SEA CHANGE CLIMATE EMERGENCY, JOBS AND MANAGING THE PHASE-OUT OF UK OIL AND GAS EXTRACTION - Oil Change International
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SEA CHANGE
CLIMATE EMERGENCY, JOBS AND
MANAGING THE PHASE-OUT OF UK
OIL AND GAS EXTRACTION
May 2019
Endorsed by
Acknowledgments This report was researched and written by Greg Muttitt, Anna Markova and Matthew Crighton, with additional contributions by Simon Pirani, Hannah McKinnon and Mary Church. It is co-published by Platform, Oil Change International and Friends of the Earth Scotland. The report is endorsed by Common Weal, Friends of the Earth (England, Wales & Northern Ireland), Global Witness and Greener Jobs Alliance Thanks to Transition Economics for input on jobs modelling. The authors are grateful for feedback from the following reviewers: Erik Dalhuijsen, Richard Dixon, Steve Doran, Alex Doukas, Sampson Low, Matt Maiorana, Adam McGibbon, Stuart McWilliam, Jenny Patient, Philip Pearson, David Powell, Gareth Redmond‑King, Louise Rouse, Kelly Trout, David Turnbull and Shelagh Whitley. Design: paul@hellopaul.com Copyedit: Gloria Dawson May 2019 Cover photo: Joe deSousa / Unsplash Back photo: Simon Butterworth / Alamy Platform is a London-based organisation that conducts research, education, and campaigns towards a just future beyond fossil fuels. c/o Oxford House Derbyshire Street Bethnal Green London, E2 6HG https://platformlondon.org Oil Change International is a research, communications and advocacy organization focused on exposing the true costs of fossil fuels and facilitating the coming transition towards clean energy. 714 G Street SE Washington, DC 20003 USA http://www.priceofoil.org Friends of the Earth Scotland campaigns for a world where everyone can enjoy a healthy environment and a fair share of the earth’s resources. Climate change is the greatest threat to this aim, which is why we’re calling for a Just Transition to a 100% renewable, nuclear-free, zero- fossil-fuel Scotland. 5 Rose Street Edinburgh, EH2 2PR https://foe.scot/ Construction workers on the foreshore of the Solway Firth near Workington, Cumbria. ©Avalon/Construction Photography/Alamy Stock Photo
3
KEY FINDINGS
This report shows that a well-managed This report examines the future of UK Given the tightness of remaining carbon
energy transformation based on Just offshore oil and gas extraction in relation to budgets, each new license, permit or tax
Transition principles can meet UK climate climate change and employment. It finds that: break for oil and gas pushes the UK further
commitments while protecting livelihoods ^ The UK’s 5.7 billion barrels of oil towards the deferred collapse path. This
and economic well-being, provided that and gas in already-operating oil and report however recommends the second
the right policies are adopted, and that gas fields will exceed the UK’s share course; it shows that energy transformation
the affected workers, trade unions and in relation to Paris climate goals - can meet UK climate commitments while
communities are able to effectively guide whereas industry and government aim protecting livelihoods and economic well-
these policies. to extract 20 billion barrels; being, if the right policies are adopted.
^ Recent subsidies for oil and gas
Global commitments on climate change, extraction will add twice as much Local manufacturing and workforce
enshrined in the 2015 Paris Agreement carbon to the atmosphere as the participation therefore need to guide new
on climate change, require the rapid phase-out of coal power saves; approaches to economic development,
transformation of energy systems, ^ Given the right policies, job creation industrial policy and ownership, together
replacing fossil fuels with energy from in clean energy industries will exceed with stronger trade union rights for workers
renewable sources. affected oil and gas jobs more than affected by energy transitions, including
threefold. union recognition and sectoral bargaining to
Both the UK and devolved Scottish ensure acceptable norms on pay and working
Governments have introduced pioneering In light of these findings, the UK and Scottish conditions.
Climate Change Acts and are phasing out Governments face a choice between two
or have already phased out coal power. In pathways that stay within the Paris climate The report recommends that the UK and
contrast, carbon dioxide emissions from limits: Scottish Governments:
burning of oil and gas have fallen just 3% 1. Deferred collapse: continue to pursue ^ Stop issuing licenses and permits
since 1990. Both governments’ policy on maximum extraction by subsidising for new oil and gas exploration
oil and gas is to enable the greatest possible companies and encouraging them to shed and development, and revoke
volume to be extracted. This report finds that workers, until worsening climate impacts undeveloped licenses;
policy position incompatible with the UK’s force rapid action to cut emissions ^ Rapidly phase out all subsidies for
and Scotland’s climate commitments. globally; the UK oil industry collapses, oil and gas extraction, including tax
pushing many workers out of work in a breaks, and redirect them to fund a
The UK offshore oil industry is a significant short space of time. Or: Just Transition;
employer, with about 30,000 direct workers 2. Managed transition: stop approving and ^ Enable rapid building of the clean
and over 70,000 more in the domestic licensing new oil and gas projects, begin energy industry through fiscal and
supply chain.1 However, as the industry a phase-out of extraction and a Just policy support to at least the extent
increases automation and tries to cut costs, Transition for workers and communities, they have provided to the oil industry,
it has made many job cuts and put pressure negotiated with trade unions and local including inward investment in affected
on working conditions. Unfortunately, leaders, and in line with climate change regions and communities;
failures of energy transition policy have goals, while building quality jobs in a clean ^ Open formal consultations with trade
meant the development of the renewable energy economy. unions to develop and implement a Just
energy sector over the last 20 years has not Transition strategy for oil-dependent
translated into significant UK job creation, regions and communities.
as a high proportion of manufacturing jobs
in the renewables industry have been lost
to overseas competitors. Furthermore,
the growing offshore wind power sector
is characterised by a lack of trade union
recognition and challenging working
conditions.
