With the delayed COP26 United Nations Climate talks scheduled for Glasgow in November the eyes of the world are on Scotland in 2021.
The Westminster and Holyrood governments aim to present themselves as international leaders in tackling the climate crisis. However, the policy of both governments is to maximise economic recovery of North Sea oil and gas. The Sea Change report shows how this policy is completely incompatible with keeping global temperature rise below 1.5 degrees centigrade. Oil and gas production needs to stop here in Scotland and worldwide. At the same time the lives and livelihoods of those working in oil and gas must be protected.
We therefore demand:
The immediate cessation of all new exploration, development and drilling activity in the British sector of the North Sea.
A planned and phased end of oil and gas production in the North Sea that would ensure that activity ends by 2030.
The establishment of a publicly owned and democratically controlled Scottish Climate Service with a five-year target to create 100,000 climate jobs. The SCS would for new investments in the production, distribution and storage of renewable energy and Scotland wide projects, for example, retrofitting homes and offices to high insulation standards and district heating.
Guaranteed employment and retraining with the SCS for all oil and gas workers whose jobs end as a result of decommissioning.
We would like individuals and organisations to discuss the pledge, support and campaign for it. If you, or your organisation, would like to add your name to the list of supporters, please email Scot.E3 at email@example.com . You can use the form on our contact page if you wish. The list of signatories is here.Please get in touch If you would like someone from Scot.E3 to speak at a discussion on the issues that the pledge raises
We republish this article with thanks from the excellent People and Nature blog (well worth following) – it has also been reposted by the Ecologist.
The UK paid Royal Dutch Shell $116 million of tax rebates in 2019, while the company reported $92.1 billion revenues in the UK for the year.
Internationally, Shell made pre-tax profits of $25.5 billion in 2019, and paid $7.8 billion income tax and $5.9 billion royalties, in dozens of countries. But the UK, France, South Africa and Indonesia handed money back to Shell.
Shell and BP’s rebates are part of the hugely generous system of tax breaks for North Sea producers, linked to the decommissioning of declining oil fields (and analysed last year in the Sea Change report by Platform, Oil Change International and Friends of the Earth).
These are subsidies to fossil fuel production, running into billions of pounds, devised by a Tory government that claims to be taking action on climate change.
And the problem runs deeper. North Sea oil production has since the 1980s been taxed with profit-based, rather than resource-based, methods, which gave the international companies access to the resources in the ground on unprecedentedly favourable terms.
The central role of these tax arrangements in the neoliberal “process of redefinition of the economic frontiers of the state” was analysed in this article by Juan Carlos Boué, published by Scot.E3, the just transition campaign group. The UK tax model was promoted across the world and “destabilised many key petroleum producers, whose governments found themselves starved of fiscal income”, Boué argues.
This is all politically relevant right now, as trade unionists and environmentalists seek ways to unite to ensure a just transition away from oil and gas production on the North Sea.
There have been some vital steps forward in recent weeks.
In September, a report compiled by Platform, Friends of the Earth Scotland and Greenpeace gave voice to North Sea workers’ views on just transition. It was based on a survey of 1383 workers, all in upstream oil and gas.
The report showed that most people who actually work on the North Sea (91% of respondents) had never even heard the term “just transition” – a reminder of the yawning gap between working people on one hand and political, academic, trade union and “left” circles on the other.
The report – which was greeted by the Rail Maritime and Transport (RMT) union – also showed that North Sea workers definitely embrace the idea of moving out of oil and gas production and into offshore wind, in particular,
and other twenty-first century ways of doing things in general. The respondents were overwhelmingly positive about retraining and moving to other industries, and offshore wind was the favourite choice.
On a webinar arranged by Platform last week, three offshore workers gave their views, together with a trade union official (Jake Molloy of the RMT), a Labour politician (Lewis MacDonald, Member of Scottish parliament) and an energy researcher (Anna Markova, Transition Economics).
The workers spoke of the hardship and demoralisation caused when the oil price falls and big companies shed labour, which they have been doing throughout the coronavirus pandemic. The high level of casualisation on the North Sea makes matters worse.
Workers who hope to move to offshore wind jobs are further aggrieved by an unjust, bureaucratic qualifications regime. They are required to pay for re-training courses from their own pockets – at the very moment when they are looking for a job and short of money. Many companies add insult to injury by requiring them to do e.g. basic safety training that covers issues they have learned over decades offshore.
The webinar provided space to reflect on what a worker-led just transition would look like. Jake Molloy of RMT pointed to the huge job, now starting, of decommissioning old oil rigs. “The steel should be recycled and used for wind turbines”, he suggested. (He said similar things when addressing the Scottish TUC recently. See this recording, at 4 hours 52 minutes.)
Such suggestions will take on meaning if they are linked to calls for public ownership, and for an end to the subsidies paid to oil and gas producers, in my view.
Only public corporations, acting in the interests of society as a whole and not for profit, would be able to act on proposals such as Molloy’s. Running down oil and gas production, and decarbonising the economy, needs integrated approaches by entities that take full account of the social and climate consequences of their actions.
Only moves towards public ownership can challenge the energy companies who see the North Sea as one part of their global operations, and use their lobbying power to mould the tax regime to their interests.
At last week’s webinar, repeated mention was made of work that could be done in the UK, e.g. building and repairing rigs and wind turbines, being done elsewhere.
There is a danger of the labour movement approaching this as a competition between workers in different places, going back along the road trod by Gordon Brown, with his notorious call for “British jobs for British workers”.
This can only feed the divisive nationalism and protectionism to which the Johnson government appeals.
A campaign for public ownership, by contrast, highlights the fact that the state can be used to challenge the power of multinational capital and constrain its exploitation of working people and of natural resources.
It highlights the fact that state action could run down oil and gas production on the North Sea, expand electricity generation from renewable sources, and develop other industries in the areas where communities now rely on employment offshore.
