Challenging Big Oil in the North Sea

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Tessa Khan, the executive director of Uplift, talks to Critical Takes:

• Why the United Kingdom matters to the global energy transition
• The political pushback against "net zero" (from 04:46)
• Public opinion wants more climate action (from 08:20)
• The legal fight to stop Rosebank (from 10:49)
• What next? Reasons to be optimistic (from 15:22)

 

Here is a transcript, edited for length and clarity.

Diarmid:

Hello, this is Critical Takes on Corporate Power and I'm Diarmid O’Sullivan. Fossil fuels have played a huge part in the history of the United Kingdom from the Industrial Revolution to the British Empire.

Indeed, two of the world's biggest oil companies, BP and Shell are based here in London. Now we can see that the end of the fossil fuel era is in sight, but oil companies and their sympathizers in the UK haven't given up the fight.

So I'm delighted to be talking to Tessa Khan. Tessa is the director of uplift, an NGO, which is working for a just transition in the UK and has already won a major court victory against the expansion of oil and gas production in the North Sea.

Tessa, thanks very much for making time to talk. So when was Uplift it set up, and what is it intending to do?

 

Tessa:

I established Uplift at the start of 2021, and the impetus for that was really a recognition that in a country like the UK and indeed across most of Europe, the effort to dispatch coal as a source of energy … was a fight that campaigners were winning.

But the next frontier seemed to one that people weren't really that focussed on, which is oil and gas. A country like the UK, which in 2021 prided itself on … the speed at which it was decarbonizing its domestic power supply, was and still is extracting about a million barrels of oil and gas a day from the North Sea.

The other thing that crystallized in 2021 was an understanding among experts, including the International Energy Agency and various UN agencies that our existing fossil fuel reserves, if burned, will take us past internationally agreed climate limits.

So what became very clear was that if we are serious about respecting that limit, then we have to start managing a decline away from oil and gas production.

The UK is the second largest oil and gas producer in Europe and it also is a country that has some of the best industrial opportunities for transitioning its oil and gas workforce.

So, if there was ever going to be a country that got this transition right and that had the opportunities to do so, it's the UK and also ought to be the UK because of its [historic] responsibility for the climate crisis.

Uplift’s mission is really to support the UK to be a global first mover in shifting away from oil and gas production and crucially in ensuring that the transition is just for the workforce in the oil and gas sector and for the communities that have historically had ties to the industry.

 

Diarmid:

Now, the North Sea's actually in decline, isn't it? So in the normal course of things, as it were, oil and gas production would be tailing off there anyway pretty soon, wouldn't it?

 

Tessa:

Yeah, that's right. And in fact, that's been the case for a couple of decades.

The UK's oil and gas production from the North Sea peaked a couple of decades ago, but because of the political power and the economic power of the oil and gas industry, they always find ways to get policy decisions made: primarily tax breaks that have increased the profitability of oil and gas extraction even in the face of an increasingly difficult geological reality in terms of extracting oil and gas.

The UK, unbelievably, in about 2019 was assessed to be the most profitable basin in the world for offshore oil and gas extraction despite that geological decline. And that is largely because of the tax regime that the industry has lobbied for here.

So I don't think we can take it for granted that just because the basin is declining, that it will actually decline in line with climate limits. And as I said, at this point, that means that we can't have any new oil or gas fields.

 

Diarmid:

Let's talk about the current political situation in the UK.

The current government came to power last year and has promised not to issue new oil and gas licenses. But recently we've been seeing that decision coming under a lot of political pressure, not just from the industry but from opposition politicians, from the right wing media and even from within the ruling Labour party.

So do you think that the government will stick by that policy?

 

Tessa:

Well, that is the million dollar question. We are working quite hard to try to influence the government to maintain its position to end new exploration and licensing.

I think there is a bad faith argument against that position and there's a more good faith one. The bad faith argument is really the one being driven by the oil and gas industry, you know, in whose commercial interest it obviously is to continue with new licensing.

Then there are parties on the right of British politics and their champions in the media here who are using the Labour government's position on North Sea oil and gas as a key flash point in the broader culture war that they're trying to ferment around climate policy in the UK.

And then there is, I think, a more good faith concern coming from, for example, trade unions and some of the communities in Scotland in particular, which is where the industry has been concentrated. [There is] a concern that in light of the very unjust transition that happened away from coal mining in the UK, that the oil and gas workforce isn't being given the support that it needs to transition into the green jobs that have been promised for years now, but which have failed to materialise.

