Stand with the people of Torry

Thanks to Friends of the Earth Scotland for sharing this call to action from a working class community in Aberdeen. Residents in Torry, just south of Aberdeen, are having their only green space threatened by an oil industry land grab in the name of ‘energy transition’. The group has been campaigning to protect their local park and for a just transition that meaningfully includes local communities. 

The oil industry and Aberdeen City Council are planning to destroy a much-loved greenspace called St Fitticks Park, which lies in the heart of Torry, a community in the south of Aberdeen. The council, together with a consortium of oil companies and Aberdeen Harbour want to dig up the park and build an ‘Energy Transition Zone’. This project now also has funding from the Scottish Government. 

St Fitticks Park is the main greenspace in Torry and is enjoyed by generations of Torry residents, as well as attracting people from outside the community due to its thriving wetland, which is a home to a variety wildlife.

A community group has formed to resist the proposals (The Friends of St Fitticks) and they have various plans to safeguard the future of the park. They support the idea of an energy transition zone in response to the climate emergency, but argue this should be located on vacant industrial land to the south and west of Torry, not on their beloved greenspace.

Unwanted industrial development has been imposed on the people of Torry down the years. In the 1970’s homes were demolished to make way for a harbour expansion to accommodate the new oil industry, but many people living in Torry have seen little economic benefit from an industry that dominates the city. So once again they are fighting one of the most powerful industries in the world. 

On Saturday 28th August, local people will gather in the park for St Fitticks day. We need to show that the community has wider support and help them to get their message heard. Please show your solidarity with the people of Torry, by either:

A) Taking a photo with ’Save Saint Fitticks Park’ placards (on your own or with your group) in your local green space and posting on social media with #HandsOffStFitticks

B) Share the graphic on social media with #HandsOffStFitticks

You can read more about the local struggle on the Friends of the Earth Scotland website.

#HandsOffStFitticks

Wind Power, Green Jobs, Global Capitalism

Mike Downham reviews ‘Who wields the welding rod’ recently published in the London Review of Books

It’s impossible to do justice here to James Meek’s 12,000 word piece “Who holds the welding rod?” (LRB 15th July).

This exceptional investigation took journalist Meek to Hull, Campbeltown and remotely (because of Covid) to Vietnam through a Vietnamese researcher. The piece is threaded with the bitter experiences of many individual workers and an intimate account of the Campbeltown community’s past and present predicaments.

The story starts with a vivid picture of the voyage of a German-owned cargo ship loaded with wind towers which had left the Vietnamese port of Phu My in early April last year, arriving more than a month later in Hull.

The towers are massive. The hollow tapered columns, made of thick painted steel, are designed to be attached to the sea-bed, raising the turbines high enough above the sea for clearance of their huge blades. They are hundreds of feet tall and weigh hundreds of tonnes.

This shipment was destined for Hornsea Two in the North Sea, which will be the largest offshore windfarm in the world, scheduled to be operational next year.

The towers were made in a factory in Phu My by the Korean company CS Wind. The towers for Hornsea One were made by a CS wind factory in Campbeltown. CS wind doesn’t have a factory in Korea. Instead it has factories in Vietnam, Taiwan, Malaysia, China, Canada and Scotland (Campbeltown). It’s really one vast international factory. The factories in both Canada and Scotland have been closed down because CS wind said they couldn’t make a profit. In the year or so before closure working conditions in the Campbeltown factory deteriorated to such an extent that serious accidents, some of them permanently disabling, became common. Then 100 jobs were lost from a small remote town which offers few other employment opportunities.

The Scottish Government had made it attractive for CS Wind to start a factory in Campbeltown, though it could have invested instead in an available Scottish company. They chose the cheaper investment of a Korean company, knowing full well that the reason it was cheaper was that CS Wind pays its workers less and works them for longer hours. The jobs it provided people in Campbeltown, more like slave labour than jobs, lasted less than three years. 

