Survey

Platform and Friends of the Earth Scotland are carrying out a survey to gather information on the effect of the oil crisis and COVID-19 on job security and work conditions and to understand how the campaign for a ‘Just Transition’ is perceived by oil and gas workers and what kinds of demands workers would like to see addressed by a transition to net-zero. 

The survey is directed at people employed in

  • The oil and gas industry
  • The supply chain (such as aviation, transport, car manufacturing and service industries)
  • Public bodies, unions or community organisations who regularly interact with the oil and gas industry and supply chain

If you fall in to one of these categories do take the time to complete the survey.

Scotland, Norway, Climate Jobs and Covid 19

The economies of Norway and Scotland have both been shaped by 50 years of exploitation of North Sea oil and gas. Both countries have governments that talk about tackling the climate crisis while remaining wedded to the further extraction of oil and gas from the North Sea basin.  There is however, a sharp divide between the two countries.  After 50 years Norway has the biggest Sovereign wealth fund in the world.  Scotland in contrast has no such fund and UK governments since the 70’s have pursued taxation policies that have resulted in massive net subsidies to the oil industry.  Right now job losses are taking place in the Scottish sector as companies respond to the overproduction of oil and the drop in price – in the worst-case scenario this could mean (including the multiplier effect) up to a quarter of a million jobs lost in Scotland out of a total workforce of 2.6m.

On the 24th May we were fortunate to hear from Andreas Ytterstad who is part of the Norwegian Climate Jobs Campaign – Bridge to the Future.  You can watch a video of Andreas’ introduction below.  This was followed by a very lively discussion in the course of which participants shared questions, ideas and links to resources.  It’s hard to do justice to such a rich discussion but in the rest of this post we have sketched a summary of the issues raised and included links to further reading and useful resources. 

Summary of the discussion

Andreas and others argued that state intervention and public control is essential for just transition. The door we’ve been pushing against is now slightly open – for example the growing scepticism in the Finance Department of even the right-wing Norwegian Government about further investment in oil extraction. All governments are now under huge financial pressure from increased expenditure and reduced receipts in the Covid-19 pandemic. This is an entirely new situation – we can push for things we couldn’t realistically push for before. Oil companies have no interest in funding transition, especially as they are led by men coming to the end of their working lives, not up for taking risks.

There was a lot of discussion about Climate Jobs, what they are and their relative importance in the overall economy.  Speakers noted the importance of studies by the Million Climate Jobs Campaign and the Green European Foundation in establishing a rigorous case for climate jobs.  Andreas noted that even if the current target number is too small it could act as the battering ram to break through to State acceptance of Climate Jobs and Just Transition.  He argued the need to win acceptance of the idea but that by itself it was insufficient.  The campaign also requires the agency of workers as active participants to ensure that ideas become implemented. Offshore workers’ skills will be important in new housing, energy efficiency retrofit of buildings and public transport. We are going to need huge numbers of Climate Jobs across all sectors, not just the energy sector. An aerospace worker added that there is also huge need for Climate Jobs arising from redundancies in the Aerospace industry.

Andreas noted that regional variation is important in planning and achieving Just transition. It will be most difficult in communities, which have grown and are now entirely dependent on oil.  Aberdeen is similar to Norwegian examples, but less remote and therefore more easily incorporated into a national plan. In the meantime we should support even defensive actions by these communities. One speaker noted that in England, Sheffield and County Durham for example, are both developing their own Climate Jobs / Just Transition plans. In both Norway and Scotland (and England) there’s potential for local and regional state authorities to join the Climate Jobs movement.  There were questions and contributions on the role of local authorities from contributors in Glasgow, Edinburgh and Aberdeen.

Other questions raised in discussion included:

How to fund the transition? Without a national investment bank how can manufacturing of renewables and other socially useful products for climate jobs be financed?

What are these green jobs?

Who will create them?

Who will fund these new jobs/businesses?

What is the response from Norwegian oil workers to transition jobs?

