Briefing 16: oil and gas are costing us the earth

Here’s the text of out latest briefing on climate, oil and gas and the cost of living. You can download it here.

Cost of Living

Everyone knows that we are in a cost-of-living crisis.  Most of us in Scotland rely on natural gas for cooking and heating and North Sea gas is a guided missile sent into every home in the country which will drive thousands of new people into poverty and will kill the most vulnerable.  Oil and gas producers are making mega profits and demanding money with menaces.  

Before this happened around a quarter of Scots lived in fuel poverty.  As a result of the price rises hundreds of thousands more will be forced to make impossible choices between food and heating.  The response from the Tories has been derisory. Their so-called Energy Security Plan does nothing to tackle immediate hardship and doubles down on the most expensive energy options for the longer term – nuclear, oil and gas, hydrogen for heating and carbon capture and storage.  

Business as usual – the North Sea Transition Deal

There is a simple reason why the Tories have made these choices.  In the face of the climate and cost of living crises they’ve chosen to protect the interests of big oil.  It’s not just that they won’t tax the enormous profits that are being made from North Sea Oil and Gas – it’s that they are following the logic of the oil industry’s ‘North Sea Transition Deal’.  

A phony deal

The ‘Deal’ is a partnership between the UK and Scottish governments and the unions.  It aims to continue the exploitation of North Sea oil and gas up to and beyond 2050.  It talks about a net-zero oil and gas basin where the greenhouse gas emissions from the oil and gas would be captured and stored.  This is not going to happen, certainly not in the next few decades, and the consequence will be that the UK will fail to meet its contribution to restricting global temperature rises.  

Maintaining profits – wasting resources

Moreover, the ‘Transition Deal’ drives high-cost energy options at every step and leaves working people to pay the price.   The latest UK government energy strategy aligns entirely with the ‘Deal’. Most of the electricity produced by new nuclear power stations will be required to produce the hydrogen for domestic heating.  Using electricity to produce hydrogen for domestic heating at large scale is hugely inefficient.  Moreover, nuclear produces much more carbon emissions over its lifecycle than wind or solar.

Torness CC-BY-SA-4.0 Image by NH2501

The alternative

There is an alternative.  Electricity produced by wind and solar is already much cheaper than that produced by nuclear, oil and gas and the costs of renewables continue to fall.  The money the Tories want to spend on new nuclear is enough to retrofit most homes across the UK – creating jobs, improving health and well-being and cutting energy demand.  

An economy based on renewables results in many more jobs than the fossil fuel and nuclear options.

A challenge for the trade union movement

It’s time for a decisive shift in policy and end to partnership with the oil industry.  Just transition, indeed arguably any transition that restricts temperature rises to 1.5 degrees, is incompatible with the ‘North Sea Transition Deal’.  Sticking with the ‘Deal’ is a disaster for the planet and undermines the ability of the workers movement and the climate movement to build the power we need to win over climate and the cost of living.

A new policy for the union movement

Tackling the cost-of-living crisis and the climate crisis means breaking the partnership with big oil that is inherent in the Transition Deal and campaigning for an end to the development of new North Sea oil and gas and the rapid planned phase out of existing fields.  Large-scale investment in renewables and a massive programme of retrofitting would result in lower energy prices and reduced carbon emissions.   A serious plan would include support for the oil and gas work force while they transition to new jobs and ramping up options for reskilling, education and training in the new industries.

No more subsidies

The oil and gas industry has been subsidised heavily over the lifetime of the North Sea.  The subsidies must stop.  Working people are suffering because what they pay for energy fuels super profits for big oil and goes into the pockets of the richest in society whose wealth grows as hedge funds speculate on the oil market.  There’s plenty of money to pay for an energy transition.

Among the components of a new policy for the workers movement should be: 

Massive investment in wind, solar and tidal energy.

Large-scale expansion of energy storage options.

No more North Sea development. 

Taking the North Sea into public ownership and beginning a planned phased out of production.

Support for oil and gas workers to transition to new jobs.

Regulate energy prices to consumers and tax big oil and the rich to end the cost-of-living crisis.

COP26 gave us a glimpse of the potential power when the workers movement and the climate movement come together.  Together we can win.

Briefing #14: Climate, fuel poverty & the cost of living

Briefing #14 on climate, fuel poverty and the cost of living is now available for download. As with all the our briefings you are welcome to use and adapt the briefing content – attribution to https://scote3.net is appreciated.

The content of the briefing is reproduced below.

Climate, fuel poverty & the cost of living

Fuel poverty kills

Prior to the latest crisis almost 25% of households in Scotland lived in fuel poverty and just over 12% were in extreme fuel poverty.  Households in extreme fuel poverty are disproportionately represented in rural Scotland.  Older people living in rural Scotland are particularly hard hit. Every year thousands die because of fuel poverty – in 2018/19 excess winter mortality (that’s in comparison with the average winter mortality for the previous five years) was 2060 – the death toll can be more than twice as high in cold winters. Around 85% of households in the UK rely on gas for heating and cooking.  The huge hike in gas prices is going to make an already unacceptable situation much, much worse.  