A campaign for public ownership to underpin a just transition could start to challenge the multinational oil companies and their accomplices in government, and unite offshore workers with school students and all those demanding rapid action to stop dangerous climate change. GL, 15 December 2020.
■ As the discussion on just transition got started in Scotland, Shell’s truth-bending claims that it is doing something about climate change have been taking a beating. Several senior executives in its renewables energy business have quit, amid what the Financial Times reported is “frustration” at the minute quantity of investment in non-carbon technologies. Two big court cases against Shell by Friends of the Earth Netherlands are close to their conclusion. The first is to compel the company to clean up the damage it has done over decades to the Niger Delta, in Nigeria, where it produces oil. The second case is aimed at forcing Shell to reduce its carbon emissions.
On November 16th, 2017, hundreds of workers at the BiFab fabrication yards in Fife marched down Edinburgh’s Royal Mile towards the Scottish Parliament in a magnificent show of determination to save their jobs. Three years on, and despite nearly £54 million investment from the Scottish Government, the hope raised on that day lies in tatters. BiFab could have been a milestone on the path to a zero-carbon economy. Instead, it stands as a warning that should not be ignored.
In this post I tell the story of BiFab and argue for the importance of a radically different approach.
BiFab was founded in Fife in 2001. Initially based at Burntisland, it expanded to take over the huge construction yard just up the coast at Methil and the Arnish yard on the Isle of Lewis. The company played a significant part in fabricating platforms for the development of the west of Shetland oil and gas fields. As demand declined it began manufacturing jackets for offshore wind installations.
In 2016 the company won a £100 million order to manufacture jackets for the Beatrice windfarm in the Moray Firth. The November 2017 crisis was sparked by cash flow problems linked to this contract. At this point the company employed around 1400 workers, although notably 1200 of these were on agency contacts rather than direct employees. All these jobs were at risk.
BiFab workers responded by occupying the yards, ensuring that no valuable equipment could be removed, and, on the 16th November, they marched on the Scottish Parliament. The Scottish Government stepped in, providing a £15 million loan that ensured that the firm avoided going into administration. The occupations ended and work on the jackets for Beatrice resumed. But the relief was short lived. The Beatrice contract was nearly complete, there was nothing else in the order book, and agency contracts were just not renewed. The workforce was scattered to the winds.
In April 2018 the Scottish Government brokered a take over of the company. The new owners were DF Barnes, a subsidiary of the Edmonton based Canadian company DV Driver. The Herald on Sunday has recently revealed that DV Driver obtained ownership for £1. The Government retained a minority stake.
Since the takeover, opportunities to build jackets for major new North Sea windfarms have been up for grabs. One of these, ‘Neart na Gaoithe’, is just a few miles off the Fife coast from the BiFab yard at Methil. Another, Seagreen, which, when complete, will be the biggest in Scottish waters, is just a bit further north, off the coast of Angus. But contracts have gone to overseas yards in Spain, Indonesia, the UAE and China.
So, despite a Scottish Government investment that may reach £52.4 million, BiFab is close to total collapse. The Scottish and UK Governments argue that despite, or because, of their stake in the firm, European competition rules made it impossible for them to guarantee the BiFab bids.
‘In a legal opinion for the GMB and Unite trade unions, Lord Davidson has described the Scottish Government’s reasoning as “remarkable”, given the looming end of the Brexit transition period and suggested Scottish ministers could have deferred any decision until after Brexit on December 31.’
This legal view is clearly true; however, focusing on interpretations of the law misses much more important issues. The Scottish Government is firmly wedded to the idea that the transition to a zero-carbon economy can be carried through by private enterprise. BiFab is just one of many examples of how this approach fails. Bids are allocated primarily on price and when the ‘cheapest’ bidder is located on the other side of the world that’s the one that’s chosen. The fact that this results in massive carbon emissions as jackets are shipped to the coast of Scotland isn’t factored in. Equally important the bidding system favours international companies that operate on a world stage and take no responsibility for joined up planning of transition in the local economies from which they profit.
To achieve zero carbon, we need much shorter supply chains, so that construction, energy generation and consumption are brought much closer together. Demanding that the manufacture of jackets and wind turbines takes place in Scotland is not about putting Scottish workers first but a necessity for the rational use of resources. Different locations offer different combinations of renewable energy resources, but sustainable energy production is necessary everywhere. Tackling the climate crisis requires local and global perspectives. Climate jobs are needed in every part of the world. It’s important to stress that while construction and energy production should be as local as possible – international solidarity requires that knowledge should be shared freely and that financial and material support is provided to countries in the global south. This of course is the opposite of what happens now as new innovations are locked into commercial patents.
Leaving transition to the market relies on the expectation that multiple independent decisions made by individual companies on the basis of maximising profit will achieve the goal of a zero-carbon economy. It’s an incredibly inefficient approach. Consider wind, a resource that’s abundant in Scotland. There has been a rapid growth in offshore wind powered electricity generation but at the same time the numbers working in renewables in Scotland has fallen, reducing local skills and knowledge and impacting on local economies. A partial transition but one that has been inherently unjust, and which puts obstacles in the path of the full transition that we need.
For the sake of the climate that our children will inherit and for the lives and livelihoods of the present generation there’s a pressing need for trade unionists and climate activists to campaign together for a new approach that integrates social justice with real, immediate practical actions to tackle the climate crisis. This means:
Systematic planning at local and national levels to plan a rapid transition to zero carbon.
Large scale public investment in new democratically controlled public enterprises to implement these plans.
These demands may seem a long way off. But we’ve seen during the pandemic that, when there’s political will, things that would have been considered impossible become possible. Old laws are thrown out and new laws are written. We’ve also seen how in the face of a crisis public systems deliver and private companies rake in profits and fail.
