing to announce a further three people had died overnight from coronavirus in Scotland, taking the total death toll to 2,442.
There were 27 new positive cases, taking the total to 15,709, while 914 people are currently in hospital with confirmed or suspected Covid-19, an increase of five.
Sir Ian Wood, chairman of Opportunity North East, welcomed the announcement of funding for the oil and gas sector and hoped it would help create “a lot of employment over the next 20 years”.
Meanwhile, Oil & Gas UK chief executive Deirdre Michie said the announcement was “good news for jobs, supply chain companies and energy communities” and recognises “the essential role” of Scotland’s offshore industry in realising net zero goals.
The funding was also welcomed by Aberdeen Central MSP Kevin Stewart, who said ministers had “brought forward a lifeline support package to the sector which will help the industry recover from one of the most challenging periods in its history”.
But Scottish Conservative MSP Alexander Burnett accused the Scottish Government of “months of inaction” and called for “concrete objectives” for oil and gas recovery that link in with the UK hydrogen production plans already in place.