CS wind may sound powerful but it’s at the bottom of the pyramid of control in the wind industry. At the top are the project developers, who put up the money – companies like Orsted (controlled by the Danish government) and SSE (London-listed, Scotland-based). The project developers contract engineering companies to manufacture and install the turbines. In Europe and much of the world the dominant engineering players are Vestas (Danish) and Siemens-Gamesa (German-Spanish), both of whom manufacture the blades and the turbines themselves because they are high-value, and contract out the rest, including the wind towers.

Are the conflicting goals of cheap green energy, free trade and secure well-paid jobs irreconcilable? At one point Meek thinks they are. But later he says:

It shouldn’t be more important that the North Sea wind farms get built than that some of their towers are made by low-paid labourers working twelve-hour shifts, seven days a week; and yet the immense utopian project to decarbonise human activity forges ahead, while the equally utopian project to end the setting of ‘low income country’ worker against ‘high income country’ worker barely exists. The mad dream of a green energy transition might just be starting to come true, with much of the credit due to stubborn activists, clever engineers and a handful of far-sighted policymakers. But it is also happening for the unlikely reason that it has been redefined as a global capitalist-consumerist project. It realises utopian goals while simultaneously keeping stock-markets ticking over, making the rich richer and spreading a general sense of virtue. The system has been able to turn the green energy transition into a set of products – electric cars, solar panels, wind turbines – but the transition  to a world of better-treated workers involves systemic changes that are the antithesis of commodification.

We have an internationalist movement to save humanity from climate. But we also have an internationalist movement to save humanity from capitalist exploitation. For the latter movement to win the struggle, as Meek concludes, a world factory like CS Wind’s demands a world trade union.

Stop Cambo

Both the UK and Scottish governments remain committed to continuing extraction of North Sea Oil and Gas. Carbon emission from the burning of these fuels are more than five times those of the whole Scottish economy. Yet these emissions are not included in Scottish or UK targets for emissions reduction. The assumption is that other countries will cut usage and the market will then drive down demand or, and more often, that we can carry on producing willy nilly but consumers will find ways of capturing the carbon. Both of these events are deferred into the future and exploration and development of new fields continues. The Sea Change report shows how these plans are incompatible with a zero carbon economy and with a just transition.

Thanks to Friends of the Earth Scotland for these notes on the latest development west of Shetland.

  • Oil giant Shell and Siccar Point Energy are seeking permission from the UK Government to develop the Cambo oil field, West of Shetland, just months ahead of COP26. In the first phase, due to start in 2025, the companies expect to extract 150 million barrels of oil – the emissions equivalent of 16 coal-fired power plants running for a year. They anticipate operating the Cambo field, which contains 800 million boe, until 2050, by which time Britain has pledged to be net carbon neutral.
  • The Cambo Field is the second largest oil and gas development waiting for approval and once up and running is set to be the fifth largest producer in the North Sea. If approved, Cambo Field will be the first UK project to get the green light since the International Energy Agency Net Zero report calling for no new investment in oil and gas starting this year and the Shell ruling mandating the company to slash carbon emissions 45% by 2030. 
  • The UK Government is currently expected to give its final approval on the project over the next six to eight weeks. Moving forward with the Cambo Field contradicts the findings of the IEA’s net zero report and is incompatible with limiting warming to the Paris Agreement target of 1.5C. 
  • The climate impacts of opening the Cambo Oil field would be devastating. In the first phase alone, developers want to extract 150million barrels of oil; the emissions from which are equivalent to running a coal-fired power station for 16 years. The field is expected to operate until 2050 – the point by which your government has committed to reaching net zero emissions.  And this is just the beginning. Cambo Field is only one of many oil and gas projects waiting for government approval that have the potential to extract 1.7 billions barrels of oil. 
  • Approving the Cambo field will be a massive failure of UK climate leadership and threatens to undermine the success of the crucial UN climate talks. In just a few months, the eyes of the world will turn to the UK as the hosts of the UN climate talks in Glasgow. Approving the Cambo field will send a clear message that this government is not serious about climate action and not willing to do its part to phase out support for oil and gas. If the UK keeps extracting oil and gas, how can it expect other countries to do anything different?
  • The International Energy Agency has stated that to meet the 1.5°C target in the Paris Agreement, there should be no more new investment in oil, gas, or coal. Further, the recent UK Climate Change Committee assessment clearly laid out that current UK policies are far from delivering the UK’s climate goals. The amount of oil and gas in already operating fields in the UK will exceed our share of emissions in relation to the Paris climate goals. The world cannot afford to open new fossil fuel frontiers. This starts with rejecting the Cambo Field.
  • If Boris Johnson is serious about being a climate leader, he must reject Cambo, all new fossil fuel developments and support a just transition for oil and gas workers and impacted communities. It’s time to end the UK government’s support for maximising the economic recovery of oil & gas and commit instead to a rapid and fair energy transition. With the right policy support, the UK could create three jobs in clean energy for every oil & gas job at risk. We need a clear, credible plan to wind down production and deliver a just transition that is driven by oil and gas workers, their unions and affected communities. 
  • The Cambo Field will bring few jobs, little tax and a potentially huge clean up bill for the public purse. Contracts for construction and installation have been awarded to overseas firms, meaning the bulk of jobs will be outside of the UK. As part of a global oil market 80% of UK crude is currently exported, and so this field would not contribute significantly to UK energy security. Siccar Point Energy, who owns the majority stake in the proposed field, paid no net tax between 2015 and 2019, instead receiving £41mn from the government to cover decommissioning costs. Meanwhile, the complexity of the field and high cost of operating in the West of Shetland makes the project high risk, with similar projects suffering from large cost overruns that have driven producers to bankruptcy.