The first and immediate step should be an emergency action plan that takes the BiFab yards into public ownership, reemploys the workforce and puts the skills and knowledge of the workers at the heart of a sustained commitment to develop the yards as hubs for the engineering initiatives that are essential to a worker led just transition.
There’s a compelling case that we are living in an age of pandemics. It’s possible, although by no means certain, that successful vaccination programmes will have had a significant on UK population immunity in 12 – 18 months. Given the profit motivation of Big Pharma it’s likely to take much longer in the global south. However, the likelihood of a mutation from Covid 19, or one or more completely new viruses over the next 5 years is high. So, a longer-term strategy for the campaign ought to be to ensure that we live safely in the face of recurrent pandemic. This is not a new idea – the British government had plans for such contingencies at the start of the millennium, then failed to maintain and update them and trashed the public health infrastructure that was needed for effective pandemic control.
So, one demand that should be campaigned for is that we learn the lessons of Covid and establish a well-funded local based public health service as part of the NHS. No place for private companies. It would be a tragedy if we are as ill prepared for the next pandemic as we were for Covid 19.
But we need more, and this is where the link with climate comes in. To be prepared we need to reimagine and redesign public transport systems so that they are safe to use and carbon free. We need to build new zero carbon houses and retrofit existing housing stock to high insulation and good ventilation standards. New public buildings and retrofitted existing public buildings also need to be zero carbon and have good effective ventilation. All of this is technically possible and is good for health and the environment.
All the key things we need to do to address both virus epidemics and global warming are not only largely the same (it’s very important that we keep stressing this point, though it’s been made before) but also their technical solutions are linked. Pumped air recirculation in buildings reduces virus cross-infection and improves energy efficiency. New bus design, rolled out in quantity production, can incorporate low-carbon motility and virus infection safety in one design, especially if the buses are in the context of no fares (protecting drivers, and passengers too because of reduced queuing and shorter journey times). Workplaces for the construction and maintenance of renewables can be much safer in relation to the spread of virus infection than oil and gas rigs. More people working in non-intensive local food production, whether commercially or in voluntary organisations, will mean more people working outside.
There are some things, like deforestation and food production, with their linked impacts on global warming and the liberation of new viruses, which we have little chance of influencing until we’ve stopped competitive capitalists from exploiting everything and every person for their profit. But these things related to housing, transport, energy production and food production are technically (and politically) achievable now. And if we don’t achieve them now there will be untold additional human suffering.
Climate crises, Covid-19 and a looming global recession: how many more storms can the N Sea oil and gas industry take?In part one of this report, published in April 2020, Brian Parkin looked at the combined impacts of the Covid-19 pandemic and a world economic downturn on the UK offshore oil and gas industry. In this brief second paper, he looks at the emerging trends from the second half of 2020 onwards and how the global hydrocarbons sector will face up to a post-Covid-19 world in which renewables may well begin to dictate the shape of energy things to come.
50… and nearly out
The North Sea oil and gas industry, in defiance of many forecasts and expectations, is now 50 years old. At the time of its baptism, governments were obsessed with balance of payments columns as well as the commitment to the post-war social compact of an economy run at levels of full employment. It was also a shared view that with an unshakeable belief in government intervention and technological innovation, things could be done.
Initial interest in UK offshore (North Sea and UK Irish Sea sectors) lay in the deposits of natural gas and the potential for a reliable and long-term resource of energy for, initially, domestic (household) consumers. The growing estimates from c.1970 onwards also promised a resource that could be extended to industrial space heating and manufacturing processes. Regarding oil, it was clear from early chemical analysis that UKCS crude oil was unsuitable for refining into the Heavy Fuel Oil required for power generation, and so the North Sea offered nothing in the way of breaking energy dependency on indigenous coal- and the National Union of Mineworkers.
However, oil from the Forties- and a little later- the Brent fields provided an ideal crude grade suitable for refining into the required range of transport fuels. The value of this asset though, was not appreciated until the global oil shock of 1972, when a largely Arab dominated OPEC punished the Western economies for their alignment with Israel in the Yom Kippur war.
In terms of petroleum supply security, the North sea has paid off. For the better part of half a century the UK has enjoyed near total security of indigenous supply. Apart from the 1984-85 miners’ strike when the UK government had to fuel the coal- fired power stations with Heavy Fuel Oil- which cannot be refined from North Sea crudes- almost all oil crudes (and distillates for aviation fuel)- have come from the North Sea. And even now, with North Sea oil capacity falling, the UK remains 95% petroleum self-sufficient.
Global oil …passing its prime?
As we have previously noted, all fossil fuels have been under the pressure of a climate consensus to conform to CO2 limits by reducing production as well as emissions from production operations. The response of the oil and gas companies as well as the OPEC cartel has been- with some success- to lobby governments as well as attempting to massage public opinion away from climate concerns. To these ends they have now failed. But as ever resourceful, the oil – and also gas – interests have been redeploying their considerable financial interest elsewhere – albeit grudgingly. After years of ‘scientific’ misinformation and fake data, the oil and gas industry faces an irreversible shift in both public opinion and scientific consensus.
At 2015 the view of the oil and gas lobby was that demand for petroleum would begin to peak in the early 2030’s – albeit tapering off slowly into the future. But by 2019 the industry had significantly changed its forecasts. Even before the combined whammy of the onset of a world economic turndown and the Covid-19 pandemic, BP, Shell, Total, DNV-GL, the IEA and OPEC had come to the uncomfortable conclusion that oil peak demand had already been reached. Big oil exceptions to this forecast have remained as the US giants, Exxon/Mobil and Chevron, who have both continued to set aside some $30 billion investment capital in further oil exploration and developments.