For example, you know the UK is one of the biggest offshore wind markets in the world and is one of the leading countries in terms of the deployment of offshore wind. But that's failed to translate into large numbers of domestic jobs because most of the manufacturing for that industry happens overseas, and the UK government hasn't done enough to incentivize domestic manufacturing of the components needed for offshore wind, which is where most of the employment is generated.

I think those are the different forces that the UK government is trying to grapple with. But again, I would say that we're on very firm ground from other respects such as energy security and energy affordability, which are also arguments that are often deployed against the government's licensing position

This isn't oil and gas that stays in the UK. It goes to whichever buyer can pay the highest price for it, especially oil. The oil just goes onto tankers, which will then go to whichever part of the world they can get the best price for. So 80 per cent of the UK's oil from the North Sea ends up being exported and a significant chunk of the gas does as well.

But you know, the real crisis that people across the UK have been facing in recent years, particularly following Russia's invasion of Ukraine, and the way that that put a squeeze on global gas supply and gas prices, is affordability. And that is something that more North Sea and gas production absolutely won't affect.

The oil and gas industry's champions deploy [it] as a intuitive talking point that the more we produce here, the cheaper it's going to get. But that just simply isn't the case.

 

Diarmid:

Where do you think public opinion is in the UK at the moment?

 

Tessa:

Well, it's interesting. We've had local elections here that have led to the election of hundreds of councillors from the Reform UK party, as well as an MP and a mayor.

[Editor’s note: Reform is a rightwing nationalist party which is loudly climate-sceptical].

There's been lots of polling done to really illustrate why it is that people vote the way they do in the UK. And the one thing that seems to bind voters across demographics, across party political preferences together is a concern about climate change.

The level of public support for action on climate change in the UK has stayed quite steady over the last five years, even in the face of increasing culture-war style attacks on climate change. The other thing that we know from polling that we and others have conducted is that the UK public associates renewable energy with cheaper energy and so they really don't see more oil and gas extraction as being something that helps with the cost of living.

I think the oil and gas industry's mega profits, in 2022 in particular after the spike in global gas prices, really put them offside. Even with a Conservative government in place in 2022, we together with lots of other organizations across civil society successfully lobbied for a windfall tax, you know, on a sector that … has benefited from some of the lowest headline tax rates of any oil and gas industry in the world.

So the fact that the government was willing to impose a windfall tax I think is indicative of just how unpopular the industry is with the UK public.

 

Diarmid:

Now, tell us about where Rosebank fits into all of this, because that clearly has been and is going to be a very big story.

 

Tessa:

So the Rosebank oil field is the largest undeveloped oil field in the UK. Its reserves have 500 million barrels equivalent of oil and gas. It's west of Shetland, technically in the North Atlantic. It's a pretty deep water field, and the proposal to develop it is coming from Equinor, which is the Norwegian state owned oil company and another company called Ithaca Energy.

And it is, in Uplift’s view, really a symbol of everything that's wrong with energy policy in the UK. It's a massive oil field in the middle of a climate crisis. It’s oil for export, , so it’s doing nothing to support the UK's energy security imperatives or energy affordability concerns.

The development of Rosebank would entail the UK government giving Equinor billions of pounds in tax breaks, so the UK public would end up effectively covering the cost of about 84 per cent of the development of the field.

 

Diarmid:

We should point out that Equinor is Norway's state oil company. So we would be subsidizing more profits for Norway.

 

Tessa:

Yeah, exactly. The UK government could take a position [against developing Rosebank] which has very little downside because it's doing very little for the British public interest, but it does allow [the government] to send a very clear signal, especially in light of its ambitions to get to 100 per cent clean power in the UK by 2030, and all of the investment it wants to attract.

On the other side of the coin, [the government] has an opportunity to send a real signal in rejecting that field that it sees clean energy and not oil and gas as where the UK's future lies.

So there has been a huge amount of public opposition to the Rosebank oil field. There have been tens of thousands of people who have signed petitions, in fact together with some of our partners we submitted just last week a petition to Downing Street [the Prime Minister's office] that had a million signatories on it, calling for an end to new oil and gas fields in the UK.

