Trade in Services Report

Energy Related Services

7.1 Sectoral Composition

• Gross Value Added (GVA) 2022: £4.8bn which constitutes 2.9% of the Scottish Economy. By Comparison, the UK ERS Sector was worth £26.0bn in 2022, which is 1.1% of the UK economy.
• Employment 2024: 60,000 workers which is 2.2% of Scotland’s workforce. In 2022, employment was 67,000 workers which implies a productivity of £72,294.83 per worker in 2022.
• International Trade (Destination outside the UK) 2022: £2.8bn representing 58.5% Energy Services total Gross Value Added in Scotland.
• Domestic Trade (Destination in Rest of the UK) 2022: £4.1bn representing 84.6% Energy Services total Gross Value Added in Scotland.
• Total Exports (Destination not in Scotland) 2022: £6.9bn representing 143.4% Energy Services total Gross Value Added in Scotland.

Source: Scottish National Accounts, UK National Accounts, BRES

Energy‑related services encompass firms across oil and gas, renewables, and engineering‑led supply chains. For data analysis, this includes businesses under SIC 71 (Architecture & Engineering). Although this approach is not ideal, it is a necessary consequence of the SIC system’s rigidity. In practice, engineering firms in Scotland are heavily oriented toward servicing the energy sector, meaning SIC 71 provides a proxy for companies most likely to be supplying energy‑related services.

The classification of the UK Continental Shelf as “offshore” also affects the data. Economic statistics for some parts ofthis sector are reported as greater than the value of the sector’s GVA, due to a substantial share of activity being generated within the offshore component of the Scottish economy.

The composition of the ERS sector in Scotland, compared to its UK counterpart can be difficult to understand. The sector is proportionally larger in Scotland then in the UK, contributing 2.9% and 1.1% to each economy, re-spectively. This is unsurprising given the prevalence of North Sea Oil based in Scotland.

58.5% of the sector’s GVA is exported internationally, with this equating to approximately a third of sector’s output.

Source: Scottish National Accounts

Growth in the value of ERS exports has typically outpaced growth in the value of the sector overall, averaging 6.9% annual growth to the sector’s 2.1% pre-pandemic.

Exports to the Rest of the UK grew at an average annual rate of 6.2%. Although this is similar to the international sector, it does not speak to the distinction of the Scottish sector from the wider UK sector, as much of this growth will be linked to activities on the Continental Shelf.

The impact of the 2014 oil crisis on the sector and export values is apparent. During the pandemic the value of the sector and exports declined, recovering in 2021 and far surpassing their 2019 levels by 2022.

We know high value energy services don’t show up cleanly in trade statistics as these services are often provided through overseas commercial presence or as part of integrated infrastructure projects rather than as standalone cross-border transactions. As a result, their value may be captured in the host country, embedded within goods trade, or recorded through investment and income flows rather than services exports. In the absence of clean data^[50], we produce a conceptual framework of what “energy related services” look like, with the caveat that some of these services may also be counted in other sectors, such as finance and insurance.

Source: Scottish National Accounts

Chart 7.2 shows the sector, and its exports, have rebounded from the pandemic – surpassing 2019 levels in 2022. Unfortunately, official statistics lag reality and are currently only available up to 2022. This research, and roundtable discussion, aims to bridge this gap in data by providing insight into post-pandemic dynamics.

The energy services sector is export intensive, with exports to international markets composing 58.3% of the sector’s GVA.

It’s important to note total exports (including “exports” from Scotland to the Rest of the UK) can be misleading. It’s not uncommon for export intensive sectors to include a large volume of intermediate inputs, which don’t count toward the sector’s GVA. Technically, Scotland “exports” a large volume of intermediates to the Continental Shelf – i.e., the Rest of the UK – where North Sea Oil operations are based. These offshore activities inflate total exports to be more valuable than the sector itself.

When focussing solely on international exports, it’s clear energy-related services are genuinely export-intensive, with much of their activity shaped by global markets.

7.2 Current and future global regulatory and non-tariff issues in the Energy Sector (oil and gas, renewables, and engineering-led supply chains)

7.2.1 Global regulatory and non-tariff landscape

The energy sector now operates in a world of tightening climate policy, intensifying geopolitics, and increasingly fragmented trade rules. Regulatory barriers are growing more complex across oil and gas, renewables, and engineering-led services, while non-tariff measures – from local content quotas to technical standards – shape who can participate and at what cost.

Four types of non-tariff measures shaping all subsectors are identified from the papers and articles produced by the international organisations, research institutes and academia.^[51]

The first type is local content/quota regimes that mandate domestic sourcing^[52] for equipment, services, and labour. This type increases project cost and complexity; encourages JV structures and local manufacturing.