As early as 2016, Shell had established its New Energy Division; a new venture into renewables generation, high capacity batteries, grid management and hydrogen. This has come at the expense of tar sands investment and shale oil extraction and refining. The company has also undertaken a major restructuring in order to free up capital investment for diversification into non-petroleum activities.
Also in October 2019, BP declared its intention to be a zero-carbon operation by 2030. And, in that year, BP entered into a $1.1 billion joint venture with Equinor Energy for the purpose of becoming a major player in offshore wind power. This was with the expectation of offshore wind appreciating six-fold to 190 Gwe installed by 2030. (But just to get things in proportion, the OECD now estimates that globally there will have to be a $6.3 trillion per annum investment to convert energy systems into renewables in order to meet the 1.5oC climate mitigation target for 2030.
The repo-man cometh
With financial data changing almost frantically day by day, it is not easy to reach a reliable estimate of the overall health of the global oil industry. Nevertheless, recent figures show the overall scene against which the North Sea industry fares. But first some raw data:
Oil production million barrels per day (Mbpd) by country 2019 (96 producers)
The global daily production for 2019-20 was 80,622,000 bpd of which 68% was produced by the top 10 producers with an overlapping 44% produced by OPEC member states. The average output for the top 3 producers was 11 mbpd. By the beginning of 2020 the same producers had an average output of 12.3 mbpd – a significant overproduction given the emerging market conditions for the year.
With signs of a global economic recession as early as September 2019, it was clear that at 15.043 mbpd, the US was entering 2020 at a significant rate of over-production. The sustained production rate of the previous year began to depress the world traded price of oil to an unsustainably low level for many OPEC+Russia producers – hence the output war of OPEC to depress output in order to increase prices. But within weeks it was clear that such a strategy was failing – hence the output switch to increase production in order to break the back of the relatively high cost US shale oil sector.
But within weeks of this price/output war, the already global markets were hit by the Covid-19 pandemic – with the second week in April seeing the price of West Texas Intermediate (WTI) fall to minus $40 dollars per barrel. After several weeks of price bounces, the world traded price of the Brent and WTI grades settled at just below $35 per barrel. Since then a fitful recovery has seen North Sea Brent begin to trade at around $40 per barrel- a price that barely covers the combined production and development costs of c.$38 pb.
Much regarding the likely fortunes of the North Sea oil and gas industry was covered in the first paper but if we want to examine the drive behind the global plight of the hydrocarbon industries, it would be better to look at the biggest producer and consumer of oil and gas- the USA.
When the bottom of the oil market fell through the floor in 2014 it was the US with some 25% of its oil and gas production from shale ‘plays’ that took the greatest hit. Since then, and not without considerable help from the US Treasury, the US has bounced back to be the biggest hydrocarbon player in the world – and with a Congressional act in 2016, a net exporter of oil and gas into the world market. And prior to the combined recession/Covid crisis, even the shale extraction sector was doing well at an oil price of c.£65 pb.
Immediately prior to March 2020 most US producers could break even at a $46> pb price. But in order to kick-start the many needed DUC’s (Developed but Uncompleted wells) required to maintain medium-term production, an additional $6.00 pb was required. Also, at that time it was reckoned that the bullish confidence of the industry was waning with an estimated 66% of oil company CEO’s of the view that 2020 had seen the peak in oil demand coming and going. Consequently, by April the fall in demand in the US had resulted in a 20% excess in capacity with a subsequent registration in Chapter 11 bankruptcy protection orders. If we want to measure the historical scale of this default, then the post-2014 crash of 2016 would be a good comparison:
2016 oil bankruptcy debt $56.8 bn
2020 oil bankruptcy to date $89 bn
Expected 2020 debt $134 bn
Furthermore, on the current market estimates it is expected that a further roll-over debt of at least £100 bn can be expected to the end of the 2020-21 financial year. Also, although the number of individual bankruptcies are so far lower, the capital size per company failure is much higher. In 2016 the failures amounted to $56.8 billion. But in 2020 to date the total is $89 billion and is expected to reach $134 billion by the end of the year. And as each company has been debt financed with no failure insurance, it is reckoned that the banks would be lucky to recover 35 cents in the $US in the event of a winding-up order.
In conclusion, with no foreseeable growth in oil and gas demand and a totally unstable market deterring future field developments, a ‘self-levelling’ market price of <$40 pb- probably struck by the bigger OPEC members and the dominant oil companies, much of the worlds marginal reserve/high cost capacity will be squeezed out. Certainly, the crash to $35 pb is a price that even the bigger and lower cost producers would find it hard to live with. This much was revealed by the leaked news that OPEC’s leading member Saudi Arabia reckoned that a sustained price of $50 pb would be the most favourable price to 2030 in order to allow margins to cover the cost of future field developments.
But whatever, the enduring relationship between US big oil and the military-imperialist project is likely to see the hydrocarbon industry not go out quietly- particularly as the states of the Gulf Cooperation Council – and Exxon/Mobil insist on peak oil as far ahead as 2030. But those the Gods wish to destroy, they first make mad.
Beyond the North Sea
The economic viability of oil and gas have always been predicated on the myth that all other sources of energy are uncompetitive and/or only so in the distant future. Petroleum, of course is mainly used as a feed-stock for mainly transport fuels – crude oil for refining into petrol (gasoline) and condensates into diesel and aviation fuels.
And by far the largest contributor today of global CO2 emissions derives from petroleum extracted transport fuels. But sticking with North Sea Brent as refined at Grangemouth (Petrochina) or Total’s Humber refineries we see the following product percentages:
(It should also be noted that the Ineos plant in the Grangemouth complex processes methane for conversion into a feedstock for plastics manufacture)
Of course the fate of some 4,000 workers and their families at Grangemouth now hang in the balance with the likely demise of hydrocarbons- both as transport fuels and plastic materials.
