As of today, the #PaidToPollute case has just gone live. Read on to learn what it is, how taxpayer money has been funding fossil fuels, and how to put a stop to it.
The case against public money for oil and gas
Billions of pounds of public money have been wasted propping up the oil and gas industry, now the people are pushing back. Three environmental activists say no more, and are taking the Government to court to pull the plug on public payments for big polluters.
Since signing the Paris Agreement in 2016, the UK Government has paid £3.2bn of public money to North Sea oil and gas companies. In recent years, companies like Shell and BP were actually paid millions to pollute. They paid next to nothing in tax, all the while laying off thousands of workers in the UK and continuing to wreck the climate.
Oil and gas work is increasingly insecure. According to a recent survey, 80% of the workforce would consider changing jobs. All of this was accelerated by the pandemic, which saw thousands of oil workers across the UK furloughed or fired. That didn’t stop these companies handing out million-pound exec payouts and big payments to their shareholders.
Burning the oil and gas in already operating offshore fields would exceed the UK’s fair share of the Paris goals. Yet, under the UK’s Government policy of “maximising economic recovery” of oil and gas we’re set to burn almost three times more than that.
The UK could be the first major oil and gas producing country to move away from fossil fuels, setting a strong standard for the rest of the world. Instead, it’s keeping alive a declining industry that’s committed to extracting more oil and gas than safe climate limits allow.
Public money is better spent on decent, green jobs and a just transition led by workers, their unions and affected communities.
Public money, private gain
In 2015, the UK legislated an official policy of “maximising economic recovery” of oil and gas in the North Sea. This kept the door open for reckless drilling and exploration. To avoid the worst impacts of climate change, we need to rapidly decline oil and gas production. We can do this but it needs to start right now. And it should start with the countries that have the resources and the capacity to make this happen fast.
Instead, oil and gas companies aggressively lobbied the government to get huge tax cuts, and they’ve been incredibly successful. The UK provides more subsidies to the fossil fuel industry than any country in Europe, but receives less money back than any of our neighbours. In Norway, the government receives about US $21 per barrel of oil. The UK receives less than $2.
It gets worse. In recent years, oil and gas companies like BP and Shell have also paid zero tax and received hundreds of millions in handouts. The UK taxpayer literally received nothing from the big polluters in those years, instead millions of pounds of the taxpayer’s money was used to keep drilling.
For example, in 2020, Shell paid negative $99.1m in tax to the UK. In other words, during the peak of the pandemic, the UK paid Shell almost $100m. The UK was the only country where Shell operated where it didn’t pay tax. How did Shell spend that money? Shell paid its CEO $7M in 2020. In January of this year, Shell announced plans to cut 330 North Sea jobs, just weeks before announcing in February it would increase its shareholder dividend. With the proper government policies, investment in green industry can create three times as many jobs as oil and gas.
Propped up by our money, the UK is the most profitable country in the world for oil and gas producers. The industry uses that money to fuel more extraction. They win, while everyday people lose.
It’s time to listen to workers and put public money towards supporting these workers to move into new careers in decommissioning, wind, solar or the millions of other jobs a Green Industrial Revolution will require.
Meet the claimants
The case is being brought forward by three individuals. Mikaela Loach, Kairin van Sweeden and Jeremy Cox. They are represented by the law firm Leigh Day, Merrow Golden and David Wolfe QC, who have applied to the High Court for judicial review of the OGA’s new strategy.
Mikaela Loach is a climate justice activist, 4th year medical student, co-host of The Yikes Podcast & writer based in Edinburgh. As a member of the Jamaican diaspora, she has seen first-hand the impacts of the climate crisis while visiting family. Many nations previously colonised by Britain, like Jamaica, are the ones experiencing the more severe impacts of the crisis today, despite having contributed almost nothing to its causation. As a medical student, Mikaela is also outspoken on the fact that the climate crisis is also the greatest global health threat the world faces. It’s the greatest threat to life globally, and it’s imperative that the UK recognises its culpability and takes action to prevent it.
Jeremy Cox is a retired former oil worker, current Extinction Rebellion activist, beekeeper, green woodworker and amateur baker. As a former employee of Esso at Fawley Refinery from 1978 – 1986, the oil and gas industry was covering up the impacts of climate change whilst he was working for them.
The whole industry was all too aware of the damage that it was – and still is – causing. But it did whatever it could to keep that hidden, even from its own employees. I had a small part in this industry and want to help make things right.
While at Esso he became increasingly concerned about the environment, joining Greenpeace and later Extinction Rebellion.
I cannot stand by and let the Oil and Gas Authority and this government pursue a highly damaging strategy that I consider illegal and contrary to the government’s commitments to mitigate global heating.
Kairin van Sweeden is an SNP Common Weal organiser for the Northeast of Scotland, the daughter of an oil worker, an Aberdeen quine and Executive Director of the Modern Money Scotland think tank. She grew up in Aberdeen, the centre of the oil and gas industry in Scotland. Her father was eventually blacklisted by oil companies for his organising activities, along with around 700 other workers. She is passionate about building a future Scotland with lots of jobs in renewables and where public money goes towards the public good, not the wealthy polluters’ pockets.
This case is also supported by numerous environmental organisations including Greenpeace, Friends of the Earth Scotland, 350.org, and Fridays for Future Scotland.
What are the claims?
The UK Oil and Gas Authority (OGA) is a state-owned body that was set up to “maximise economic recovery” of oil and gas resources. This mandate is enshrined in legislation, specifically the Petroleum Act.
By not including the significant tax breaks that oil and gas companies receive in its definition of “economic recoverability”, the claimants are arguing that the OGA’s new Strategy, adopted in February, is unlawful. It supports the industry, rather than the UK public, and will encourage more oil and gas to be extracted, endangering climate targets and the Government’s commitment to net zero emissions.
Oil and gas extraction in the North Sea is contributing less and less to the UK and is increasingly a burden to the economy. The billions spent propping up the industry should be going to fund a just transition and a managed phase out of oil and gas production – not further drilling.
In court, they will prove that the OGA’s interpretation of the law is a massive handout to big business with disastrous consequences for the UK economy and our climate.
Most tax relief now and in the future will come from the costs of decommissioning – taking apart and recycling – the rigs, pipelines and wells scattered across the North Sea. Thanks to an incredibly generous tax system, the UK public is currently on the hook for roughly £18.3 billion in decommissioning costs. These costs will get even higher if more oil and gas is extracted from the North Sea. The polluter should pay, not us. Government policy is shifting the burden of cleaning up these sites to the public and letting companies off the hook. This has to stop.
The UK recently ended public support for fossil fuel projects overseas. So why continue supporting domestic production? If the UK, the sixth largest economy in the world, commits to end public support for domestic oil and gas extraction, it will be a powerful signal for the rest of the world to follow ahead of the crucial UN climate negotiations in Glasgow later this year.
It’s vital that a country like the UK—which has the resources, the skills and a booming renewables industry—demonstrates leadership on this agenda, showing how you can transition away from oil and gas while reskilling workers and creating thousands of decent, well paid jobs in the process.
The fate of entire communities hangs in the balance. The longer we fund business as usual the harder it will be to support a fair transition that puts oil workers and formerly oil-dependent communities at the centre of the new, green economy.