Rising fuel prices

Gas and electricity prices have been rising faster than inflation for a long time.  From 2006 – 2016, Gas prices rose by 71% and Electricity 62%. Between 2017 and 2020 electricity prices increased by a further 8% in real terms while gas prices fell by a similar amount.  But gas prices are extremely volatile.  Since 2019 the wholesale price has almost trebled. 

Gas consumption fell by just over 2% in 2020, a consequence of lockdowns around the world.  In 2021 there was a rebound with consumption increasing by 4.6% because of increased economic activity and several extreme weather events worldwide.  The cost of producing gas is about the same this year as it was last year and the year before. So why has the price rocketed up?  Prior to 1987 the EU designated natural gas a premium fuel that should be reserved for home heating.  Now 60% of gas is used to generate electricity.  Britain used to have significant storage capability. This was abandoned in favour of allowing the market to deliver gas as needed.  These changes have been a disaster.  Gas is traded on the spot market with hedge funds gambling on future prices.  As a result, the cost of an essential utility is determined by a casino where traders rake in massive profits while consumers pay the price.

Lack of ambition

In June 2019 the Scottish Parliament passed a new act setting statutory targets for reducing fuel poverty.  Rightly it highlights the impact of fuel poverty on the most vulnerable in society. Low-income, high-energy costs, and poorly insulated housing result in the appalling situation where families, young people, elderly, disabled and many working people, cannot afford adequate warmth.  The new act sets interim targets for reducing fuel poverty to 15% of households by 2030 and final targets for 2040.  Considering the cost of living and climate crises we face this is too slow and not enough.   The act failed to address the threat posed by a chaotic market.  From April 2022 annual bills will increase by an average of almost £700.  Further increases are expected later in the year.  The numbers in fuel poverty are set to rise well above the current level.  

Fossil fuels cost the earth

Both Holyrood and Westminster remain committed to the maximum economic extraction of oil and gas from the North Sea. The big energy companies are making billions in extra profits out of the crisis.  North Sea oil and gas operates under a regime of very low taxation.  With prices high companies will be doubling down on plans to open new gas fields.  If this happens there is no chance of meeting the reductions in greenhouse gas emissions that are essential.  We argue that there are two essential steps.  The first is to protect all those who are in fuel poverty and stop more people joining them.  A windfall tax on profiteers will help with this but should not be mistaken for a long-term solution – and the scale of the problem is so large that it requires significant redistribution with higher taxes on the rich and much more support for the poor.  These are necessary short-term steps to prevent large scale misery, deprivation and increased winter deaths.  But a secure future for us all rests on gas being taken out of the market, with North Sea and North Atlantic oil and gas taken into public ownership and control.  With public control it then becomes possible to plan for the phase out of fossil fuels from the North Sea.  In the process we cut greenhouse gas emissions and replace expensive gas heating by cheaper renewables.  The interests of working people and the need to protect the planet are aligned.

A mass insulation campaign

In its ‘One Million Climate Jobs Pamphlet’, the Campaign Against Climate Change (CACC) notes that 

Three quarters of emissions from houses and flats … are caused by heating air and water. To reduce this we need to insulate and draught- proof the buildings, and replace inefficient boilers. This can cut the amount of energy used to heat the home and water by about 40% and delivers the double-whammy of reducing energy costs and helping mitigate the scourge of fuel poverty. 

Based on these CACC estimates, which are for the whole of the UK, a campaign to properly insulate all homes in Scotland would employ around 20,000 construction workers for the next 20 years.  This doesn’t account for additional jobs in education, training and manufacture that would spin off from such an endeavour.  Through this carbon dioxide emissions from homes would be cut by 95%.   We could ensure that all new houses are effectively carbon neutral.  The technology exists – there are examples of ‘passive houses’ that use very little energy.  Insulation together with the steady replacement of gas boilers by affordable heat pumps is the solution to cutting the energy demands of domestic heating. Hydrogen is not a solution (see Briefing #13).

Image by Pete Cannell CC0 Public Domain

New Technologies 

The current costs for fossil fuel power range from 4p -12p per kilowatt-hour. Inter renewable energy agency (IREA) state that renewable energy will cost 2p – 7p with the best onshore wind and solar photovoltaic projects expected to deliver electricity for 2p or less.  Renewable energy is necessary for a sustainable future, and it is cheaper than fossil fuels.  Current Westminster Government policy – notably the subsidy ban for new onshore wind farms – is impeding the shift to renewables. 

No Fracking

For the moment fracking is off the agenda in Scotland.  The result of a magnificent campaign of resistance.  But INEOS continues to import fracked gas from the US.  This has to stop.

In conclusion

Fuel Poverty and the cost-of-living crisis are the direct result of the “wrecking ball” of market forces dominating our need for energy to give us warmth, light and sustenance. In the pursuit of profit, the use of fossil fuels adds to the catastrophe of climate change.

