In 2015 the UK committed to a legally binding target of limiting global warming to 1.5 degrees.
However, these aims are incompatible with the continued operation of the oil machine and a UK government policy that continues to grant new licences for drilling and exploration in the North Sea. What is at the root of this contradictory approach?
Writer, activist and naturalist James Marriott describes the UK as one vast oil machine. The point is both literal and figurative — the Forties pipeline system, which connects oil platforms far out in the North Sea to facilities onshore, is one of the largest machines in Europe.
But the scale of the physical infrastructure that is knitted into the seas and the soil has its equivalent in the pervasive role that oil plays in the UK’s economic and political life.
For environmental lawyer Tessa Khan, the oil and gas sector has long enjoyed a privileged status because two of the world’s oil supermajors – BP and Shell – are headquartered in Britain, and both were founded in the 1900s:
“They are companies that have been incredibly powerful industrial and economic players in the British economy and that is part of what has given them the level of access and influence that they still exercise in many ways in the UK. That is why we have to be so clear about the fact that this is an industry of the past and those companies no longer deserve the seat at the table that they have had for so many decades.”
While BP and Shell have begun to pivot away from their North Sea oil operations, their inordinate power remains significant in the upper echelons of British society and government. There is a particularly close relationship between the oil machine and the UK treasury, Tessa argues:
“These companies have access to policy makers that people who are arguably trying to act in the public interest rather than in the private interest do. [...] We’ve given them money to extract oil and gas and I think that that’s something that could only come about if there was a disproportionate amount of influence that those companies exercised over policy making because it’s certainly not in the public interest.”
Tessa’s point is echoed by economist Ann Pettifor, who has been lauded for predicting the financial crash of 2008. For Ann, the aspect of the oil machine’s power is deeply damaging for the rest of society:
“It’s pretty much a corrupt relationship between a powerful sector that has lobbied government to reduce taxes both powerful North Sea oil sector but also a powerful financial sector that has more or less bought politicians, especially in the United States, and corrupted the process, the democratic process in order to ensure that they, unlike you and I, don’t pay taxes.”
Thanks to its privileged status, the oil machine operates largely on terms that it sets itself. This partly explains why the UK claims to be a leader on climate change but actually breaches its own legal climate commitments in practice:
“The UK has a policy of maximising economic recovery of offshore oil and gas and that is completely inconsistent with the climate commitments it’s made internationally, it’s very difficult to square with the UK’s own net zero agenda. And given the UK’s historic responsibility for the climate crisis, I think it’s critical that the UK shows leadership on this issue.”
While the value of the oil machine to the UK economy is significant it also serves as a mechanism for syphoning taxes and profits overseas. For Ann, this represents a deep contradiction in its own terms: who questions the extent to which the current regulatory regime is actually able to exert control over the industry?
“North Sea oil is a really important and valuable asset for the British government and for the British economy, but it has never occurred to the government that we the public, the people should own this valuable asset that is fundamental to the health of our economy. Instead we are very happy for it to be owned by international financial institutions that operate beyond the regulatory framework of the British state, and the government is happy for that to happen, and it’s disadvantaged by that process, because the capital gains are shifted away and abroad. Secondly, these institutions cannot be taxed by a British government, they don’t pay the level of taxes, the share of taxes of their income and their capital gains that you and I pay of our income.”
Ann wants a Green New Deal instead, this means public ownership of the oil machine:
“So if we want to save ourselves, if we want to save human civilisation, the government has to get a grip and has to take over and manage these resources in the public interest and not in the interest of shareholders or the one percent.”
The policy landscape may be changing — with the U.S recently reversing decades of economic deregulation in order to develop new green industries — with $369 billion earmarked to tackle climate change in the landmark Inflation Reduction Act.
The US is partly making this move in line with its long-term strategic aim of achieving energy security and lowering its reliance on oil from the Middle East and renewable components from East Asia.
But in the UK there remains a qualitative difference in the new rush for expanding the oil machine that is not commonly understood.
As the war in Ukraine threatens the UK’s own energy security by inflating international gas prices, it’s important to remember that most of the oil and gas in the North Sea is sold on international markets rather than used domestically. As James explains:
“There has long been an argument that Britain depends upon the North Sea for the oil that it uses. In the mid 1980s, almost 100% of the oil that was produced in the UK sector was being refined and utilised onshore in the UK. Now two thirds of the oil that is produced is exported abroad to countries such as China, or the US, even before it is utilised in this country. It is never used in refineries – it's exported directly internationally.”
The energy crisis and wider global insecurity represents an important opportunity to think about ownership of these assets, which leads to James to ask:
“How much control do we as British citizens have over the future of the North Sea, how much control do we have that’s actually been sold off to national companies, or companies that are owned by foreign states?”