Will the jobs be from the private sector, or subsidised by national/regional governments, or state/regional publicly owned and financed?  Responses to this included ‘That’s fundamental  – I think the devil is not just in the detail of when or how much but also who will own it!  In Aberdeen the oil and local political establishment have ignored and then when they had to, slowly started to talk about transition but mainly to manage it and make sure they were still in control of transition!  What about pushing for transition without them in control?  Where all could the money be taken from.’

What does anyone think of case of Uruguay?  

More links and further reading

Andreas Ytterstad writing on climate jobs for the Open Democracy website

Scottish Government Energy Strategy

Aberdeen City Council consultation and net zero vision

Sea Change Report – the case for transition from North Sea Oil and Gas

In Scotland the Common Weal “Our Common Home Plan” outlines a way in which a six of passive measures to REDUCE energy requirements in buildings AND improve well-being. 

Call to Action

Read the call to action on global climate jobs

Covid19 and Oil Extractivism

In recent weeks we’ve published a number of articles on the impact of the drop in global oil prices on employment in North Sea oil and gas and on the urgent need to protect workers in the midst of the pandemic and seize the opportunity to organise for a rapid and just transition to renewables. Simon Pirani, Senior Research Fellow at the Oxford Institute for Energy Studies spoke at our 10th May public meeting.

You can watch the video of Simon’s talk here:

As background to the talk and for more information on the North Sea Oil and Gas industry you might also like to read the report on taxation and subsidies to the oil companies operating on the North Sea that we published in February.

If you’d like to look at Simon’s slides without watching the full video you can see them here:

We have a small number of Simon’s book available at the reduced price of £11 (postage extra). Email triple.e.scot@gmail.com if you’d like a copy.

A transition to renewables is coming but will it be a just transition

James Masson is a university student who is also involved with environmental activism. Coming from the North East of Scotland Just Transition is of particular interest to him.  We are really pleased that he’s given us permission to republish this article on Just Transition, which was written as a journalism project.

In recent years, climate change has become a key issue and we are only starting to realise the full impact that it could have on our lives. The Intergovernmental Panel on Climate Change (IPCC) fifth report stated in 2013 that they are 95% confident that climate change is being caused by humans burning greenhouse gases. More recently the UN Chief called climate change an existential threat to humanity. In light of the scientific consensus that burning fossil fuels is bad for the planet and therefore all life on Earth it seems obvious to suggest we stop burning fossil fuels, and of course we should. However, we cannot forget about all the jobs and money tied up in the fossil fuel industry. 

The North East of Scotland is a region that depends upon the oil and gas sector for much of its wealth. Scottish government stats show that in 2019 the oil and gas sector accounts for £16.2 billion or 9% or Scotland’s economy. The high concentration of fossil fuel jobs within the North East has meant that the employment rate in Aberdeenshire, in 2018, was 82.3% compared to the UK average of 74.8%.

 The North East relies heavily on the existence of the oil and gas sector for its prosperity and therefore we must replace the oil and gas industry with an equally strong industry that will mean the local area isn’t hurt economically. This is a concept that is referred to as a just transition. The aim of a just transition is to ensure that communities reliant on fossil fuel industries are not economically disadvantaged when moving away from fossil fuels and are provided with opportunities to grow economically in other sectors, namely the renewable industry. 

If we want to avoid the worst consequences of climate change a just transition needs to happen very soon. Scotland just like the rest of the world is warming at an alarming rate.

Read the rest of James’ article here.

Testing

The impact of the pandemic on the oil and gas industry is huge and we will be looking at this in a forthcoming post. Here retired oil worker Neil Rothnie looks at the health and safety issues for workers on the North Sea rigs which remain in production.

According to oil & gas workers trade union official Jake Molloy speaking to the industry trade paper, Energy Voice, tests to help safeguard North Sea oil and gas workers against the outbreak of Covid-19 are “at long last becoming available”.


It’s not clear from the article whether swab testing is already underway, but the RMT trade union seems to have talked to one company in Aberdeen that is involved in the venture. In the “deal” maritime operations employers either have or will be able soon, to mobilise workers who test as “clear” to crew their vessels without fear that anyone is being sent offshore with the virus. It doesn’t look like testing has reached other categories of oil & gas workers.