We have the technology and skills to stop this madness and misery through a radical shift in Energy policy that would combine sustainable and renewable resources dedicated to social need.  Tackling climate change would go hand in hand with creating additional jobs, eliminating fuel poverty, and improving health and well-being.  To make this happen we need the kind of focus and the level of investment that has only normally applied at times of war.  Ending the use of fossil fuels over a short period is practically possible provided there is the political will.

Some of the material in this briefing also appears in Briefing #7 – Fuel Poverty

About Scot E3

Scot.E3 is a group of rank and file trade unionists, activists and environmental campaigners. In 2107 we made a submission to the Scottish Government’s Consultation on a Scottish Energy Strategy. Since then we have been busy producing and sharing leaflets and bulletins.

We believe there is a compelling case for a radical shift in energy policy. Looming over us there is the prospect of catastrophic climate change, which will wreck the future for our children and grandchildren.

We have the knowledge and the skills to make a difference to people’s lives in the here and now. A sustainable future requires a coherent strategy for employment, energy and the environment. We need a sense of urgency.  We need a coordinated strategy and massive public investment.

Time to phase out North Sea Oil and Gas

Retired oil worker and XR Scotland activist Neil Rothnie responds to the recently published XR strategy for 2022.  Neil argues that the strategy is weakened by not making specific reference to the North Sea when North Sea Oil and Gas remains at the heart of both the UK and Scottish governments energy strategies. 

Begin a planned rundown of North Sea oil and gas production without delay.

That’s a real ‘demand’ and is directed at the UK oil industry and the UK and Scottish Governments.

North Sea oil and gas is a major contributor to the greenhouse gases that are the UK’s contribution to global heating.

 So why does the Extinction Rebellion UK Strategy 2022, on the fossil economy, make no mention of North Sea oil and gas?  

The new 2022 strategy document talks instead about End(ing) The Fossil Fuel Economy in general, and specifically demands No New Fossil Fuel Investment,   No New Fossil Fuel Licences,  and an End (to) Fossil Fuel Subsidies Now.  

But – End the Fossil Fuel Economy – is not a demand.  It’s a slogan!  And the three specific demands could be met in full today without making a jot of difference to the climate catastrophe that’s unfolding.  

Because without one more penny being invested in the North Sea, without one more licence issued, and without a penny more in public subsidy, everything is already in place to ensure that North Sea oil and gas fields will, unless someone puts a stop to it, produce more than the UK’s share of global greenhouse gases that will heat the atmosphere to way over +1.5 degrees, and trigger the irreversible climate change that leads, according to the science as I understand it, to mass extinctions of life forms on the planet.

A similar scenario is set to be repeated all over the world.  In Norway, the Gulf of Mexico, Saudi Arabia, Russia, the China’s coalfields, etc etc.  So, it’s a global problem that has to be addressed in each locality.  

In the UK, we have a responsibility to begin to choke back North Sea oil and gas production.  In the US the responsibility to end fracking and wind down hydrocarbon production from the Gulf of Mexico falls, in the main, to Americans.  In Russia to Russians . .  .

We must have the confidence that the peoples in each and every other fossil production zone will act at least as decisively as we will.  We can talk to them and encourage them, but above all we need to lead by example.  The main enemy is at home.  It’s our responsibility to fight our corner.

And the biggest support we can give to the masses of people in the global south who face climate chaos earlier and harder than us, is to end North Sea oil and gas production.

One massive implication of “disappearing” North Sea Oil and Gas from a UK strategy for fossil fuels is that you also “disappear” the North Sea oil and gas workers and their rights and their responsibilities.

Oil & gas production is going to go.  Sooner rather than later if the climate and our grandchildren are to have a chance. Oil workers must not be shafted like the coal miners were before them.

If you are an oil and gas worker. a climate activist, a trade unionist – if you live in a community that hosts the industry and the workers – or if you’re young and fearful for your future, put your name to our demands*.

  • No more redundancies of oil and gas workers.
  • Workers whose jobs are threatened as the oil industry is wound down, must be furloughed until they are retrained and re-employed.
  • North Sea wind jobs must be made to pay North Sea wage rates.

*These three demands are still in draft but will form part of a new Scot.E3 campaign in 2022.

Fossil fuel systems and how to change them

Simon Pirani is the author of ‘Burning Up – A Global History of Fossil Fuel Consumption’* – Simon recently spoke on Fossil Fuel Systems at one of. series of events discussion issues around ecosocialism. The video of his introduction provides a very clear and comprehensive account of how fossil fuel systems are embedded in modern capitalist economies and of the challenges of breaking from an economic system based on these fuels.

Simon blogs at the People and Nature website which carries lots of articles that will be of interest to followers of Scot.E3.

* we have a small number of copies of Simon’s book available at the reduced price of £11 (postage extra) – email triple.e.scot@gmail.com if you’d be interested in a copy.