This week the Financial Times brought together representatives from across the oil and gas sector for its oil and gas finance and investment forum in Aberdeen.
The forum took place less than three weeks before the UN Climate Action Summit in New York, and amid a growing understanding among investors and the public alike of the devastating impact the industry is having on the global climate. It would therefore seem pertinent that debate on “reinvigorating the North Sea” at the forum would put front and centre discussions on how oil and gas companies can contribute positively to the UK’s target of zero net emissions by 2050 — yet there seemed to be little sign of this on the published agenda.
The 2015 Paris Climate Change Treaty, to which the UK is a signatory, aims to hold the global average temperature increase to well below 2C and pursue efforts to limit it to 1.5C. The recent “Sea Change” report produced by Friends of the Earth Scotland, Oil Change International and Platform — using data from Rystad Energy and the UN Intergovernmental Panel on Climate Change — shows that the UK’s 5.7bn barrels of oil and gas in already-operating oil and gasfields will exceed the UK’s share of emissions in relation to the Paris climate goals.
Recent tax changes, such as the decision to zero-rate petroleum revenue, while allowing oil and gas companies to continue to claim rebates for a variety of expenses, including decommissioning, means that the UK taxpayer is now subsidising fossil fuel companies. Globally, the average government tax take from offshore oil and gas projects is, according to Rystad, around 75 per cent. In the UK it is 40 per cent.
Former prime minister David Cameron once described fossil fuel subsidies as “economically and environmentally perverse”. If the oil and gas sector continues to bury its head in the sand it risks being left behind in a rapidly changing world. If these companies want to remain relevant they cannot miss opportunities like today to develop a meaningful plan on reducing their destructive impact on the environment.
Get alerts on Letter when a new story is published