4
SUMMARY
CLIMATE LIMITS: UK OIL AND already invested and forcing a deferred Extraction is currently growing, with major
GAS VS THE PARIS GOALS collapse of fossil fuel extraction at the new projects coming on stream (such as BP’s
Using data sources from the energy industry expense of workers and communities. Clair Ridge) and new discoveries (such as
and the Intergovernmental Panel on Climate Total’s Glendronach field). In 2019, the UK
Change (IPCC), research by Oil Change The alternative to such socially damaging Government plans to complete the UK’s 31st
International (OCI) has found that carbon and costly outcomes is a structured and licensing round and launch a 32nd licensing
dioxide emissions from the oil, gas and planned transition, phasing out oil and gas round, to encourage yet more exploration.
coal in already-operating fields and mines extraction while replacing it with clean
globally will push the world far beyond 1.5°C energy to power our economy. And while Key finding: The UK’s 5.7 billion barrels
of warming and will exhaust a 2°C carbon this process must occur worldwide, the of oil and gas in already-operating
budget, as shown in Figure ES-1. first steps should be taken in countries fields will exceed the UK’s share in
that have the greatest resources to enable relation to the Paris climate goals -
These developed reserves exist where the transition. As well as in the UK, climate whereas industry and government aim
infrastructure has already been built, capital justice advocates are actively calling for an to extract 20 billion barrels.
invested and workers employed for long- end to new oil and gas development as part
term operating jobs. Because of the problem of a managed transition in Norway, Canada This report finds that:
of “carbon lock-in”, the more fossil fuel and the United States; in all three cases, the ^ Opening new fields would nearly
reserves that are developed, the harder it calls have entered the political debate. In the quadruple the emissions from UK oil
will be to achieve the Paris goals. words of the Lofoten Declaration, signed and gas. These new fields are additional
by over 500 civil society organisations, to the UK’s developed reserves in Figure
Any new oil or gas field developed in the “It is the urgent responsibility and moral ES-1 below. These emissions are shown
UK or elsewhere will add to the left-hand obligation of wealthy fossil fuel producers over time in figure ES-2 overleaf.
column in Figure ES-1. Barring a dramatic to lead in putting an end to fossil fuel ^ If all countries took the same
change in the prospects of carbon development and to manage the decline of approach as the UK – of phasing out
sequestration technologies, this can only existing production.”3 coal power while maximising oil and
lead to two possibilities: either the newly gas extraction – resulting warming
developed reserves are fully extracted and However, the policy of the UK and Scottish would significantly exceed 2°C,
burned, helping push the world further Governments is to maximise extraction of oil moving dangerously beyond the Paris
beyond climate limits, or some portion gets and gas, by continuing to support exploration goals (see Figure ES-3). This is because
left in the ground, stranding the capital and new oil extraction infrastructure. the additional oil and gas emissions far
exceed the savings from coal.
Figure ES-1: Carbon dioxide emissions from developed global fossil fuel reserves, compared to Paris goals carbon budgets
1200
2°C
PARIS GOALS
1000
Coal
800
DEVELOPED
Gt CO2
600 RESERVES Gas
CARBON BUDGET
1.5°C
400
Oil
CARBON BUDGET
200
Land use
change Cement
0
Emissions 1.5°C (50% chance) 2°C (66% chance)
Sources: Rystad UCube, International Energy Agency (IEA), World Energy Council, Intergovernmental Panel on Climate Change (IPCC), OCI analysis2
KEY RECOMMENDATIONS facilities should be phased out early UK Government’s efforts to encourage 5
Based on these findings, we recommend that: through a Just Transition, in order to onshore extraction in England through
^ The UK should cancel the current and contribute to the achievement of the hydraulic fracturing (fracking). The Scottish
any future oil and gas licensing rounds, Paris goals. Government has declared an indefinite
and stop issuing permits for new fossil moratorium on fracking; the Welsh
fuel exploration and development; While this report focuses on the impacts Government has stated it will not issue any
^ The UK should revoke undeveloped of offshore UK oil and gas extraction, licenses for fracking.
licenses and review whether existing these conclusions apply equally to the
Figure ES-2: Projected carbon dioxide emissions from UK oil and gas, 2018-50
350
Producing Under development Undeveloped Undiscovered
300
250
200
Mt CO 2
150
100
50
0
2020 2025 2030 2035 2040 2045 2050
Sources: Rystad UCube, IPCC, OCI analysis
Figure ES-3: If all countries took the same approach as the UK: The impact on cumulative global carbon dioxide emissions from fossil fuels
if all countries phase out coal while maximising oil and gas extraction
Specifically, if countries: (i) phase out coal power using the timeline of the Powering Past Coal Alliance; (ii) phase out non-power uses of coal by 2050; (iii)
approve all new oil and gas fields until 2030; and (iv) provide additional subsidies to keep those fields profitable whenever the oil price falls
1,400
1,200
EMISSIONS
INCREASE
Gas
1,000
Gas
800
Gt CO2
600 Oil
Maximise oil & gas
(Approve all fields till 2030 then sustain) Oil
400
Phase out coal
(Powering Past Coal Alliance timeline)
200 Coal
Coal
0
Developed reserves UK approach applied globally
Sources: Rystad UCube, IEA, World Energy Council, IPCC, OCI analysis4
6 Figure ES-4: The top ten takers: Total net payments to government by selected oil and gas companies, calendar years 2015-17
800
TAXES
600
400
200
£ million
0
-200
-400
-600
SUBSIDIES
-800
Source: UK Extractive Industries Transparency Initiative (EITI) Multi Stakeholder Group7
Figure ES-5: Effect on 2016-2050 carbon emissions of UK support and subsidies for oil and gas extraction, vs UK coal phase-out
3,000
2,500
FURTHER
2,000
SUBSIDIES
+
1,500 SUPPORT
(Govt ambition)
Mt CO 2
1,000
SUBSIDIES
+
500 SUPPORT
SINCE 2014
0
COAL PHASE-OUT
-500
-1,000
Sources: Rystad UCube, Oil and Gas Authority (OGA), Department for Business, Energy & Industrial Strategy (BEIS), IPCC9
SUBSIDIES FOR OIL AND of the ten were profitable during the period. introduced since 2014 will increase future
GAS EXTRACTION Both BP and ExxonMobil made more than extraction by more than 30%.8 The carbon
In pursuit of its policy of maximising oil and £1 billion of profits from UK extraction during dioxide emissions from that additional oil
gas extraction, the UK Government has that period.6 and gas are already twice what will be saved
given generous tax giveaways to oil and gas over that period by the UK phase-out of coal
companies. In the tax years 2015-16 and Key finding: Recent subsidies to oil power (see Figure ES-5). Through additional
2016-17, the Treasury gave more money and gas extraction will add twice as measures to achieve its “Vision 2035”, the
to oil companies than it took from them much carbon to the atmosphere as government hopes to double the impact of
in taxes.a5Figure ES-4 shows the top ten the phase-out of coal power saves. those recent subsidies.
beneficiary companies, all of which received
net handouts during 2015 to 2017. This is The UK Government estimates that the oil
not because they made losses: at least five and gas subsidies and support that it has
a In 2017-18, tax revenues went back into the black (to £1.2 billion) although still a long way short of the £6.1 billion collected in 2010, when oil prices and extraction rates were at
roughly the same level.5
This report identifies and evaluates three of decommissioning offshore oil KEY RECOMMENDATIONS 7
major types of subsidy for UK oil and gas installations at the end of their life. Based on these findings, we recommend that:
extraction: In addition: ^ The UK should remove all subsidies
1) Tax allowances: tax breaks on high-cost ^ Since 2013, the government has signed from oil and gas extraction, including
and marginal fields, available from 2009 legal guarantees to prevent any future tax breaks, and redirect them to fund
to 2015, now replaced by tax breaks on elected government from changing the a Just Transition.
investment on all fields. tax rules, an extraordinary surrender of ^ Decommissioning Relief Deeds should
2) Reduced tax rates: the UK has some sovereignty. be cancelled; companies should pay
of the lowest oil tax rates in the world, ^ It allows companies to sell their tax decommissioning costs, and their
pushed even lower in the 2015 and histories to other companies, so that decommissioning plans should provide
2016 Budgets. For example, Petroleum those new companies can also claim public for a Just Transition for workers.
Revenue Tax is now charged at zero funding for decommissioning.
percent.