Green Jobs in Scotland – a review

In April the Scottish Trades Union Congress (STUC) published a new report ‘Green Jobs in Scotland’. written by Transition Economics.  The headline finding is that the decarbonisation of the Scottish economy could lead to 367,000 new jobs.  That’s about 16% of the number of workers employed currently in Scotland.  

The jobs message is powerful but it’s not new.  More than a decade ago the ‘Million Climate Jobs’ pamphlet looked at how large numbers of new jobs are essential to the transition to a zero-carbon economy. It estimated that a million new jobs are needed across the UK; scaled by population size this means around 100,000 jobs for Scotland.  This prediction was confirmed by a December 2018 report by the Green European foundation, which provides regional estimates for job creation in Scotland.  Six months later the Sea Change report showed how a planned run down of North Sea Oil and Gas could mean many more, new, skilled jobs in renewables.  The STUC report adds to this body of evidence. However, the challenge remains for trade unionists and climate campaigners alike to take the evidence, make it widely known and build a mass movement to make it happen.  

Green Jobs in Scotland comprises 103 pages of densely packed analysis covering six broad sectors of the Scottish economy.  It’s important to note that it is not a critique of either the Scottish or UK’s policies on climate.  It takes as given, for example, the fact that both governments’ have strategies based on large scale use of carbon capture and storage.  What it does do, sector by sector, is take current targets and policy recommendations and analyse in detail what needs to change for decarbonisation targets to be achieved.  The graphic illustrates how, in the best case scenario, 367,000 new jobs would be distributed across six major industry sectors.  

The report repays careful reading, not just because it provides solid evidence to back up the case for climate jobs, but also because, working within mainstream assumptions about the economy it shines a light on significant dangers along the road to transition.  

The Transition Economics team highlight the inadequacy of current climate action plans and argue that for targets to be achieved the Scottish Government’s timeline to meet its 2045 targets needs to be revised

Scotland’s net zero emissions by 2045 target, decarbonisation has to accelerate.

They also make it clear that, to date, the promise of jobs has been illusory. Indeed, job numbers in the renewable sector have been in decline.  This is a direct result of policies that have relied on the market.  And the report makes it clear, that while with the right policies and funding in place, 367,000 new jobs in the Scottish economy is a possible outcome, without such policies the number of new jobs might be as low as 156,000.  It concludes that 

… it is also possible for Scotland to decarbonise without significant domestic job creation – and that those jobs created could be primarily precarious and under-paid. 