The second type is technical barriers to trade (TBT) such as market-specific standards, certification, and conformity assessment. Product redesigns and duplicated testing increase costs and especially disadvantages SMEs.

The third type is sustainability and disclosure rules including mandatory climate risk, taxonomy alignment, and supply-chain due diligence (human rights, biodiversity). These result in higher reporting costs and legal exposure; necessary for access to green finance.

The fourth category is customs, licensing, and state aid controls including export/import licenses, industrial subsidies oversight, and preference schemes. These create variable access and timing and competitive asymmetries across jurisdictions.

By 2030, the global energy sector will be defined by a dual trajectory of tightening compliance and selective streamlining. Environmental regulation is set to become more stringent, with methane abatement obligations, lifecycle emissions accounting, and biodiversity safeguards becoming standard practice, raising costs but also driving innovation in monitoring and verification. At the same time, industrial policy is expected to intensify, with governments expanding local content rules, export controls, and subsidy competition to secure supply chains, leading to greater fragmentation and reshoring of production.

Yet, alongside these pressures, some jurisdictions are moving to accelerate permitting and grid modernization through one‑stop shops and statutory time limits, creating competitive advantages for faster deployment of renewables. Standards and disclosure frameworks will partly converge—particularly around safety, cybersecurity, and climate finance—while bifurcation persists in strategic technologies, forcing firms to design for multi‑standard markets. Overall, the energy economy will be more regulated, localized, and disclosure‑driven, with success hinging on the ability to comply quickly, diversify supply chains, and secure critical inputs.^[53]

7.2.2 Subsector mapping

Regulatory barriers (licensing, IP enforcement, fragmented governance, localization rules) and non‑tariff barriers (trade costs, standards, bureaucracy, supply chain bottlenecks) are consistently identified as the main obstacles to scaling oil & gas transitions, renewable deployment, and engineering‑led supply chains.

Oil and gas sector: The oil and gas sector is entering a period of stricter environmental regulation combined with growing geopolitical fragmentation. Governments are tightening methane measurement and abatement rules, expanding disclosure requirements across Scope 1, 2, and 3 emissions, and imposing more rigorous permitting and decommissioning obligations, all of which raise compliance costs and demand advanced monitoring technologies. At the same time, sanctions, export controls, and foreign investment screening are reshaping global trade flows, while local content and procurement rules are increasingly used to protect domestic industries. These overlapping pressures mean that operators face higher capital intensity, longer project timelines, and reduced access to international technology and finance, with smaller^[54] firms particularly disadvantaged. The result is a sector where regulatory compliance and geopolitical risk management are now as central to competitiveness as production efficiency.^[55]

Renewables: The renewable energy sector is expanding rapidly but continues to face significant barriers that slow deployment. Lengthy and complex permitting processes, often involving land-use, biodiversity, and community consultations, create bottlenecks that delay projects, particularly in wind and solar. Grid interconnection challenges add further uncertainty, with long queues, evolving grid codes, and curtailment risks increasing financing costs and discouraging investment. At the same time, diverging technical standards and certification requirements for equipment such as turbines, batteries, and inverters act as non‑tariff barriers, forcing companies to redesign products for different markets. Industrial policy competition is also intensifying, with governments introducing subsidies, tax credits, and local content rules while deploying trade measures such as anti‑dumping actions and carbon border adjustments. Together, these dynamics mean that while renewables are central to the energy transition, their growth trajectory is shaped as much by regulatory and non‑tariff barriers^[56] as by technological innovation.^[57]

Engineering-led supply chains and services: Engineering‑led supply chains and services are increasingly constrained by regulatory and non‑tariff barriers that affect standards, data management, and workforce mobility. Professional services often face limited mutual recognition of engineering credentials, requiring project‑specific licensing and compliance with stringent health, safety, and quality assurance rules, which raise transaction costs and delay project delivery. Procurement systems add further complexity, with extensive vendor prequalification, ESG due diligence, and anti‑corruption requirements that disproportionately burden smaller firms. At the same time, data localization laws, industrial cybersecurity standards, and export controls on advanced engineering tools restrict the use of cloud‑based collaboration and remote operations, while conformity assessments and product testing requirements slow the movement of equipment across borders. Together, these constraints create a landscape where engineering services must invest heavily in compliance infrastructure and local partnerships to remain competitive in global energy supply chains.^[58]

7.3 Energy Services Sector Roundtable Summary

This roundtable convened senior leaders from firms across the energy and engineering sector, including major consultancies, offshore developers, specialist contractors, logistical services, as well as leading membership organisations. Scotland’s energy and engineering services firms report strong, exportable capabilities built on decades of expertise from North Sea operations, with recognised centres of excellence routinely supporting projects overseas. Participants described a growing international footprint, but face increasing headwinds including regulatory checks, duplicated conformity processes, uneven recognition of professional qualifications and restrictions on short‑term mobility for engineers. These issues add cost, slow delivery and, in some cases, push work to EU‑based subsidiaries. Market entry in many jurisdictions now requires a local presence (such as through a subsidiary, joint venture or acquisition) because procurement rules favouring local content. While effective, this can dilute value captured in Scotland without complementary policy and support.