3) Decommissioning tax breaks: the Table ES-1 shows estimates of the costs and
taxpayer will pay almost half of the cost impacts of these subsidies.
Table ES-1: Summary of three types of UK subsidy for oil and gas extraction
Fits subsidy
Type Measure Cost to taxpayer Effect on extraction/emissions
definition?
Designed to enable
£1.1 bn granted in
Field Allowances extraction of fields that Supported 100
2013-14, used over Tax allowances almost
(2009-15) would be otherwise additional fields
5 years universally considered
Tax allowances unviable
to be a form of subsidy
£1.3 bn over Designed to incentivise
Investment + 700 MtCO2 = 10 years (except by UK govt)
5 years (combined investment, causing
Allowance (2015-) of UK coal emissions
with 2015 tax cuts) carbon lock-in
New fields opened since Govt forgoes revenue,
Govt revenue since the major subsidies of enabling higher
25 years of tax cuts, 1990 is £255 bn 1993 have added 13.3 profits than otherwise
to unusually low lower than if it had bn boe to date ⇒ +3.6 due (WTO, IMF
levels the same effective GtCO2, more than UK definitions); UK fails to
Declining extraction has
Reduced tax tax rate as Norway coal emissions over that secure the public’s fair
been reversed through
rates period share of income from
subsidies
2015 tax cuts + the nation’s resources;
£2.3 bn over 5 oil companies average
Major tax cuts in investment allowance:
years (including 20% profit over last
2015 and 2016 15% increase in 2019
Investment 10 years, cf 12% for
Budgets extraction ⇒ +16
Allowance) other UK industries.
MtCO2/yr
Taxpayer pays
Attracts more A grant, liability or
almost half of a bill
Decommissioning companies to extract, foregone tax (WTO),
estimated at £60 bn, Not known
tax reliefs frees up their capital for not available to other
but could be much
expansion industries (IMF)
higher
Principal cost is in
removing future
governments’
Could enable extraction
freedom to change Unlocking capital
Decommissioning of an additional 1.7 bn These mechanisms
Decommissioning tax rules. Already by for expansion (up to
Relief Deeds barrels of oil equivalent don’t directly change
funding 2019, Treasury has £40 bn)
⇒ +650 MtCO2 flow of funds, but
committed £357m
to covering one underpin the tax
company’s default. reliefs, and are not
available to other UK
Unknown, though
industries or in other
clearly the
Designed to increase countries
Transferable Tax mechanism allows
investment and Not known
Histories companies to claim
extraction
reliefs that they
could not otherwise
Sources: See chapter 4
8 JOB CREATION IN THE This report models the impact on the oil and and policymakers), at least three times as
TRANSITION TO A gas workforce of ending the development of many new jobs will be created in wind power,
CLEAN ECONOMY new fields. Taking into account jobs created marine renewables and energy efficiency
To respond to the challenges presented by through decommissioning and forecast retrofits as the number of oil and gas jobs
climate change while avoiding a deferred retirement in the existing workforce, we affected in a managed phase-out of oil and
collapse of the UK’s oil industry, a structured estimate that 40,000 existing oil workers gas extraction.
and planned transition is needed which (direct and supply chain) may need to be in a
covers both phasing out extraction and different job by 2030. In this report we advocate the full transition
replacing the oil and gas with clean energy from fossil fuels to renewable energy before
to power our domestic economy. Renewable To examine the scale of jobs that can be 2050, in line with climate goals. In a Fully
energy is now cheaper in the UK than gas created in compatible clean energy industries Renewable scenario, we find that over four
power. Several UK and global studies have and the level of policy ambition necessary, times as many new jobs will be created in just
shown that a rapid transition to 100% this report models the numbers of new jobs these sectors as the number of current oil
renewable energy is both technically feasible that would be created in offshore wind, and gas workers affected.
and affordable. The barriers are political. marine renewables and energy efficiency
retrofits, sectors that have strong overlaps KEY RECOMMENDATIONS
The history (and present) of UK oil and gas with existing oil and gas skills. Based on these findings, we recommend that:
extraction shows what can be achieved when ^ The UK and Scottish Governments
a government sees a strategic interest in Key Finding: Given the right policies, should initiate a concerted policy
enabling an industry. From the first discovery job creation in clean energy industries and fiscal effort to rapidly build the
of oil in 1969, the UK was an oil exporter will exceed affected oil and gas jobs clean energy industry to at least the
within just twelve years, and by 1985 was more than threefold. extent they have supported the oil
the world’s fifth largest producer of oil.10 industry, with the aims of meeting
It was government policy that enabled On the Current Trajectory (minimal support UK energy needs and creating
this rapid expansion, and government for renewable energy), the growth of jobs in decent employment. This should
policy (through subsidies and industrial wind energy alone exceeds the number of oil include investment and public sector
interventions) that sustained extraction long workers affected by the transition, but will not participation in the clean economy, for
after it would have otherwise declined. result in enough power to meet UK demand, example through national investment
nor in enough jobs to credibly support large- banks, ownership of renewable
Clearly, it is an ambitious project to transform scale re-employment of existing oil industry infrastructure and support for local
the UK energy system within a couple of workers. This demonstrates that ambitious supply chains.
decades, just as the rapid development of the government action is needed to push ahead ^ The governments should support major
North Sea was an ambitious project. However the transition. scaling-up of education, retraining and
government intervention enabled the oil re-skilling to help workers succeed in
industry to develop, and it will be government In an Existing Ambitions scenario (currently new industries.
intervention that similarly enables renewables. proposed ambitious targets from industry
Figure ES-6: Estimates of cumulative potential new jobs in case-study industries –
a) Current Trajectory, b) Existing Ambitions, c) Fully Renewable.