Judging by daily Government briefings on the crisis, the issue of testing is a hot potato, with health workers very unhappy that, at least up until Thursday, April 2, when this article appeared, there had been virtually no testing of health workers. Front line NHS staff don’t know whether they are infected or immune when they treat patients or when they go home to their families. Similarly, those self-isolating because family members have shown symptoms don’t know whether they can get back to the front line.


This news from the North Sea begs the question of whether oil & gas workers are more “essential” than doctors nurses and all the other categories of hospital workers and should be prioritised for testing? This is quite possibly the case. Who would presume to judge the issue? It’s easy to see the possibility that if the lights (and the ventilators) went out, even heroics from the NHS workforce would be of little avail in the face of this ongoing emergency. Is this the case? Oil & gas workers it seems are being informed by letter that they are “key” workers.


Energy Voice and Jake Molloy of RMT can only be congratulated for bringing this issue out into the open. Because what certainly wouldn’t be acceptable is if testing of one or other section of the workforce went ahead under the radar and without public scrutiny. Talking about what would seem to be a different test altogether, Mr Molloy said 7000 antibody tests have also been purchased to build up a picture of which workers have had Covid-19 and track workers’ progress, and he added that the priority for the kits “100% has to be National Health Service (NHS) workers”. Mr Molloy said: “If it’s a question of who’s getting it first, then it’s no question that the NHS is getting it first. This does sound like his union RMT will have some role in making this decision.
But there seems to be some confusion as to whether these kits are available to the industry yet or whether they still have to be purchased.


There needs to be some clarity from the Government and the industry, not least because according to the experts, and the Government, the co-operation of the whole of society is required if there is to be an outcome that doesn’t crash the NHS and lead to many avoidable deaths. So it should not be controversial to suggest that no single section of industry, however important, should be allowed to make its own arrangements as though it operated on a different planet to the one where the rest of us live and die.


The other valuable service this article has done is bring to public attention just what conditions exist in the industry and which mitigate against containing the pandemic. Jake Molloy, in the article, points out that if care is not taken, “every single installation or vessel out in the North Sea is another Diamond Princess”. This is the cruise liner where 634 (17%) of the 3711 passengers and crew were found to have contracted Covid 19 after it had been detected in a former passenger. 328 of those who tested positive showed no symptoms.
Jake Molloy thinks that Covid-19 testing kits are essential to halt any major outbreak on an offshore installation or vessel – given the nature of confined helicopter travel and cabin sharing in the North Sea.


The impossibility of social distancing en route to and onboard oil & gas installations, surely makes transmission of the virus inevitable. What policy will apply to workers returning from installations where outbreaks occur? The industry is talking about dedicated hotels in Aberdeen to isolate infected workers when they return ashore. Till they recover or die? There’s mention of taxi companies prepared to take returning workers (presumably those either ill or presenting symptoms) home anywhere in the country. To die at home? To spread the infection to families and possibly further?


At least one oil worker has died on returning from offshore where he became ill with virus-like symptoms. And now the guys are travelling to Aberdeen, having their temperature taken, packing onto choppers and ending up in HVAC (Heating, ventilation, and air conditioning) accommodation modules where the air is recycled and people live cheek by jowl in shared cabins sometimes with 2 occupants sleeping in the same cabin at the same time, and everyone communally eating in the mess room. Keeping a consistent 2-meter distance on a North Sea installation is impossible while working normally. They can wash their hands till the skin comes off.


Although repeated hydrocarbon releases in recent years raise the suspicion that the North Sea is once more a disaster waiting to happen, no-one can have imagined that the disaster would be Covid 19. The media have to let go of their self-censorship, stop parroting industry PR and calling it news, and actually start investigating what’s going on and ask some pertinent questions and report clearly.


There’s been another mass cull of oil & gas workers in recent weeks. It’s the age-old response of the industry to price downturns. Maybe these guys will turn out to have been the lucky ones.

Solidarity with the Wet’suwet’en!