In April 2020 the OECD anticipated a year in which at least 1 million oil and gas industry workers would lose their jobs – a calculation which must include many thousands of North Sea workers. But there does seem to be a levelling off – possibly due to a convergence of strategic thinking on the part of OPEC and the oil ‘majors’ that a sustainable price of $45 pd could be struck over the next period – a price that would strike out both the higher cost OPEC members as well as other high cost sectors such as US shaleand most deep water operations.
On the other hand, the anticipated rise in demand for more and more offshore wind capacity – ideal for Scottish waters – along with an expected Compound Annual Growth Rate of matching large scale lithium/ion battery capacity to match incoming wind/wave/tidal and solar units.
The future is full of dangers and hope- and if the rage generated by the threatened loss of 20,000 miners jobs in 1984 could the reproduced many times over again in order to demand a Just Transition for the threatened tens of thousands of oil and gas sector workers, then the future is full of hope.
Scot.E3’s contribution to the gathering is ‘The Urgency of Now – Climate Jobs and Just Transition’ which takes place at 6pm on the 15th November.
The Covid-19 pandemic has intensified calls for a global Green New Deal – an urgent transformation of the global economy with massive investment to tackle climate change and address inequality. But what does a just transition look like for oil workers facing immediate redundancies because of low oil prices and privatisation? And with much wider unemployment expected, how do we take the initiative to create momentum for climate jobs on a local level, creating solutions rooted in communities and a real alternative?
This workshop draws on recent research with offshore oil and gas workers in Scotland. While many are looking for better job security, they are not being given a clear path to transfer their skills to renewable energy. The oil industry in Brazil also faces insecurity due to privatisation. Meanwhile, campaigns for free public transport in Glasgow and for a mass home retrofitting programme in Leeds are challenging the piecemeal approach taken by national government and calling for investment that meets the needs of local communities and creates climate jobs ‘from the ground up’. Workshop participants are invited to bring their experiences of mobilising for a just transition and climate jobs in their own sector / community.
All events will take place on Zoom and we will email through the relevant links beforehand when you register. You can get help installing zoom here.
Contributors Antony Devalle (Sindipetro-RJ, Brazil), Gabi Jeliazkov (Platform), Stuart Graham (FreeOurCity), Ellen Robottom (Leeds Trade Union Council)
We’re pleased to be able to repost this article by Gabriel Levy which was first published on the People and Nature blog. Do check out the People and Nature site which has a wealth of useful and informative resources and follow the site on Twitter @peoplenature
A plan to pipe hydrogen, instead of natural gas, to millions of UK households is being pushed hard by the fossil fuel industry. It sounds “green” – but could wreck efforts to make homes truly zero carbon, using insulation and electric heat pumps.
Oil and gas companies support switching the gas grid to hydrogen, as a survival option in case of decarbonisation, as hydrogen is usually fabricated from gas.
But the hydrogen strategy cuts across the approach recommended for years by housing policy wonks and architects: to use insulation to slash the amount
of heat needed, and install electric pumps (which work like fridges in reverse).
Leeds Trades Union Council (TUC) last month launched a campaign in favour of retrofitting homes with high-quality insulation and heat pumps.
It’s an issue many people can unite around – those fighting for better housing and tenants’ rights, campaigners against fuel poverty, trades unionists fighting building industry cuts, and all of us who want to tackle climate change.
And there’s a choice to be made we cannot avoid.
If the gas grid is switched to hydrogen, that will block for good the electrification-and insulation approach, that heats homes better, more cheaply, with technology that we know works, and is truly zero-carbon. We cannot have it both ways.
We will be locked into extra dependency on fossil fuels, instead of speeding the shift away from them.
That gas-to-hydrogen switch is being planned in north-east England by Northern Gas Networks (NGN): its H21 project would convert 3.7 million homes and businesses by 2035, and 15.7 million by 2050. NGN is asking the government to fund an engineering study for it.
This article is a guide to the debates and to more information. It covers:
hydrogen and its drawbacks;
whole system solutions: existing technologies to decarbonise heating
the government’s no-strategy strategy and how we could resist it; and
There is a short appendix with a non-technical guide to the technologies.
Hydrogen and its drawbacks
Hydrogen is touted as a “green” fuel internationally, because governments seek industry-friendly paths to decarbonisation, and oil and gas companies offer this false solution.
The International Energy Agency (IEA) last year published a report on hydrogen, which noted active support for it by the Chinese, Brazilian, Indian, Australian and many European governments.
Much of this is based on a totally unproved assumption: that technology to produce zero-carbon hydrogen can be made to work at scale. That is a long way off, and may never happen.
There are two supposedly carbon-free types of hydrogen: “blue” hydrogen made from natural gas, from which the carbon is removed and stored; and “green” hydrogen made by electrolysing water. Neither has ever been used at large scale.
At the moment, about 70 million tonnes of hydrogen is produced per year globally, and 98% of it is “grey” hydrogen, made from natural gas … without carbon capture. So it emits a huge amount of greenhouse gases – almost as much as the aviation industry. (See below for more details on the technologies.)
Large-scale “blue” or “green” hydrogen production is far away for three types of reasons.
Cost. The European Commission estimates that “blue” hydrogen would cost €2 a kilogramme at today’s prices, and “green” hydrogen €2.50-€5.50/kg, compared to €1.50/kg for existing “grey” hydrogen.
Technology. “Blue” hydrogen needs carbon capture and storage (CCS) technology that does not yet work at scale anywhere. Transporting hydrogen might not be the walk in the park that some companies claim, either, this presentation suggests.
Resource use. “Green” hydrogen uses huge quantities of electricity and water.
Take the NGN project. It would by 2050 need 8 million tonnes of hydrogen per year, equivalent to 300 Terawatt hours (TWh) of electricity.