180,000
EXISTING AMBITIONS FULLY RENEWABLE
Home retrofits
160,000 Wave
Tidal Stream
Onshore Wind
140,000 Floating Offshore Wind
Fixed Offshore Wind
120,000
100,000
Jobs
80,000
60,000
CURRENT TRAJECTORY
40,000
20,000
0
2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050 2020 2025 2030 2035 2040 2045 2050
Sources: Modelling by Platform and Transition Economics. See Appendix 3
Figure ES-7: Potential new clean energy jobs in three scenarios, compared to total oil and gas jobs lost (without new fields), 9
and total oil and gas workers affected (accounting for retirement), 2020-2050
180,000
160,000 FULLY RENEWABLE
140,000
120,000 EXISTING
AMBITIONS
100,000
Jobs
80,000
Oil and gas total jobs decrease
60,000
CURRENT TRAJECTORY
40,000
Oil and gas workers affected
20,000
0
2020 2025 2030 2035 2040 2045 2050
Sources: Modelling by Platform and Transition Economics. See Appendix 3
DELIVERING A JUST TRANSITION Drawing on published literature and trade KEY RECOMMENDATIONS
FOR THE WORKFORCE union statements, this report brings together We recommend that:
While developing renewable energy and clean a set of safeguards necessary to protect ^ The UK and Scottish Governments
infrastructure can create significantly more existing oil and gas workers’ rights and should develop and implement robust
jobs than those affected in a phase-out of livelihoods that a Just Transition strategy Just Transition Plans, guided by
oil and gas extraction, it does not follow should aim to deliver. The safeguards include: climate limits, for the workforce and
automatically that new jobs will be created in ^ Accountability to worker representatives communities dependent on the oil
locations where they are needed, that they and affected communities; industry. These should be accountable
will match the skills of existing workers, or ^ Long-term investment into industry to trade unions and local stakeholders
that these new jobs will equate to decent, cluster locations such as Aberdeen; and guarantee safeguards to protect
unionised work. Government policy therefore ^ Where jobs are lost, creation of new jobs workers’ livelihoods.
plays a pivotal role. Past energy transitions with equivalent terms and conditions and ^ Governments should provide regionally
in the UK have failed in these respects, with permanent contracts; specific policy development, planning
manufacturing jobs going overseas, increased ^ Support for workers’ education, and targeted long-term investment
labour market inequality and rising poverty. re-location and retraining, along with to manage transition for the wider
The present transition to a low-carbon wage and pension protection; community in oil industry centres.
economy has similarly seen a large portion ^ Trade union rights for workers affected ^ The UK and Scottish Governments
of manufacturing jobs in the renewables by energy transitions, including union should ensure that offshore renewable
industry go overseas. New approaches to recognition and sectoral bargaining. energy projects are designed so as to
economic development, industrial policy maximise the transferability of oil and
and ownership which emphasise local Creating good quality new jobs requires gas workers (for example, in terms of
democracy and workforce participation are public sector participation, support and common standards), and provide terms
therefore necessary. Regional strategies investment. Evidence from other countries and conditions equivalent to those of
will be required to respond to the particular (from Taiwan to Denmark to Canada) existing oil and gas jobs.
challenges faced by industry centres like suggests that significant degrees of public
Aberdeen and Aberdeenshire. ownership of energy infrastructure and
support for innovation, infrastructure and
A Just Transition Plan for industrial supply chains can be decisive in enabling a
conversion to renewable energy rapid transition that serves the public good.
sources while protecting workers’
livelihoods is urgently needed.
10
TABLE OF CONTENTS
KEY FINDINGS 3
SUMMARY 4
ABBREVIATIONS 11
1. INTRODUCTION 12
2. CLIMATE LIMITS: WHY OIL AND GAS EXTRACTION MATTERS 15
3. UK OIL AND GAS VS THE PARIS GOALS 22
4. SUBSIDIES FOR UK OIL AND GAS EXTRACTION 26
5. INVESTING IN THE CLEAN ECONOMY 37
6. JOB CREATION IN THE TRANSITION TO A CLEAN ECONOMY 43
7. DELIVERING A JUST TRANSITION FOR THE WORKFORCE 50
8. RECOMMENDATIONS 56
APPENDIX 1: FOSSIL FUEL EXTRACTION AND CLIMATE CHANGE 58
APPENDIX 2: METHODOLOGY: OIL AND GAS JOBS AFFECTED BY
A MANAGED PHASE-OUT 63
APPENDIX 3: METHODOLOGY: POTENTIAL CLEAN ENERGY JOBS 64
REFERENCES 6611 ABBREVIATIONS ºC degrees Celsius bbl barrel bcf billion cubic feet BECCS bioenergy with carbon capture and storage BEIS Department for Business, Energy and Industrial Strategy bn billion boe barrels of oil equivalent CCC Committee on Climate Change CCS carbon capture and storage CO2 carbon dioxide CRINE Cost Reduction Initiative for the New Era EITI Extractive Industries Transparency Initiative EJ exajoules FT Financial Times G7 Group of 7 nations G20 Group of 20 nations GDP gross domestic product Gt gigatonnes GVA gross value added GW gigawatts HMRC Her Majesty’s Revenue and Customs HMT Her Majesty’s Treasury HSE Health and Safety Executive IEA International Energy Agency IISD International Institute for Sustainable Development ILO International Labour Organisation IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change ITUC International Trade Union Confederation kbd thousand barrels per day kcm thousand cubic metres m million mbd million barrels per day mboed million barrels of oil equivalent per day Mt megatonnes MWh megawatt-hours OBR Office for Budget Responsibility OCI Oil Change International OECD Organisation for Economic Cooperation and Development OGA Oil and Gas Authority OGUK Oil and Gas UK ONS Office for National Statistics OPEC Organisation of the Petroleum Exporting Countries OREC Offshore Renewable Energy Catapult OSO Offshore Supplies Office PRT Petroleum Revenue Tax RMT National Union of Rail, Maritime and Transport Workers SC Supplementary Charge SEPA Scottish Environmental Protection Agency SR15 Special Report on Warming of 1.5°C STUC Scottish Trades Union Congress TTH Transferrable Tax History TUC Trades Union Congress UNFCCC United Nations Framework Convention on Climate Change WTO World Trade Organisation
12
1. INTRODUCTION
CLIMATE EMERGENCY Philippines.16 A 2011 report by the Joseph The UK is the second largest producer of
The burning of oil, gas and coal is driving a Rowntree Foundation found that climate oil and gas in Europe after Norway. Oil and
breakdown of the earth’s climate. To date, the change impacts would have a major impact gas were first discovered in the North Sea
world has warmed by about 1°C since pre- on jobs in the UK’s coastal areas, including in in the 1960s and many of the largest fields
industrial times and is already experiencing fishing, agriculture and tourism.17 were developed in the 1970s. Extraction has
profound impacts.11 In the UK, the Met Office peaked twice – in the mid-1980s and early-
has estimated that the record-breaking While there are large uncertainties in how 2000s – and today is growing again.20 Most
temperatures of summer 2018 were made climate change will affect employment, extraction is still in the North Sea, although
about 30 times more likely by human-caused several studies have found that it will have about a fifth comes from the North Atlantic,
climate change than they would be in a a major negative impact on the global West of Shetland.