And Uplift, together with Greenpeace UK, also successfully, legally challenged the decision by the former UK government [to let Rosebank go ahead].

 

Diarmid:

Why did the court rule in favour of you rather than in favour of the government?

 

Tessa:

So among the other astonishing concessions that the oil and gas industry has managed to extract over the years is that when the government does an environmental impact assessment of a new oil and gas project it hasn’t, up until very recently, needed to take into account the environmental impact of burning the oil and gas in that project. It simply looks at the carbon emissions created by extracting the oil and gas, which, as you can imagine, is a tiny fraction of the overall climate impact of new oil and gas fields.

You know, we are not arguing against new oil and gas fields because of the emissions created by developing those fields. We're arguing against them because of the emissions created by combusting the oil and gas in those fields, which is the whole point of extracting that oil and gas. And the UK courts have recently recognized that actually it's not reasonable for an environmental impact assessment for an oil and gas project to emit a single biggest environmental impact of those projects.

Rosebank's assessment was undertaken without taking to account those emissions, which are known as Scope Three or downstream emissions. So the Scottish Court of Session, in February this year, agreed with us that that environmental impact assessment was not done properly, and therefore the decision to give consent to that field was unlawful.

 

Diarmid:

So this is potentially a very, very big deal. What will happen next?

 

Tessa:

The UK government has rightly undertaken to rewrite the guidance for environmental impact assessments to take into account the court's view that Scope Three emissions should be taken into account.

I should say that was a position that the UK Supreme Court actually took last year. A challenge brought by a campaigner, Sarah Finch, against an onshore oil and gas well in the UK. So the court in our case, was simply implementing the Supreme Court's findings in Sarah Finch's case.

So post those decisions, the UK government has undertaken to rewrite how environmental impact assessments are conducted. They've said they will publish that new guidance in the next few months. Once that happens, we fully expect that Equinor and Ithaca Energy will reapply for the development consent for Rosebank.

In our view, there's no credible environmental assessment of Rosebank that takes into account its downstream emissions that could reconcile that impact with the UK's climate targets and the climate targets that we've agreed to globally.

But the government is under a huge amount of pressure to provide, as always, some compromise that the industry can get behind. So we're gearing up for another fight.

 

Diarmid:

Do you expect to be back in the courts? Are we talking mass demonstrations?

 

Tessa:

You know, even though I spent many years working actively as a lawyer, we don't love being in court. We'd really rather that the government makes the right decision at the outset and saves everyone just the stress and cost of going to court.

So we're really hoping that the arguments that Uplift and all of our partners can make publicly between now and that decision being made are persuasive enough for the government to do the right thing.

I think the stakes are quite high. The terrain is more difficult, I would say, than it has been in the UK recently, partly because of the influence of Reform UK on the Labour Party's thinking. It’s been dragging the party to the right, I think it's fair to say, and [the Labour government] may think that taking a decision that's pro oil and gas is one that will win it more votes, even though I think that's misconceived given all of the polling.

We also know that this is a government that has put growth at the top of its political agenda and [it means] saying no to a project that would result in short-term investment in the UK and a handful of jobs, albeit nothing on the scale of the number of jobs that would be created by proper investment in domestic renewable energy generation.

All of those things are considerations that we will have to speak to over the next few months. And I'm sure there will be activity on the streets,  just to reassure you about that.

 

Diarmid:

Oh, that's good. The weather should be nice by then. So, to the very final question I always ask people. Are you feeling optimistic? Do you think this be won?

 

Tessa:

I think it can be. Insofar as the UK is really the best possible candidate for a transition away from oil and gas because of the decline in the basin, because of the alternative jobs that are available, because of the fact that people in the UK do take climate change seriously.

So I really am hopeful. I think that in a small way, we may also be aided by the Trump Administration's very extreme position on this agenda … And people here are quite hostile to the Trump administration. I think what the Trump administration has done shows how little political capital there is in a full blown war on climate change and a war on a transition to renewable energy.

And I think people understand that in the uk renewable energy really is one of the few areas in which we have a genuine industrial competitive advantage just because the North Sea is one of the windiest, shallowest bits of sea in the world, which makes it ideal for or offshore wind generation. So that's not to understate, you know, the very challenging political moment that we're in and the power of the industry that we're up against. But yeah, I think there's the reason to be optimistic.

 

This is the end of the transcript.