Sunday 1st March, 2pm – 3pm at the east end of Princes Street, Edinburgh (opposite Balmoral Hotel)

Scot.E3 has called a protest in solidarity with indigenous land defenders in the Wet’suwet’en territory of British Columbia.  They are protesting against the construction of a new gas pipeline across their land.  The construction project breaks the Canadian constitution, however, the protests have been met with harsh repression by Royal Canadian Mounted Police.  There has been solidarity action across Canada.

At a time of climate crisis we should be phasing out oil and gas.  The Wet’suwet’en protesters are in the front line of our common struggle for a sustainable future.

‘It’s a whole damn army up there. They’ve got guns on, they’ve got tactical gear on. They look like they’re ready for war.’
– Wet’suwet’en hereditary Chief Woos (Frank Alec).

Donate to the Unist’ot’en 2020 Legal Fund

More information at the supporter toolkit site 

Canadian Facebook Page

UK Campaign Facebook Page 

At the time of writing the Edinburgh solidarity event has been cohosted by: Friends of the Earth Scotland, Young Friends of the Earth Scotland, People and Planet Edinburgh, rs21 Scotland, Edinburgh Youth Climate Strike and Extinction Rebellion Edinburgh

There is also a protest in London at Canada House on the same day.

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Outcomes from the 20th February organising meeting

What follows is a summary of the main points from the meeting – the full write up of the action points from the meeting is available here. 

Following a discussion in which we shared information on the progress being made in mobilising for COP 26 we agreed to establish a new page on www.scote3.net dedicated to COP 26 and to prioritise a Briefing ‘What is the COP?’  The page is work in progress and ideas for useful content would be really appreciated.  Please email them in.

At the January meeting we had sketched out an ambitious programme of meetings and events around Scotland and on the 20th we made further plans to link up with other groups to take this forward.  We are also submitting an application for grant funding to the Joseph Rowntree Charitable Trust to support the activities that we have planned in the run up to the COP and beyond.

The North Sea Oil and Gas report has had a significant impact and was downloaded 242 times in the first 5 days from its publication.  We are exploring the possibility of a fringe meeting on the report at the STUC conference in April and are keen to promote other opportunities for sharing the information and promoting debate on the process of phasing out North Sea Oil and Gas production.

We have been invited to speak at the Edinburgh City Council Unison AGM in February and the EIS/ULA AGM in March – we are always open to invitations to speak at events and we are working on the development of speakers notes as part of expanding the pool of people who are confident to speak at these events.

We agreed to contact other groups to see if we could hold a solidarity protest in support of the Wet-suwet-en in British Columbia.  This is scheduled for 2pm on Sunday March 1st at the east end of Princes Street – there is a protest in London on the same day.

We also agreed to work with SCND and others to hold discussion meetings based around screenings of the new Lucas Plan film – The Plan.  Details soon.

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Mossmorran

Public Meeting

Friday 1st February, 7pm at Lochgelly Town Hall, Bank Street KY5 9

This is a really important meetingAccording to the Scottish Environmental ProtectionAgency (SEPA) the ExxonMobil plant at Mossmorran in Fife is the second biggest emitter of greenhouse gases in Scotland – only the INEOS complex at Grangemouth is a bigger polluter.  People living in the vicinity of the plant have suffered from excessive flaring and poor air quality for a long time.   The Mossmorran Action group has been campaigning for a resolution to these issues.  George Kerevan has recently written about the ways in which SEPA has failed to respond adequately to their concerns.

The plant is currently being returned to operation after a shut down in August 2019.  Flaring and pollution has been at a high level and yesterday around 170 workers walked off the site to highlight concerns over working conditions and safety.  There needs to urgent action to protect the health and safety of local residents and workers.  But in light of the climate crisis Mossmorran must also be part of a plan for a rapid phased run down of the Scottish petrochemical industry in which the workers are supported in a just transition to new sustainable jobs – part of the just transition that is so urgently needed.

Mossmorran

CC BY SA 3.0  Mossmoran petrochemical plant

Report back from the XR “Oil & Gas” Public Meeting

We recently published the Scot.E3 contribution to the XR “Oil & Gas” Public Meeting held in the Garnethill Multicultural Centre, Glasgow on Saturday January 25.  Thanks to Neil Rothnie for this much more comprehensive report.