natural climate.12 As this report goes to press, economy. Estimates since the Stern Review
the Scottish and Welsh Governments and of 2006 have commonly put the impact at In November 2018, extraction began at BP’s
the UK Parliament have declared a Climate several percent of global gross domestic Clair Ridge project, where the company aims
Emergency. product (GDP) by the late twenty-first to extract over 640 million barrels of oil over
century; a 2015 study of historic correlations the next thirty years.22 The project, located
The 2015 Paris Agreement, now in force between temperature and economic activity in the north Atlantic about fifty miles west
and ratified by the UK among more than suggested that unmitigated climate change of Shetland, constitutes the sixth largest
170 nations, aims to hold the global average could cause as much as a 20% reduction in capital investment in the history of the UK oil
temperature increase to well below 2°C 2100 economic output.18 As the International industry (in real terms).23
above pre-industrial levels and pursue Trade Union Confederation puts it, “There are
efforts to limit it to 1.5°C.13 The importance no jobs on a dead planet.”19 Today there are over 50 companies with
of the 1.5°C target was re-emphasised in stakes in extracting UK offshore oil. Smaller
October 2018 in a Special Report by the UK OFFSHORE OIL AND GAS companies have taken up many of the newer
Intergovernmental Panel on Climate Change This report examines the implications of small fields and have bought out some of the
(IPCC), which found that limiting warming UK offshore oil and gas extraction for the declining old fields; however, Shell, BP, Total
to 1.5°C (compared with 2°C) would climate and of an energy transition for the UK and Chevron still operate fields accounting
significantly reduce impacts on the most oil and gas workforce. for around 40% of extraction.24
vulnerable people and reduce risks of wider
system impacts.14 Figure 1: Historic UK offshore oil and gas extraction
5
In the absence of strong action to reduce
greenhouse gas emissions, these impacts will 4.5
get significantly worse. The IPCC reports that
if climate change is unchecked:15
4
^ Crop yields will be severely reduced,
potentially causing hunger on a mass
scale, with a one-in-five chance that 3.5 Gas
yields of wheat, maize, rice and soya will
decrease by more than 50% by 2100 and 3
a further one-in-five chance that they will
mboed
decrease by between 25% and 50%;
2.5
^ Cities will increasingly be hit by storms
and extreme precipitation, inland and
coastal flooding, landslides, air pollution, 2
drought, water scarcity and sea level rise;
^ A large proportion of the earth’s species 1.5
faces increased risk of extinction, as many
cannot adapt or migrate as fast as the Oil
1
climate changes.
Disruption to agriculture and storm damage 0.5
to cities are affecting millions of jobs. For
example, Typhoon Hagupit/Ruby in 2014 0
adversely affected 800,000 workers in the 1970 1980 1990 2000 2010
Source: Rystad UCube21Jurisdiction over offshore oil and gas lies BOX 1: JOB LOSSES IN THE OIL INDUSTRY 13
at the UK level, not devolved to Scotland.
The Department for Business, Energy and As oil and gas firms ramp up efforts to oil extracted fell by 30% between 2014
Industrial Strategy (BEIS) is responsible for automate extraction and attempt to cut and 2017.31 The National Union of Rail,
licensing and most regulation; HM Treasury is costs during low oil price periods, they have Maritime and Transport Workers (RMT) has
responsible for taxes and most subsidies. The cut significant numbers of jobs in recent estimated that there has been an average
Scottish Government plays a supportive role, years. Communities in North East Scotland 20% fall in staffing levels on UK Continental
in skills, training, some infrastructure and have already felt the impacts of the long- Shelf installations, with the remaining
local investment. term decline in oil drilling. Oil companies like offshore staff working an average of 300
ConocoPhillips and BP have repeatedly cut hours more per year for the same pay as
Oil and gas extraction remains a significant workforces, resulting in highly qualified and in 2014.32
employer, with about 100,000 direct and experienced people being made redundant.28
supply chain employees combined (excluding Increased automation looks set to reduce Jobs already lost include offshore workers,
UK workers serving oil and gas extraction offshore human labour further, including with the core offshore workforce reducing
overseas). Estimates of the number of Total’s planned introduction of autonomous by 18% between 2012 and 2016,33 but
workers directly employed in the extraction robots to inspect rigs.29 Risk management also those employed in the oil supply chain
of oil and gas vary between 29,700 to company DNV GL predicts that oil and and in other anchor/volume sectors in and
36,100.25 A further 71,300 work in the UK oil gas companies may implement fully around Aberdeen that relied on oil activity,
industry’s supply chain,26 providing services autonomous (crewless) drilling by 2025.30 such as retail, hospitality, transport and
ranging from administration to specialised property.34 The decline is expected to
construction, from machinery to IT. Recent years have seen particularly continue: a 2018 regional skills strategy
significant job losses linked to measures published by Skills Development Scotland
These jobs are highly geographically to cut costs in the context of a low oil expects 5,700 fewer jobs in energy
concentrated in Scotland, especially in price. According to Oil & Gas UK, the (predominantly oil and gas) by 2027 in
its northeast, though estimates of the number of workers employed per barrel of Aberdeen City and Aberdeenshire.35
concentration vary. According to the Office
for National Statistics, 87% of the jobs in oil
and gas extraction and support activities are Following recent years of cost-cutting by Minimum Wage. The government –
located in Scotland, with a further 5.9% in the oil industry, a number of key workplace notwithstanding promises by ministers
London and 3% in the East of England;27 while protections and conditions have been eroded: to protect those working in UK waters
Oil and Gas UK attributes 38% of direct, – has failed to insist on payment of
supply chain and induced jobs to Scotland. ^ A shift pattern of 3-weeks-on/3-weeks- the minimum wage. As a result, the
off has become the norm, replacing RMT union reported that contractors
WORKING CONDITIONS previous patterns 2-on/2-off or 2-on/3- decommissioning a BP rig, and others
The National Careers Service estimates that off, with adverse consequences for health decommissioning a Canadian Natural
offshore oil and gas workers’ salaries are of the workforce.38 Resources platform, were being paid
in the range of £12,000-£50,000 a year; ^ An increasing proportion of offshore about £2.70/hour – just over one third of
however, key specialist and management workers is employed by subcontractors,39 the minimum wage.42
roles can earn well in excess of this range. resulting in zero-hours and fixed-
Salary depends on location, experience term contracts and lack of access to Despite these issues, the workforce still
and level of risk involved in the job. Oil company pension provision and union currently benefits from higher levels of
roustabouts (unskilled or low-skilled representation.40 trade union recognition and better working
labourers) may earn around £18,000 a ^ Existing worker pensions are also conditions than, for instance, workers
year, while newly qualified technicians and at risk: oil and gas companies have employed to install and maintain offshore
engineers may start at £35,000 a year. overwhelmingly channelled funds into wind farms.43 The working conditions and
Due to the working conditions and amount dividends and stock buybacks as opposed safety standards of the UK oil industry were
of time spent away from home, employee to supporting their pension funds – both established through decades of trade union
turnover rates are relatively high. 36 when the firms have had highly profitable organising and many struggles, in particular
years and when they have experienced after the Piper Alpha disaster.44
It is a dangerous industry. In 1988, the losses.41
Piper Alpha explosion took the lives of 167 ^ At present UK employment law only
people. Crashes of helicopters traveling to applies within 12 miles of the shoreline
oil platforms have caused 33 deaths since so it is legal for crews working beyond
2009, as well as many non-fatal incidents.37 that limit to be paid less than the National14
Royal National Lifeboat Institution rescue team with boats in Carlisle city centre after Storm Desmond caused severe flooding.