To supply that amount of “green” hydrogen, Friends of the Earth says,would need 140 Gigawatts (GW) of wind-powered electrolyser capacity – compared to a current total UK wind capacity of 22 GW (which supplies about one fifth of
the UK’s electricity). Plus the same amount of water as is used by 1.2 million homes.
If “blue” hydrogen were used instead, 60 plants, as big as the world’s biggest, would have to be built … fitted with that CCS technology that is still in development.
I am not arguing that hydrogen – especially “green” hydrogen – could never be used, during and after the transition away from fossil fuels. But now, it is not a priority or a game-changer.
Today, most hydrogen is used in oil refining and fertiliser manufacture. Hopefully, much of this current use will disappear, along with fossil-fuelled industries. There may well be new uses, because low- or zero-carbon hydrogen might be the best substitute for fossil fuels e.g. to make steel. Hydrogen is also good for storing energy.
But why, in any sane world, would you start by searching for new ways to use hydrogen, as governments are trying to do now?
Why would you even think about using hydrogen to heat people’s homes – when technologies that work, that are already in use (retrofitting, electricity and heat pumps) could do the job better?
Unless you were seeking ways of wringing the last few bits of profit out of oil and gas production.
Whole-systems solutions: existing technologies can decarbonise heating
Government and parliamentary reviews, too, have found that heat pumps and insulation are the way to go. (They have also looked at a hybrid heat pump system, in which a heat pump provides heat for 85% of the time, but switches to a gas boiler during colder periods.)
The government’s business and industry department (BEIS) did a big review of home heating options in 2018. It concluded that, first, there should be a “growth in no or low-regrets low carbon heating” measures, including heat pumps, biomass boilers and solar water heaters. But BEIS said that, long term, all technologies had to be looked at – and kept the hydrogen option open, by commissioning the engineering company Arup to do a feasability study.
The parliamentary Committee on Climate Change also did a big study on hydrogen in 2018, and concluded that it is “best used selectively, where it adds most value alongside widespread electrification” – and providing CCS could be got to work properly. Most urgent, the CCC pointed out, is “strategic certainty about how the decarbonisation of heat will be delivered in the UK”.
(The detailed analysis for the CCC was done at Imperial College. It showed that a hydrogen-based approach would be more expensive, especially if the aim were zero carbon, and that up-front investment makes more sense to stop emissions. There is more from Imperial on “smart and flexible heat” here.)
All this paperwork underlines that an integrated approach is needed. Buildings need to be upgraded and insulated; different types of heat pumps and different installation methods are called for; expertise and training have to be developed; in some areas, district heating networks make sense.
In the face of this pile of evidence that, more than anything, home heating needs a strategy – the government has avoided adopting a strategy. It “has yet to make any firm decisions about which pathways it prefers”, this report on the Renewable Technology site explained in July.
The politics of this is very clear.
In the face of climate crisis, the government must choose between an integrated strategy, best implemented through local government, relying on existing technology … or a no-strategy strategy that takes the lead
from powerful private companies with unproven technology.
The no-strategy strategy fits with this government’s maniacal, neoliberal hatred of the public sector – one of its few ideological principles. That was what motivated its no-strategy strategy on coronavirus testing and tracing, with devastating results, costing tens of thousands of lives.
A heat decarbonisation strategy will have to be fought for in opposition to the government – just as health workers, scientists and others have had to fight for a coronavirus strategy.
This is why the Leeds TUC initiative, which appeals to local government to act, is welcome.
The Leeds TUC has recognised a techno-fix for what it is – damaging to society and the labour movement. Its campaign could be a focus for all who want to tackle dangerous climate change.
If you are in a trade union, an environmental campaign group or a community organisation, please discuss the Leeds TUC’s document and the actions it proposes.
If you are in a union, you could challenge trade union leaders’ support for the oil and gas industry’s hydrogen initiative.
Instead of such support, the labour movement should:
First, embrace technologies that are in society’s best interests – which for heat decarbonisation means retrofitted insulation and heat pumps;
Second, demand that firms producing filthy-dirty “grey” hydrogen take action to reduce the horrendous levels of greenhouse gas emissions they produce; and
Third, urge that future hydrogen use be limited to applications that are socially useful and don’t add to the climate crisis.
The H21 project is at a crossroads. The companies who sponsor it – NGN, the gas network firm Cadent and the Norwegian oil company Equinor – got state funding for a series of initial reports: £9 million from the Ofgem Network Innovation Competition (NIC) in 2017, mainly to fund safety assessments; and another £6.8 million in 2019 to test the technology at a specially-built site at Spadeadam. (Update from a H21 manager here.)
But H21’s plea for a much larger dollop of state funding – £125 million, half the cost of a Front End Engineering and Design (FEED) study, originally scheduled to start this year – has not so far been heeded, despite the “urgency” explained in the H21 North of England report (available here, although temporarily (October 2020) missing).
Meanwhile, the government has announced another project – to support an industrial complex on Teesside, making “blue” hydrogen for transport – that could be an alternative source of demand for natural gas being pumped from the North Sea … and has as little as H21 to do with tackling the climate emergency.
Despite the question marks over H21, the oil and gas industry’s lobbying machine in support of hydrogen for heat decarbonisation is trundling on, with greater force than ever.
And in August, the gas industry “scored a success in persuading the Environmental Audit Committee [of the House of Commons] to back its plans for using hydrogen […] in domestic heating”, the 100% Renewable UK blog reported.
The committee chair, Philip Dunne MP, deceitfully suggested that hydrogen is “the most cost-effective option” for “parts of the UK energy system”.
Tom Baxter, a chemical engineering researcher, questions the pro-hydrogen arguments in this article.
Gas network companies have also jumped on the post-Covid financing bandwagon, asking for a huge state hand-out for conversion to hydrogen. And cement manufacturers – who, like energy companies, need carbon capture and storage – have joined the queue for state funding.