The report gives examples of the consequences of giving free rein to the private sector. For example, in offshore wind and solar 

… employment in renewable energy …has been below standard. Jobs tend not to be unionised, and there have been reports of large multinational energy utilities like EDF trying to avoid unionisation of their (new) renewables divisions, despite union recognition across the rest of the company. The wind power Sector Deal created by the UK Government excludes any provision for trade unions. This adds to significant Health & Safety concerns with wind power, repeated violations, and recent deaths amongst onshore wind workers.

An investigation revealed that migrant workers hired to work on crane ships and guard vessels for offshore windfarm construction and offshore cable-laying sites were paid a fraction of the minimum wage and made to work more than 12 hours a day – both at the Beatrice site and others.  Instead of ensuring acceptable labour standards, the UK government has now repeatedly extended a waiver work for permit requirements in the wind sector to facilitate the employment of foreign crews – raising concerns about poor safety and human rights conditions for migrant workers, as well as concerns about local jobs and training opportunities in the sector.

Throughout, the report assumes that climate projects will be undertaken by the private sector with public participation.  The role for participation is to set policy goals, make investments and provide some level of regulation – legislation on fair work practices for example.  One example that is given notes that there are serious skill shortages in some sectors and recommends a co-ordinated approach to skills provision for the climate transition through the creation of a new public body – Climate Skills Scotland.  The new organisation’s role would be


to play a co-ordinating and pro-active role to work with existing providers (e.g. FE colleges) to quickly roll out the new qualifications required. 

So essentially, public participation means supporting and facilitating the private sector.  But given the track record of the private sector there must be grounds for questioning whether this level of participation is adequate. It’s clearly right to suggest, as the report does, that there is no certainty that the headline figure of almost 400,000 jobs will be achieved, or that jobs will be unionised and provide good pay and conditions.  Even if both Holyrood and Westminster step up the pace and address investment in the projects outlined in the report, the private sector will still be driven by profit maximisation.  That’s why renewable job numbers in Scotland have declined, why renewable projects source production on the other side of the world resulting in massive carbon footprints, and why wage rates and working conditions are driven to the bottom.  Scot.E3 argues that public participation is not enough to ensure that we meet zero carbon targets or to ensure that the jobs that accrue from transition are good jobs.  We need public ownership and democratic control.   

Finally, the report touches upon three areas which, in our view, require urgent attention if Scotland’s roadmap for transition to zero carbon can have any credibility.  The first of these is North Sea Oil and Gas.  Most oil and gas production is not included in Scottish emissions figures or in targets for emissions reductions. The report notes that:

Scotland’s oil and gas output is equivalent to an additional 180.3 MtCO2e when used, more than four times greater than Scotland’s own greenhouse gas emissions [our emphasis].  

These uncounted emissions represent a whole herd of elephants in the room and must be addressed as part of a planned, coordinated and just transition.  This requires a sharp shift from the current policy, espoused by both Holyrood and Westminster, of maximum economic recovery of North Sea hydrocarbons.  It also requires a break with the long-term partnership with big oil which has been cemented over 50 years by massive subsidies from the public purse and is now driving the policy focus on hydrogen production in order to sustain the industries dominant economic position.  

The report is critical of a focus on hydrogen production from oil (blue hydrogen), arguing that it could delay progress with green hydrogen produced by electrolysing water. However, in line with its overall concentration on existing government policy it fails to look at the serious criticisms that have been made of zero carbon plans that foreground hydrogen.  

Finally, the report notes how the private companies contracted to build energy from waste plants have tried to drive through serious cuts in pay and working conditions.  However, it is uncritical of a strategy that requires a continual stream of waste for burning (and thus generating greenhouse gas emissions) for decades to come) and is incompatible with a zero-carbon transition and the Scottish Government’s aspirations for a circular economy.

Scot.E3’s campaigning pledge for COP26

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:

  1. The immediate cessation of all new exploration, development and drilling activity in the British sector of the North Sea.
  2. A planned and phased end of oil and gas production in the North Sea that would ensure that activity ends by 2030.  
  3. 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 manage 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.
  4. 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 triple.e.scot@gmail.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

North Sea and Just Transition – let’s talk about public ownership

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.