©Andrew Findlay / Alamy Live News
STRUCTURE OF THIS REPORT
It is in this context that this report focuses 4 looks at the fossil fuel subsidies that lie at the growth of new jobs in clean industries.
on offshore oil and gas extraction in the UK in the heart of the maximisation policy, enabling Chapter 7 explores a range of policies that
relation to climate change and employment. growth that would otherwise be uneconomic. could ensure a Just Transition for oil and gas
workers and the creation of decent jobs in
Chapter 2 examines climate limits and carbon Chapter 5 explores how much clean energy renewable-powered industries.
budgets at a global level and why fossil will be needed to enable the UK to run
fuel extraction matters in relation to these. without fossil fuels and the policies needed Each chapter makes recommendations
Chapter 3 applies these findings to UK oil to make it happen. Chapter 6 models the to the UK and Scottish Governments and
and gas extraction, reviews the government future of oil and gas extraction jobs in light Parliaments. Chapter 8 compiles these
policy of maximising extraction and assesses of climate limits, estimating the numbers of recommendations, outlining how to put the
what the impact on climate would be if all workers over time that could be affected by UK and Scotland on the path to being the
countries adopted similar policies. Chapter the transition, and models the potential for climate leaders they should be.
BOX 2: FRACKING: A NEW FRONTIER OF FOSSIL FUELS
The UK Government hopes to open up a new frontier of previously On the other hand, the Scottish Government has adopted a more
inaccessible onshore oil and gas using hydraulic fracturing, commonly cautious approach, partly in response to the climate impacts of the
known as fracking. This is a new source of carbon the atmosphere industry, introducing a moratorium on all onshore unconventional oil
can ill afford. and gas extraction in 2015, which remains in place indefinitely.
Since former Prime Minister David Cameron announced in 2014 that The focus of this report is on another UK carbon threat – the
“we’re going all-out for shale”,45 the UK Government has introduced undeveloped reserves of the North Sea and North Atlantic. It
a series of measures to support the industry, including tax breaks, also examines what the UK and Scottish Governments’ policy of
changes to the planning system and removing home owners’ rights maximising extraction of offshore oil and gas means in the context
to say no to fracking underneath their homes.46 Faced with major of the Paris Agreement. However, it is worth highlighting that climate
public opposition, only one site (in Lancashire) has been fracked constraints to offshore production apply equally onshore. None of
so far, and that is currently suspended after causing a series of the UK’s shale gas and oil resource – whether under license or not
earthquakes. – has been proven as commercially viable. This means that the UK’s
unconventional oil and gas resources are additional to the reserves
that this report considers.15
2. CLIMATE LIMITS:
WHY OIL AND GAS
EXTRACTION MATTERS
In this chapter, we review global fossil fuel carbon budgets aligned with these goals, as extractable with current technology. Beyond
extraction in relation to climate limits and calculated by the Intergovernmental Panel on that is an even larger quantity of fossil fuel
identify the central choices for energy Climate Change (IPCC). “resources”, which includes undiscovered and
transition pathways. unconventional sources, such as oil and gas
Other researchers have found that the that could be extracted by fracking in the UK.
ENOUGH ALREADY: world’s stock of fossil fuel reserves An obvious first step to addressing this vast
GLOBAL OIL, GAS AND COAL significantly exceeds the carbon budget surfeit of reserves is to stop adding to them
Climate science has established that the total aligned with 2°C.49 The logical implications by ending new exploration and refraining
cumulative carbon dioxide emissions over of this “terrifying mathematics” were from opening new frontiers.
time determine how much global warming popularised by Carbon Tracker Initiative in
will occur.47 To keep warming within any 2011 and in a 2012 Rolling Stone article by In a September 2016 report, The Sky’s
particular limit – all else being equal – there US writer Bill McKibben. Indeed in 2016, Limit: Why the Paris Climate Goals Require a
is a maximum cumulative amount of carbon UK Minister of State for Business Nick Hurd Managed Decline of Fossil Fuel Production,
dioxide that may be emitted: this is the acknowledged that 70% to 75% of known Oil Change International assessed what
carbon budget. fossil fuels would have to be left unused the Paris goals would mean for fossil fuel
in order to limit global temperature rise to extraction globally.51 It built on the earlier
The Paris Agreement requires governments below 2°C.b, 50 studies of fossil fuel reserves compared to
to pursue efforts to limit global temperature carbon budgets, but focused specifically on
rise to 1.5°C above pre-industrial levels and “Reserves” are defined as fossil fuel sources the subset of oil, gas and coal reserves in
in any case to hold it well below 2°C.48 In that are known (ie they have been found fields and mines that are already in operation
this and the subsequent chapter, we use the through exploration) and economically or under construction (see Figure 2).c
Figure 2: What are developed reserves?
RESOURCES What exists, ultimately recoverable
(incl. with future technology).
explore, develop technology
RESERVES What is known, economically
recoverable now.
drill wells, dig mines,
build infrastructure
DEVELOPED What is known and recoverable in
RESERVES currently operating fields and mines.