These relentless lobbying efforts are funded by a range of companies including hydrogen, transport, carbon capture, gas network, engineering and chemical firms as well as oil and gas. Their greenwash proliferates through the Decarbonised Gas Alliance and Hydrogen Strategy Now.
Hydrogen is the most common, and lightest, element in the universe, but only exists on earth combined with other elements. People started fabricating hydrogen from compounds and using it e.g. for balloons in the nineteenth century. Today there are three main types of hydrogen:
■ “Grey” hydrogen. Fabricated by removing the hydrogen (H) from methane i.e. natural gas (CH4), or from coal. This is how 98% of hydrogen is currently made. It is extremely emissions-intensive. For every tonne of hydrogen made from gas, 10 tonnes of carbon dioxide (CO2) goes into the atmosphere;
hydrogenfor every tonne from coal, 19 tonnes of CO2.
The 70m tonnes of hydrogen produced in 2018 caused 830m tonnes of CO2 emissions, the IEA calculated. That’s a healthy chunk of the world total of 42 billion tonnes – about the same as total emissions from Indonesia plus the UK – and nearly as much as the global aviation industry, which emitted 915m tonnes in 2019.
Most hydrogen produced now is used for oil refining, and ammonia production to make chemical fertilisers. Some is used as part of synthetic gas products, mainly for manufacturing steel, or methanol.
■ “Blue” hydrogen. In this process, instead of CO2 being emitted into the atmosphere, it is captured and stored. The capture process, steam reformation, is straightforward for about 70% of the emissions and gets really tricky above and beyond about 85%.
Steam reformation splits methane into CO2 and synthetic gas (carbon monoxide plus hydrogen); in the second stage, the synthetic gas is mixed with steam; more CO2 is removed and hydrogen produced. Other similar processes are partial oxidation, which uses oxygen in the air as an oxidant instead of steam, and autothermal reforming, which combines both methods.
Note on carbon capture and storage. This can also be used in gas- and coal-fired power stations. Usually the carbon is captured after the fuel has been burned. Then, as with carbon from hydrogen production, it has to be transported and stored. CCS has been in development for about 40 years, but there are still only 20 projects in development in the world. Only two of these ever actually functioned, and one of those two (Petra Nova in Texas) was mothballed in August. (A good analysis is here.) CCS is greenwashed as the key to “green power”. Some politicians, and some international climate talks documentation, claim that bioenergy with CCS could play a big role in global decarbonisation, but climate scientists and engineers think that is nonsense.
■ “Green” hydrogen. Produced by electrolysis of water. The electricity could come from fossil fuels (in which case it would not be green), nuclear power or renewables. The process is proven, but is very energy intensive and very inefficient.
If electricity from renewables were to be used, this could be the most “carbon light” way of producing hydrogen. But huge targets for “green” hydrogen production are sometimes published without being reconciled with other huge targets for renewably-produced electricity. Is producing hydrogen ever going to be the best way to use this electricity? The IEA says that just to produce the 70m tonnes of hydrogen the world economy uses annually would need 3600 TWh of electricity, more than total European consumption. The electrolysis also needs huge amounts of water – 9 litres for each kilo of hydrogen.
Gazprom, the Russian gas company, sees potential in producing hydrogen by methane pyrolysis, a related technology. GL, 30 October 2020.
Closing Down Big Oil was our contribution to the Edinburgh World Justice Festival 2020. At the event on 9th October there were contributions from Andy Georghiou, Brian Parkin and Neil Rothnie. In this post we’ve collated video, audio, Powerpoint slides and links which give a flavour of the discussion.
Andy talked about the local and global role of INEOS and the importance of petrochemicals in the debate on just transition.
Brian gave an overview of the rise of big oil, its dominance in the twentieth century and the necessity for its demise in the twenty first.
Neil brought the discussion back to the importance of the North Sea for the campaign for a just transition to a sustainable economy here in Scotland
In this audio file Neil addresses a question about the role of XR
And in this audio file Andy addresses a question on greenwashing and reflects on the overall discussion
September 2020 Oil and Gas Workers report – a review and links to the full report are on this blog – click here
The Sea Change report on North Sea transition and implications for employment
Some background to the Scottish National Investment Bank is here, while some questions and criticisms of how it is likely to be run can be found here and a recent article by George Kerevan is here.
The ‘Big Read’ in the Herald newspaper on Sunday 4th October was ‘The nuclear option – can atomic power save the human race from climate change?’. In it, journalist Neil Mackay reviews a new book by US earth scientist James Lawrence Powell. Powell argues that we are at a tipping point that will lead to runaway global temperature rises unless decisive action is taken to reduce greenhouse gas emissions to zero. In this he is absolutely right. However, he goes on to argue that achieving zero carbon by replacing fossil fuels with renewable energy technologies will take too long. According to Mackay, Powell argues that achieving zero carbon in a decade by adopting renewables is just ‘infeasible’. The only serious option is to produce all our energy needs by a massive expansion in the number of nuclear power plants. Essentially, he says that we should use nuclear to buy time while renewable technologies are developed further.
Undoubtedly current energy needs could be met by nuclear. But Powell himself concedes it would take at least 25 years for this level of capacity to be reached. Indeed, construction timetables for nuclear power stations are notorious for length overruns.
Powell is not alone in arguing for nuclear as the means to end the climate crisis. However, in our view the nuclear strategy is profoundly mistaken.
Nuclear power has always been entangled with nuclear weapons programmes. The US ‘Atoms for Peace’ programme, launched at the height of the cold war promised a future of almost limitless energy. In truth the civilian reactors provided the raw material for a huge increase in the US nuclear arsenal. By 1961 the US inventory of nuclear weapons was equivalent to 1,360,000 Hiroshima bombs. In the US, the UK, Russia and elsewhere nuclear power has always been a necessary support for nuclear weapons. In the UK context researchers at the University of Sussex Science Policy Research Unit have shown that the sole case for nuclear power is to subsidise nuclear weapons. Electricity consumers are paying for the high cost of an industry that subsidises the military nuclear weapons programme.