Rather than try and summarise the individual contributions by invited speakers and the discussions from the work groups, I’ll try and give a sense of what I thought the meeting achieved. 

It was, it seemed to me, a success.  It was well attended.  Maybe 60 odd people? Men and women were fairly equally represented and there was a wide range of ages amongst those attending, though we were predominantly young.  The speakers were good, the meeting attentive and discussion lively. 

The success of the meeting owes much to the fact that it took place at the end of the month long Rig Rebellion 2 which, receiving considerable media attention, had brought the issue of fossil fuel production in UK into sharp focus. This meant that the struggle to end fossil fuel production on our patch was no longer just a theoretical question.  We are engaged.  This was reflected in the meeting.

A document laying out the basic premises on which the meeting was called had been circulated widely in the movement in Scotland. A “critique” of Rig Rebellion 2 presented by Andrew and a further document for discussion presented by Paul had been received by the facilitators and Paul was able to attend and speak to the documents during group discussion.  All three of these documents are appended.

The meeting was facilitated by Dario Kenner, active in XR Families in London who had travelled up with partner and two toddlers – an expression of seriousness if I ever did see one.  Dario is author of “Carbon Inequality: The role of the richest in climate change” (Routledge, 2019). He’s also co-author with Rupert Read of a memo to XR. I’ve appended it.  Dario’s presence, more than any argument, shouts that the struggle to decarbonise the economy, to take on the polluters, is a UK issue as part of a global issue.  Certainly not a Scottish issue. No more than XR Aberdeen can be expected to shoulder the burden of confronting Big Oil, XR Scotland do not have the resources to take on the UK’s major polluters and chief source of UK’s greenhouse gasses.  We are part of a movement that spans the whole of the UK. 

A very personal message from a rebel “allegedly” involved in the most ambitious of the Rig Rebellion 2 actions was delivered to the meeting. It placed central stage, the issue of civil disobedience and direct action against the polluters, and nailed, as central to the struggle for survival, the end of fossil fuel production.  Our speaker challenged the web of relationships in which oil and gas worker, rebels and the myriad other victims of climate change are caught up, in a toxic system built on misinformation, social conditioning, debt, powerlessness, privilege, excuses and ignorance.  Rig Rebellion 2 means that no longer is the discussion about the future of North Sea oil & gas to be solely the property of industry and Government.  The text will be appended if legal advice allows.

My ideas/comment on what the meeting achieved borrows heavily from the contributions of the two main speakers.  Ryan Morrison from Friends of the Earth Scotland talked us, at breakneck speed, through the FotE sponsored “Sea Change” report , and Pete Cannell from Scot E3 took the discussion on to how we respond to this crisis.  I’ve tried to reflect, as best I could,  what came out of the group discussion I was involved in, and/or had notes from.

The big lie at the centre of today’s, still restricted, public discussion about global warming and species extinction is laid out clearly in Sea Change as presented to the meeting by Ryan. We can’t avoid climate chaos without tackling global warming.  We can’t stay “well below” 2 degrees of warming without decarbonising the global economy.  That is, not without the planned rundown of the source of greenhouse gasses – fossil fuel production. (North Sea oil & gas on our patch).  And we can’t decarbonise the economy by following the “magic thinking” of industry and Government (Pete Cannell) who want business as usual and the maximum economic recovery of every barrel of oil & gas under the North Sea.  20 billion barrels more is the industry’s guesstimate. This gives us warning of what the industry plan is globally.

The issue of a “just transition” is central to the struggle to end fossil fuel production, and it’s not just about providing well paid jobs in renewables for workers who stand to lose well paid jobs in oil & gas, important as this is.  Just transition is seen very differently in the global south (Ryan) and when we get the chance to explore this when activists from throughout the global south descend on Glasgow for COP26 later this year, we can show no more solidarity than be seen to be fighting to end to fossil fuel production in the global north starting with on our own patch, the North Sea.