Source: OCI
b This is based on a 50% probability of keeping warming below 2°C.
c To be more precise, with conventional oil and gas we are referring to “projects” that have their own final investment decision, which in the case of a large field may be one phase of a
multi-phase development. Thus for example, in the Clair field, two projects are now operating – Clair and Clair Ridge – while a third, Clair South, is expected to start extraction only in
2024, and so is currently treated as undeveloped.16 The report focused on these “developed The results show that: How do these findings relate to the earlier
reserves” because they represent the oil, ^ The oil, gas and coal in existing fields research on the total amount of (developed
gas and coal that companies have already and mines (together with optimistic and undeveloped) reserves? Using the
invested in extracting over the coming estimates of future emissions same sources as above, we estimate total
decades: the wells have been (or are from land use change and cement reserves to be nearly three times the size
being) drilled, the pits dug and the related manufacture) would push the world far of developed reserves, hence a majority
infrastructure built. As a result, due to the beyond 1.5°C and would exhaust a 2°C of total reserves must remain unburned,
problem of “carbon lock-in”,52 it will be more carbon budget. as the earlier studies found.55 Whereas a
politically and economically difficult to leave ^ Even if global coal use were phased out policy conclusion from the earlier work on
these reserves unextracted compared to overnight, the developed reserves of all reserves is that there is no room for new
reserves that have not yet been developed. oil and gas would push the world above exploration, the conclusion from the finding
1.5°C of warming. on developed reserves is that there is no
The Sky’s Limit estimated developed reserves room for new development either.
of oil and gas using the UCube database These findings indicate that there is no room
and model of Rystad Energy, a consultancy for new fossil fuel development: when you MANAGED PHASE-OUT
based in Norway.d It estimated developed are in a hole, you should stop digging. We Any new oil or gas field developed in the UK
reserves of coal using data published by recommend that governments worldwide or elsewhere will add to the left-hand column
the International Energy Agency and World should cease issuing licenses, leases and in Figure 3, going even further beyond
Energy Council. It calculated the carbon permits for new fossil fuel projects in order climate limits. Unless one relies on carbon
dioxide emissions resulting from these, using to stop pushing the developed reserves capture and storage technologies becoming
IPCC emissions factors, and compared them bar in Figure 3 even higher. Stopping available at large scale (see Box 3), the Paris
with carbon budgets established in the IPCC’s new projects alone will not be enough goals could then only be achieved if some
Fifth Assessment Report. to achieve the Paris goals: governments portion of the developed reserves gets left
should also revoke undeveloped licenses and in the ground, stranding the capital already
This report uses the same approach as The phase out a significant number of existing invested and forcing a rapid collapse of fossil
Sky’s Limit, but updates the carbon budgets projects ahead of schedule.54 All new fuel extraction.
to those published in the IPCC’s 2018 Special energy investments must be in renewable
Report on 1.5°C of warming.e energy and related technologies such as There are therefore only two possibilities
electrification, storage and grids. consistent with the Paris goals:
These updated findings are shown in Figure 3.f
Figure 3: Carbon dioxide emissions from global developed fossil fuel reserves, compared to carbon budgets within range of the Paris goals
1200
2°C
PARIS GOALS
1000
Coal
800
DEVELOPED
Gt CO2
600 RESERVES Gas
CARBON BUDGET
1.5°C
400
Oil
CARBON BUDGET
200
Land use
change Cement
0
Emissions 1.5°C (50% chance) 2°C (66% chance)
Sources: Rystad Energy, IEA, World Energy Council, IPCC, OCI analysis53
d The UCube is a bottom-up model and database of the past, present and future production and economics of all of the world’s oil and gas fields and projects (more than 65,000 in
total). Rystad collects and verifies data from company and government reports, or where not available, conducts research and uses its own modeling estimates. The UCube is updated
monthly.
e Since scientific knowledge is finite, and the earth system immensely complex, much climate knowledge is couched in terms of probability. For historical reasons, IPCC findings tend to
be given for probabilities of >50% and >66%.
f We use the budgets for a 50% probability of keeping warming below 1.5°C to reflect the fact that it is a goal to pursue efforts towards (50% probability means that outcomes are as
likely to be higher as lower) but a 66% probability of keeping below 2°C, as the Paris goals see this as a danger threshold to be avoided (and 66% is the highest probability the IPCC
publishes).^ Deferred collapse: Governments Unfortunately, significant periods of Clearly, a managed transition is the 17
allow further fossil fuel development to economic restructuring in the past have better path. By stopping new fossil fuel
continue, but eventually manage to limit often happened in a chaotic fashion, development and managing a Just Transition
emissions to within carbon budgets. The leaving ordinary workers, their families towards an economy powered by clean
resulting collapse in demand then leads and communities to bear the brunt of energy, we can achieve the brightest
to a sudden and chaotic shutdown of the transition to new ways of producing future. An eloquent argument for a planned
fossil fuel extraction, stranding assets, wealth. Indeed, many individuals and transition was made during the Climate
damaging economies and pushing many communities in the UK are still paying Change Bill debate in 2008 by Greg Clark,
workers in fossil fuel and related industries the price for the rapid shift away from then Shadow Energy and Climate Secretary: 57
out of work in a short space of time.g industrial production over the last 30
Or: years. Such injustice cannot become a In any case, what is affordable? Is it
^ Managed transition: Governments stop feature of environmental transition. Not clinging to a high-carbon economy and
approving and licensing new fossil fuel only would this be morally wrong and everything that that implies for our
projects, while carefully managing the socially damaging but it would undermine energy security, price volatility and the
phase-out of fossil fuel extraction over the credibility of the transition itself and costs of doing business, or is it switching
time and planning for a Just Transition for could slow or even halt this vital and to secure, stable and efficient energy
workers and communities. urgent shift. systems that put British business,
particularly British process industries,
The costs of a sudden shutdown are On the other hand, there is a growing body which have long been world-beating, into
illustrated by the UK’s de-industrialisation of international experience of managing the forefront of world innovation?
in the 1980s. In its report A Green and Fair a transition justly. While nowhere has
Future, the Trades Union Congress (TUC) undergone a perfect transition, there are Now that Clark is Business Secretary, his
writes:56 many successes to replicate and cases to Department seems not to be heeding his
learn from. These lessons are reviewed in earlier observation, as we shall see.
Chapter 7.