Domestic factors, including taxation, regulation and skills shortages, which limit the ability of the sector to access international opportunities were a consistent theme. Participants agreed that, while exporting is a sensible avenue for firms to explore, a bigger problem has been an “exodus” of talent and capability moving overseas. Companies are offshoring routine tasks to lower‑cost locations, which may be commercially sensible in the short term but risks weakening the pipeline of future senior specialists unless higher‑value design, controls and project management roles are anchored in Scotland and supported by education and training.

Finally, exporters described the support landscape as fragmented and asked for a simpler, sector‑literate “single front door”, more in‑market specialists and a reliable domestic project pipeline to train and retain teams between international contracts.

7.4 SWOT analysis: Energy Related Services

7.4.1 Strengths

Mature Capability Base

• Extensive expertise across offshore engineering, advisory and project management services. Long track record that is respected in international markets.
• Deep experience gained in the complex and high-risk environment of the North Sea, creating globally transferable technical competence.
• Ability to mobilise multinational and multidisciplinary teams for complex international assignments.

International Reputation and Market Reach

• Established reputation in key export markets including Norway, the United States, West Africa, Malaysia and the Gulf.
• Longstanding international relationships and repeat client networks.
• Strong credibility in high integrity, safety critical and technically challenging environments.

Knowledge and Institutional Ecosystem

• Close links between industry and universities reinforce innovation, training and problem-solving capacity.
• Concentration of specialist skills in engineering, project delivery and regulatory compliance.

7.4.2 Weaknesses

Participants identified structural and policy-related constraints affecting competitiveness and anchoring.

Post-Brexit Frictions

• Increased administrative burden and reputational challenges in servicing EU markets.
• Shift of some activity to EU based subsidiaries, particularly in the Netherlands, to maintain ease of access.
• Perception risk limiting contract opportunities despite formal market access remaining open.

Skills Pipeline Pressures

• Skills gaps across multiple levels, combined with a growing tendency to offshore routine work. Services work is highly mobile.
• Reduced domestic training ground as North Sea oil and gas activity contracts.
• Risk of weakening the long term specialist talent pipeline if higher value functions are not retained domestically.

Fragmented Trade Support

• Perceived inconsistency and limited sector specific knowledge within trade support agencies.
• Short tenure of agency staff limiting relationship depth with industry.
• Difficulty measuring embedded services value within multinational or goods led contracts, complicating targeted support.

7.4.3 Opportunities

Cross System Energy Integration

• Overlaps between oil and gas, offshore wind (fixed and floating), hydrogen and CCUS create transferable demand for engineering and project services.
• Supply chain firms can pivot across energy technologies with appropriate support on standards, accreditation and market access.

Cluster Repurposing and Innovation

• Regional clusters such as the Project Acorn CCUS cluster and initiatives around Grangemouth provide assets and skills that can be redeployed in the energy transition.
• Strong record in innovation offers scope to capture value in emerging low-carbon systems.

International Collaboration Models

• Firms are leveraging centres of excellence and upskilling Scottish based teams for growth markets such as West Africa and Malaysia.
• Potential to anchor higher value functions domestically while servicing global demand.

Standards and Accreditation Enablement

• With coordinated support on conformity assessment and professional recognition, Scottish expertise could convert more effectively into sustained export revenues.

7.4.4 Threats

Domestic Policy and Investment Climate

• Perceived unfavourable taxation and licensing regime affecting oil and gas investment.
• Global renewables headwinds combined with domestic policy uncertainty creating an “un-investable” perception of the North Sea.
• Risk of firm relocation overseas, resulting in permanent erosion of skills and capability.

Loss of Domestic Anchor

• Export capacity depends on a reliable stream of domestic work to justify remaining in Scotland.
• Scotland is not a low-cost base. Without domestic demand, firms may relocate to more competitive jurisdictions.
• Weak domestic manufacturing base compared to peers such as Norway and Denmark limits engineering ecosystem resilience.

Policy Misalignment

• Divergence between UK and Scottish policy positions on energy creates uncertainty.
• UK policy restricting overseas support for fossil fuel related activities may disadvantage firms whose expertise spans both legacy and renewable systems.