The meeting took the discussion forward from the understanding that the Sea Change report gives us.  Direct action is crucial in applying pressure on industry and Government and as Rig Rebellion 2 did, bringing the issue centre stage.  But it is not in itself enough if the mass of people only look on – scared.  The ideas of a just transition must become the common sense of society. (Pete)  But to do that the ideas need to be sharply defined, not just the easy ones like why the oil & gas needs to stay in the ground, but those that confront the smoke and mirrors employed by industry and Government to justify business as usual.  We need to understand carbon capture and storage (discussed by Ryan).  If, as widely suspected, it cannot be delivered at anything like the  scale required, then we need to be able to expose this with thoroughly researched materials and in a clear and concise fashion.

Multi billion pound taxpayer subsidies (our money) is handed to the industry by a Government whose ear they have.  The threat of job losses in oil & gas that the industry say would accompany the ending of such subsidies and the ludicrous industry claim that they are ready to deliver net zero as a part of the solution as they continue business as usual. (Ryan). Our answer is the massive expansion of renewables during (and financed by) the end to subsidies to the oil & gas, and the planned run down of the industry starting now.  This could leave us with a world class green energy industry to replace oil & gas.  Otherwise where would we be in 2050 if this ludicrous plan for “maximum economic recovery” is allowed to proceed.  Apart from fire fighting the results of another 30 years of full on fossil fuel greenhouse gas emissions, we’d still have a reliance on oil & gas from wherever, when the North Sea fields have been pumped dry.

The weakness in the regulatory regime that encourages the misuse of migrant labour who are paid a fraction of the UK minimum wage in the offshore renewables industry was noted. (Ryan)  A practice they no doubt learned from offshore oil decommissioning.  The Sea Change report puts trade union organisation at the centre of a just transition to renewables, though this, given the state of trade unionism on the North Sea, is problematic.

When we confront Big Oil in Dundee and Aberdeen as we have begun to do, who are we actually speaking to?  We challenge the industry’s vice grip on a media traditionally prepared to repeat any old nonsense that flows from oil company PR.  But we’re also speaking to wider society.  Those working in the industry might be the last people to be convinced, but they need to know that the energy transition is inevitable one way or another, and that their intervention will be crucial in determining whether it is to be fair to them or not.  They also need to know they do not have a veto.  All our grandchildren must have a future.

The discussion is impossible for me to record in any readable form.  I’m here setting down some of the ideas that emerged from the contributions of our speakers and from the workgroups I have notes from.  This is obviously not definitive and my be controversial.  It’s not the final say and can only at best provide a framework for further more concrete planning if, as I hope, an Oil & Gas Working Group can be set up to carry forward what the Rig Rebellions have started.

Although direct action can’t stop oil & gas production, it can identify Big Oil as the problem and can generate press interest and effectively open the issues to public scrutiny.  Maybe we can call our self Big Oil’s Big Nuisance.  That’s a joke!  But not for the industry who spend big keeping everyone “on message”.

Only as the role fossil fuels plays in generating greenhouse gasses and climate change becomes “common sense” in society (throughout the UK) can pressure be progressively brought to bear on Government and industry and finance to begin the mass expansion of renewable energy in sync with the rundown of oil & gas production.

The voice of even a small minority of oil & gas workers prepared to speak out on the issue of just transition and a future for their grandchildren would have a powerful effect and therefore outreach amongst this group is particularly important.  But whatever they want to say, the workforce must be encouraged to say it.  It is the workforce who will be forced to transition sooner or later, in a planned or a chaotic way.  They need to intervene if it is going to be anything like fair to them.  The last time there was an energy transition the coal miners and there families and communities, were shafted.

Amongst the citizens of Aberdeen, and amongst oil & gas workers, is where there is likely to be maximum pushback against these ideas, and has to be where we do our most serious listening. They will tell us where our arguments are weakest. Aberdeen also provides us with potential allies amongst those sections of the population who live amongst oil wealth and the high prices it generates, but who are living without oil wages.  Making common purpose with them in the Oil Capital of Europe will bring the spotlight on the iniquity of the system and the nature of Big Oil. The transition is inevitable.  But the industry, left to its own devices, will leave that city with little of value.  What it threatens to leave society with is mass extinction of species

Research into carbon capture and storage, and hydrogen production, pushed as solutions to global warming needs to be accessed and turned into outreach material. 