BOX 3: CARBON CAPTURE AND STORAGE: LIMITED AND UNCERTAIN
Since the 1990s, the fossil fuel industry has argued that carbon at scale, [carbon dioxide removal] is unproven and reliance on such
dioxide emissions can be eliminated while continuing to burn fossil technology is a major risk in the ability to limit warming to 1.5°C.”60, i
fuels, by using the technology of carbon capture and storage (CCS). Furthermore, it would require converting land to grow bioenergy
61
However, as most of the few CCS pilot projects to date have proved instead of food, risking large-scale food shortages: for example,
costlier and less effective than hoped,h many analysts now consider offsetting a third of today’s fossil fuel emissions would require land
that wind and solar power, which are proven technologies, are likely equivalent to up to half of the world’s total crop-growing area.62
to remain cheaper than CCS, even as CCS technology improves. Given the challenges and uncertainties, the European Academies
Advocates and investors have pulled back from the technology Science Advisory Council recommends that models that depend on
in recent years, including the UK and US Governments and some large-scale use of “negative emissions” technologies should not be
European utilities.58 In the words of Francesco Starace, Chief considered a useful guide to policy.63
Executive of the Italian utility Enel and chair of trade association
Eurelectric, “I think CCS has not been successful. It doesn’t work, If CCS can ultimately be deployed reliably, affordably and without
let’s call it what it is – it is simply too expensive, too cumbersome, harm, it might provide a welcome means of further lowering
the technology didn’t fly.”59 emissions and/or offsetting hard-to-eliminate emissions, such
as in heavy industry. However, it would not be prudent to rely on
Going one step further, many climate models over the last ten years an uncertain technology, because if it does not work out, climate
have assumed that CCS can be combined with bioenergy to suck change will be locked in. It is far safer to reduce emissions in the first
large amounts of excess carbon dioxide back out of the atmosphere place.j64Therefore, throughout this report we apply the precautionary
later in the century. This approach suits the models’ cost- assumption that CCS will not be available at a significant scale.
optimising logic, but as the recent IPCC report warns, “Deployed
g In the UK case, it would also make it hard to ensure decommissioning benefited UK workers, as decommissioning would need to occur faster than UK industrial capacity would allow.
h For example, the world’s first industrial-scale CCS project, the Sleipner project in Norway, started in 1996 and was assumed to be safe until it was discovered to have fractures in
its caprock in 2013. The Boundary Dam project in Canada, the first to install CCS at a power station, was exceptionally expensive to build and has struggled to operate as planned,
suffered considerable cost overruns, and been forced to pay out for missing contracted obligations.
i Bioenergy grown on the wrong soils, or replacing existing biomass, or using the wrong inputs, can emit more carbon dioxide than it absorbs. If it competes with agricultural land,
it could undermine food security. Carbon dioxide injected in the wrong geological structure may not be safe over the long term. Thus to deliver effective large-scale “negative
emissions” would require extensive international monitoring and regulation over subsequent centuries in order to ensure emissions were actually negative and not reversed, together
with internationally agreed incentives, funding and penalties.61
j Furthermore, even if these technologies can be delivered at large scale, their potential to capture or remove carbon dioxide is much smaller than the total emissions from fossil fuels.
The most optimistic scenario by the International Energy Agency – a strong advocate of CCS – projects 8.4 Gt CO2 captured by CCS in 2050. The IPCC sees the maximum potential
for bioenergy with CCS as 5 Gt CO2 in 2050. For comparison, carbon dioxide emissions from fossil fuels and industry were 36 Gt in 2017.6418 INTERNATIONAL JUSTICE: to the UK’s $40,000.70 Broadening this nations to lead the way on early and deep
WEALTHY COUNTRIES analysis, Figure 4 illustrates the challenges of mitigation. Given that for 2°C between
MUST LEAD transition in various oil-extracting countries. 70 and 80% of known fossil fuel reserves
Continuing the logic above, one possible It plots oil’s share of countries’ public revenue cannot be exploited (higher still for
scenario would be for the UK to continue against their per-capita GDP. 1.5°C) and that Scotland is a wealthy
developing new oil and gas fields, leaving industrial nation with excellent prospects
other countries to go through faster Clearly, it would violate principles of for renewable energy, the Scottish
transitions to offset new UK extraction and international justice and solidarity to allow Government needs urgently to enact
stay within global climate limits. the UK to go on extracting for longer in the policies to rapidly cease hydrocarbon
expectation that countries like Algeria would production from its oil and gas sector.
To illustrate the consequences of such a phase out their extraction more quickly.
scenario, compare the UK with Algeria, To consider the relative pace of transition in
which produces nearly twice as much oil That is not to say that poorer countries different countries, a forthcoming paper by
and gas as the UK.65 Media reports suggest should not transition: the remaining Oil Change International and the Stockholm
around 3% of the Algerian workforce is carbon budgets are now so small that all Environment Institute proposes five key
employed in the oil and gas sector: about countries must do so; for example, there ethical principles by which we might aim to
350,000 workers (official data are not are active campaigns for a Just Transition fairly manage the transition from fossil fuels
available).66 However, in Algeria oil and gas away from fossil fuels in many African worldwide:74
account for 34% of government revenue67 countries including Nigeria.72 In some cases, 1) Curb total fossil fuel extraction at a
and hence also provide the salaries of that oil and gas extraction should be stopped pace consistent with climate limits,
proportion of the public sector employees, immediately where it fundamentally as defined by the Paris goals;
a further 1.7 million workers, or 14% of the violates people’s rights by destroying their 2) Ensure a Just Transition for fossil
country’s total workforce.68 The 100,000 land, water, food and political or cultural fuel-dependent workers and their
workers in UK oil and gas and its supply freedoms. However, the considerations communities;
chain (see page 13) amount to 0.3% of the above require that wealthy countries like 3) Respect human rights by prioritising
total workforce and oil provides just 0.16% the UK must move faster than the global for closure any extraction activities
of government revenue.69 Whatever the average, not slower. that violate rights, especially of poor,
UK’s or Scotland’s challenges in enabling a marginalized, ethnic minority and
Just Transition, they are considerably smaller In an analysis on how Scotland can meet its Indigenous communities;
than those of Algeria. climate commitments, the Tyndall Centre 4) Transition fastest where it is least
for Climate Change Research recommended socially disruptive, particularly in
Furthermore, not only are Algeria’s transition a phase-out of oil and gas extraction for wealthier, less extraction-dependent
challenges greater than the UK’s, but it similar reasons:73 countries;
has just a fraction of the UK’s economic 5) Share transition costs fairly, providing
resources to address them. Algeria has a The Paris Agreement’s steer on equity poorer countries with support for an
per-capita GDP of US $4,000, compared requires wealthy and industrialised effective and Just Transition.
Figure 4: Relative challenges of Just Transition away from oil extraction:
Oil share of government revenue versus per-capita GDP, selected countries, 2016
45,000
40,000 UK
UAE
35,000
30,000
GDP per capita / US$
Just Transition
Kuwait
resources for
Brunei
25,000
More
20,000 More workers Saudi Arabia
affected
15,000 Oman
10,000
Russia Equatorial Guinea
Iran
5,000 Angola
Algeria Azerbaijan Iraq
Nigeria Congo Timor Leste
0 Chad
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Oil share of govt revenue
Sources: OBR, IMF, UNDP71You can also read