Local Content and Market Access Pressures

• Increasing prevalence of local content requirements abroad incentivises overseas relocation or establishment of subsidiaries.
• Risk of long-term capability leakage if high-value activity shifts permanently.

Non-Tariff Barriers

• Duplicated testing and certification across jurisdictions increase costs and delay project delivery.
• Uneven recognition of professional qualifications complicates staff deployment.
• Mobility restrictions for short-term travel reduce responsiveness and competitiveness.
• Firms incur additional overhead through pre-positioning equipment and establishing local entities to manage compliance.

7.5 Roundtable Feedback and Policy Considerations

7.5.1 Reserved to the UK Government, with a Scottish Government Advocacy Role

• Pursue mutual recognition agreements globally that remove duplicated testing and certification requirements for equipment and services used in offshore wind, hydrogen and CCUS projects. Reducing regulatory duplication would lower costs and accelerate project delivery in international markets.
• Introduce more flexible short-stay business mobility arrangements globally and ensure recognition of relevant engineering and technical qualifications. Short notice deployment of project teams for installation, commissioning, operations and maintenance is critical to securing overseas contracts.
• Improve the timeliness and granularity of services export statistics to better reflect embedded Scottish value in multinational energy projects. More accurate data would support targeted policy design and strengthen the evidence base for sector-specific support.
• Ensure that domestic regulatory, fiscal and taxation regimes are internationally competitive and supportive of export growth, attracting inward investment while protecting domestic supply chains and employment.

7.5.2 Trade Support and Market Enablement : Actions for the Scottish Government and Scottish Enterprise , in Partnership with UK Bodies

• Establish a clear “single front door” for trade support by rationalising Scottish Enterprise and partner offers into a coherent pathway with named account leads, sector-specialist advice and escalation routes for live market access barriers.
• Expand in market expertise and buyer access in priority geographies for offshore engineering and energy services. Support should include curated buyer introductions, forward looking procurement calendars and structured delegation programmes aligned to project pipelines.
• Provide specialist support on standards and accreditation by working with the UK Accreditation Service and industry bodies to map priority international standards, fast track conformity assessment routes and systematically capture firm-level barriers to inform ongoing mutual recognition negotiations.
• Support firms navigating localisation requirements by offering advisory services on joint ventures, acquisitions and local entity establishment where local content rules make domestic presence the most viable route to market. This is especially important for emerging and upcoming markets.
• Present a clear and unified cross government position on trade support for firms with legacy oil and gas activities alongside expanding renewable portfolios. As the energy system transitions, exporters operating across both legacy and low-carbon markets should receive consistent support for international engagement, including participation in trade missions and sector roadshows.

7.6 Case study: Offshore energy engineering services

A Scottish offshore energy engineering consultancy exports specialist services to international offshore wind and subsea projects, including front-end engineering design, subsea and cable-route analysis, installation methodology, and ongoing asset integrity support. The firm does not manufacture or supply equipment; its exports consist entirely of engineering expertise, modelling, and project support delivered digitally from Scotland and, where necessary, through short periods of on-site engagement. While demand for this expertise remains strong, the firm faces a range of non-tariff barriers that affect its ability to deliver services efficiently and at scale. In several markets, engineering documentation associated with offshore developments must be validated or signed by locally licensed professionals, with UK chartered status not accepted on a stand-alone basis. In practice, this requires Scottish engineers to route work through local partners, increasing costs and introducing duplication despite the underlying technical work being undertaken in Scotland. Project delivery also depends on short-term mobility of engineers for offshore surveys, installation readiness reviews, and discussions with clients and regulators. Immigration frameworks often struggle to accommodate this pattern of work, with business-visitor provisions narrowly defined and offshore site presence sometimes treated as local employment, leading to delays and uncertainty around compliance. Although the services themselves can be delivered remotely, developers and regulators frequently expect a visible local footprint as part of project governance and compliance, creating pressure to establish in-country entities or joint ventures even where no formal requirement exists. The increasing reliance on digital tools and data adds a further layer of complexity: restrictions on cross-border transfer of seabed, geotechnical, and asset data, alongside requirements to use locally approved IT systems, raise costs and reduce the efficiency of cross-border collaboration. Finally, procurement practices in public or quasi-public offshore projects often favour bundled delivery models and local presence, with qualification criteria and evaluation frameworks that disadvantage stand-alone engineering consultancies. Individually, none of these constraints is prohibitive, but together they shape how, and through whom, Scottish offshore engineering services reach international markets, limiting direct exports and reducing the visibility of services trade in a sector where Scotland has clear and established strengths.