The figures were published last month by Shell. The UK tax rebate to Shell also shows up in the UK Extractive Industries Transparency Initiative (EITI) report, published last week, along with a smaller £14.7 million tax rebate to BP.

At least the UK’s upstream oil industry as a whole paid some tax in 2019 – £1.43 billion – unlike 2015 and 2016, when the Treasury paid out more 

in rebates than it collected in tax (as shown in this earlier EITI report).

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,

Oil and wind. Photos by Berardo62 (oil) and David Dixon / Creative Commons

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.

Further Reading

What the BiFab disaster tells us about class rule – Scot.E3

Bifab- time for action – Scot.E3

Crisis, North Sea oil and Covid 19 – Platform

North Sea oil and gas: the elephant in the room – People & Nature, October 2019

BiFab – time for action

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. 

REEL News reported on BiFab in November 2017

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.

Photo by Pete Cannell CC0

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.  

The trade unions representing BiFab workers have contested this view. The Courier newspaper noted on October 29th that 

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.

Pete Cannell (November 25th, 2020)

Covid, Climate and Transition

Mike Downham and Pete Cannell suggest ideas for campaigning priorities that tackle the pandemic, future pandemics and the climate crisis.

A new campaign, ‘Zero Covid’ was launched a week ago.  The Independent SAGE committee of scientists has been arguing for a Zero Covid UK since the summer. This approach is also supported by the Hazards Campaign for workplace safety.  The campaign aims to build a movement that can force UK governments to adopt the Independent Sage proposals as public policy. 

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.

Image by Artivists at Work

Scotland’s North Sea Oil and Gas workers: the fight for a Just Transition: Part 2 – The Final Storm?

Oil Rig at sea during a storm (iStock).

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 COlimits 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, TotalDNV-GL, the IEA[1] and OPEC[2] 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[3].

As early as 2016, Shell had established its New Energy Divisiona 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[4]. This was with the expectation of offshore wind appreciating six-fold to 190 Gwe installed by 2030[5]. (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[6].

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:

RankCountryMbpd
1USA15,043
2Saudi Arabia11,800
3Russia10,800
15Norway1,649
21UK940
Oil production million barrels per day (Mbpd) by country 2019[7] (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[8].

Much regarding the likely fortunes of the North Sea oil and gas industry was covered in the first paper[9] 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.


http://www.sjvgeology.org/history/gushers_world.html

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[10]. 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[11].

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[12].

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 COemissions 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:

Product% of crude refined[13]
Asphalt       0.7
Residues0.7>
Refinery Fuel1.85>
Liquid Natural Gas4.0
Aviation Fuel9.0
Diesel/Light Oil25.0
Petrochemicals13.0
Petrol45.0
Total Transport Fuels79.0
(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 shale[13] and most deep water operations[14].

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[15].

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.

Dr Brian Parkin, Edinburgh, November 2020.




[1] IEA- International Energy Agency

[2] Organisation of Petroleum Exporting Countries

[3] Oilprice News 10th Sept 2020

[4] Above company information Oilprice News 10th Sept 2020

[5] Bloomberg NFF Oct 2019

[6] OECD annual report 2018

[7] US Energy Information Administration (EIA) 31st March 2019

[8] UK Oil and Gas Sept 2019

[9] Brian Parkin Scot.E3 April 2020

[10] Oilprice News/Bloomberg Feb 12th 2020

[11] All figures Rystad Energy consultants October 20th 2020

[12] Irina Slav Oilprice News 5th October 2020

13] David Messeder, Bloomberg as reported in Oilprice 22nd October 2020

[14] Oilprice/Bloomberg/Wood McKenzie, May 20th as reported in Oilprice 20th May 2020

[15] Wood McKenzie 30th September 2020

The Urgency of Now – Climate Jobs and Just Transition

The Cop26 Coalition is holding a global gathering from the 12th – 16th November.  Register here.

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)