Imaginative materials allowing us to interact with citizens and oil & gas workers will be needed. 

Media penetration will be important.

Should it be decided that an Oil & Gas Working Group be established to take this discussion further and make concrete plans, I think one of it’s first tasks will be how it can penetrate XR UK Circles, and challenge them to take responsibility for encouraging the whole movement to see ending oil & gas production from the under North Sea, and a major upscaling of renewable energy production, as a major strategical aim for the movement. This will need the whole movement with all its skills and operating at its regenerative best.  UK’s greenhouse gas reserves/emissions are not a Scottish issue. XR UK must be challenged to encourage a movement wide campaign.

None of this is possible unless the necessity becomes “common sense”.  Outreach is fundamental.

This is the year of COP26 in Glasgow.  Let us show our solidarity with the activists from the Global South who come to Scotland.  Let them see our determination to end fossil fuel production in the UK.  We can organise transport and hospitality for Nigerian and other activists from around the world who may want to share our action and give their own message to Shell (and others) in Aberdeen, one of the the Oil Capitals of the Global North. 

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Image: Aberdeen Harbour  CC0 from Pixabay.com

The case against new developments in the North Sea

The North Sea hydrocarbon reserves are among the most expensive and most technically difficult in the world. They are also short-medium life reserves compared with larger landmass oilfields.

Anticipating these disincentives, the incoming Labour governments of 1964-69 and 1974-79 with the state-owned BNOC and British Gas companies decided to make them more attractive for licenced operators by zero valuing to hydrocarbon assets thus avoiding the usual auction bidding process that would entail up-front purchase and risk acceptance by prospective extraction companies.

Then taxation rates on oil/gas extracted were relaxed to a very minimum as an incentive subsidy on future exploration and extraction activities. These arrangements- along with wholesale privatisation in 1980- meant that high profits were assured at low taxation rates and with the burden of risk and asset write-off being shouldered entirely by the taxpayer.

Also, these arrangements allowed for profligate extraction with value worthless assets being frittered away when the operational conditions got too difficult.

Unlike Norway– and many other oil and gas nation-states, no sovereign wealth fund was created on the back of oil/gas profit taxes- which in the case of Norway, has resulted in the biggest such fund for social welfare and public infrastructure in the world. So with Scottish territorial waters accounting for over 70% of UK oil and gas fields, little in the way- other than employment- of benefit has resulted/been accrued for the Scottish people.

Now Climate Change imperatives are bearing-down on all countries signed up to the IPOCC targets on carbon emissions targets- but yet ALL reliable sources producing estimates on oil (in particular) output and demand/consumption set targets well above limits required to bring about anything like a global temperature slow-down.

Also, the estimates for Scottish offshore- and fracked gas onshore- extraction fly clearly in the face of the Scottish government targets for a green neutral to zero-economy by 2030.

And also, also, it is clear that despite over 40 years of offshore hydrocarbon extraction- the living standards of the Scottish population- already low in comparison with much of the EU as well as many regions of the UK as a whole- have continued to fall and have continued downwards while the offshore company profits have continued upwards.  Essentially we have had subsidies and tax breaks for the rich oil companies and merciless market rigour for the poorest consumers.

Global oil prices (to which gas is pegged) continue to be volatile- but with an OPEC cartel of some 20 countries which are hydrocarbon exporting economic mono-cultures- future price wars- like the one in 2014 which saw 75,000 job losses in the North Sea- make any future dependence on the industry both a climate change folly and an economically ruinous strategy.

Oil and gas over-production is already upon us and any future development- such as the West of Shetland fields- is both unsustainable AND a waste of opportunities to create a green and socially equitable political economy for Scotland.

Dr Brian Parkin, Senior research fellow (Energy Economics), Leeds University

February 2020.

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