Worldwide the number of operational nuclear plants is in long-term decline. In part this is a response to Chernobyl and Fukushima, but it is also a result of the high cost of building new plants (not to mention the eyewatering sums needed for decommissioning plants at the end of their life). Renewables are cheaper than nuclear power and the gap is growing year on year.
Nuclear power is not zero carbon either. Greenhouse gases are admitted at every stage of the lifespan of a nuclear power station. The process of mining uranium and the process of milling and separating the uranium from the ore omits considerable carbon and is likely to be more energy intensive in the future.
Powell has undoubtedly played an important role in arguing the case for rapid action in the face of the climate crisis. He is a fine scientist. However, in making the case for nuclear he employs inaccurate data and even worse judgement.
He notes that in Sweden GDP and carbon emissions rose in lockstep until Sweden increase nuclear power generation at which point GDP started to grow faster than emissions. We are meant to understand here that GDP is equivalent to wealth and that with nuclear we can have GDP growth and low emissions. This is an argument that appeals to big business – it should be less appealing to the 99% for whom GDP growth in recent decades has gone along with increasing inequality.
He dismisses renewables as being immature and not ready yet. But serious studies around the world, including those by Commonweal in Scotland and the Centre for Alternative Technology in Wales, have shown that existing renewable technologies can achieve zero carbon. The technologies that are not ready are those like Carbon Capture and Storage which are advocated by those who want to tackle the climate crisis while not making the radical changes in the economic system that a genuinely sustainable economy requires.
Inexcusably Powell plays down the issue of nuclear safety and Mackay repeats his figures without questioning them. ‘Manual for Survival – A Chernobyl Guide to the Future’ by Kate Brown ought to be compulsory reading for anyone writing on this topic. In a scrupulous forensic investigation, she uncovers the decades long efforts by the old Soviet Union and then the US to cover up the real impact of Chernobyl. Rather than Powell’s 4 – 16 thousand deaths the true figure is most likely in the range 35 – 150,000. And it remains the case that long-term safe storage of the radioactive by-products of nuclear power remains unsolved.
Scot.E3 has joined with a number of other organisations in signing a letter sent to the Scottish Government arguing that Bioenergy with Carbon Capture and Storage should have no place in the their updated Climate Change Plan.
The key points in the letter are listed below.
Risk of exacerbating rather than mitigating climate change
Biodiverse forests are vital protection against the climate and ecological emergencies. Protecting mature forests and allowing more land to revert to forest and other natural ecosystems is a vital part of our efforts to sequester and store carbon. Large-scale tree burning for biomass energy is not compatible with this need, and any level of BECCS implementation would further increase demands for extraction of wood and other types of biomass.
To date, the only working example of BECCS anywhere in the world is the capture of CO2 from ethanol fermentation. This process emits more carbon than it sequesters once the fossil fuels burnt during the refining process and the emissions released by land-use change are taken into account. Cutting down trees for energy production exacerbates the climate crisis because it takes too long for new trees to grow back, and forest ecosystems that are logged will not recover for many decades, if ever.
High risk to nature
The suggestion from the UK Committee on Climate Change (CCC) that Scotland could grow and supply around 33% of all UK biomass and would therefore be an ideal location for BECCS is extremely concerning. Existing demand for biomass energy in the UK far exceeds the availability of genuine biomass residues and wastes. If BECCS was applied on a large scale in Scotland, it would increase the demand for wood and land, and therefore add pressure on woodland and other biodiverse ecosystems.
The world’s only example of a pilot BECCS project involving the burning of biomass – one which has not succeeded in sequestering any carbon so far – is at Drax Power Station in Yorkshire. Drax is the world’s biggest biomass burner and routinely sources pellets made from clearcut, coastal and hardwood forests in the Southeastern USA as well as from forests in the Baltic States. These forests are home to countless rare and endangered species and Scotland must not have a role in their destruction.
In Scotland, biomass electricity relies heavily on burning domestic wood from tree plantations, most of which are Sitka spruce. The Forestry Strategy for Scotland highlights the major role of biomass energy in the overall demand for wood, itself one of the ‘strategic drivers’ of expansion. Conifer plantations may be faster growing than native woodlands and thus preferred for bioenergy, but they provide little habitat for wildlife.
European biofuel policy has shown that large-scale demand for crop-based biofuels causes large-scale land-use change. In the case of European crops, it involves more intensive agriculture with greater agrochemical use, contributing to the decline in farmland birds, animals, insects and wildflowers.
Diverts resources from meaningful responses to the climate emergency
We urge the Scottish Government not to rely on speculative negative emissions technologies such as BECCS in the energy sector to make up for, or “undo”, carbon emissions. These unviable technologies distract us from the urgent action needed to tackle emissions at source and meet our climate targets.
Scotland’s new 2030 climate target requires urgent action to reduce emissions, and the costs – both financially and environmentally – of trying to develop BECCS are huge, representing a real risk of diverting much needed resources and financing away from proven and effective responses to the climate and biodiversity crises which, unlike BECCS, can be implemented immediately.
The Scottish Government must end support for new fossil fuel developments, focusing instead on ensuring a Just Transition that protects the livelihoods of communities which currently rely on high carbon industries. Swift efforts must be made to upscale truly clean energy, to develop a mix of energy storage systems at scale and to greatly expand the roll out of heat pumps and the insulation of homes.
The Scottish Government must invest in, and provide policy support for, increasing biodiverse forest and woodland cover and the protection of forest, peatland and wetland ecosystems which naturally sequester carbon prioritising the expansion of native woodland through tree planting and natural regeneration.