The oil giant Shell has withdrawn from the Cambo oil field. The Cambo site, west of Shetland, in the Northern Atlantic, in waters 1,000 metres deep, was first given government approval in 2001. It could deliver 170 million barrels of oil
over 25 years, equivalent to the annual emissions of 18 coal-fired power plants. What does this news mean for the main stakeholder Siccar Point Energy and the dozens of other projects in the pipeline?
When news broke a few weeks ago that oil giant Shell would pull out of the controversial Cambo oil field, activists in the UK and around the world were ecstatic. The move was celebrated by environmental groups as a ‘death blow’ for the
project, which had been fiercely opposed since it surfaced into public consciousness six months ago.
With Shell citing the ‘weak economic case’ as the reason for their withdrawal, the main stakeholder Siccar Point Energy was left struggling to replace crucial funding and announced a week later that the project would be paused; a huge win
for the climate movement.
Activists and environmental groups have rightly pointed out that Cambo is not compatible with the UK’s net zero targets, and the government could face multiple legal challenges if it were given final approval—which now looks very unlikely.
Shell’s withdrawal, which has been described as a ‘death knell’ for new North Sea projects by an industry figure, came as a surprise given the recent announcement that the company would move its headquarters from the Netherlands to London.
In May, a Dutch court ordered Shell to reduce its carbon emissions by 45% by the year 2030, but the landmark ruling only applies in the Netherlands.
‘Shell’s withdrawal has been described as a ‘death knell’ for new North Sea projects.’
Shell is now appealing the ruling, and its CEO Ben van Beurden said that targeting a single company was ‘not effective’, but that we need ‘clear and ambitious policies’ instead. However, those policies are often blocked by aggressive fossil
fuel lobbying. Only recently the industry represented the largest delegation at the 2021 United Nations climate change conference (COP26), which is thought to have contributed to the watering down of language in the Glasgow Climate Pact.
Even before Shell pulled out, the political debate around Cambo—with Nicola Sturgeon coming out against the project and the Stop Cambo campaign mobilising tens of thousands—had threatened the North Sea’s reputation as a ‘safe basin’ for oil
and gas production. This has caused many big companies to sell their assets as the UK’s climate policy has grown more ambitious.
Elsewhere, Shell’s activities are still wreaking havoc. Only this month, the company was blocked from continuing with seismic blasting along South Africa’s coastline by a high court after having won a previous legal battle. Shell’s
activities would have disrupted vital whale breeding grounds and damaged ecologically diverse and sensitive environments, and there is no question that it will do so in jurisdictions with weaker environmental regulations.
Fossil fuels continue to be the main drivers of climate breakdown
Fossil fuels account for 75% of global greenhouse gas emissions, and earlier this year, the International Energy Agency urged that in order to keep temperature rise under 1.5°C, there can be no new fossil fuel developments. According to the
2021 Production Gap report, extraction and use of fossil fuels will need to decline by 6% a year in this decade, but the UK is on a trajectory to use twice the amount it can burn safely, and three times its fair share.
The North Sea Transition Deal—co-authored by fossil fuel industry management—commits to lowering emissions from oil and gas by 50% by the year 2030, which, perhaps not surprisingly, is lower than what is recommended by the Climate Change
Committee (68%) in its Sixth Carbon Budget.
The UK’s approach to phasing out fossil fuels relies heavily on carbon capture and storage, an unproven technology which has made little progress and cannot be used at scale so far. The UK Government may live in a fantasy world where it can
maintain business as usual, but it cannot change the real danger of fossil fuels derailing our ambitious climate commitments.
‘The UK government may live in a fantasy world where it can maintain business as usual, but it cannot change the real danger of fossil fuels derailing our ambitious climate commitments.’
While the industry has promised to cut emissions by 50% by the end of the decade, it does not take into account scope three emissions—those originating from the actual burning of oil and gas—which make up the vast majority of fossil fuel
emissions, ultimately rendering those targets almost meaningless.
Research by Oil Change International has shown that oil majors, the dominant oil and gas companies in the world, are not even close to meeting their targets under the Paris Agreement. In fact, the research has shown that most of them are on
track to significantly increase production between now and 2030.
Many net zero pledges were found to contain large exclusions, such as ignoring jurisdictions where climate regulations do not exist or excluding oil and gas projects with shared ownership between companies. Existing fields alone will exceed
our carbon budget to keep warming below 2°C, however, governments are currently planning dozens of new projects.
There are dozens of new projects currently in the pipeline
The Cambo oil field is only a symptom of a wider systemic issue; almost 20 new oil and gas projects have been approved for production in the UK since 2018, with a further 113 licences for exploration issued last year.
As it stands, companies are planning at least 40 new coal, oil and gas extraction projects in the next few years, based on an analysis by Friends of the Earth. The combined emissions would amount to 1.3 billion tonnes of carbon dioxide, or
the current emissions of the entire UK. The most imminent—the Cambo oil field, Cumbria coal mine and a new oil project in Surrey—would be equal to more than four times the emissions of all cars in the country. Between 2019 and 2030,
domestic UK oil production is projected to increase by 18%.
‘Companies are planning at least 40 new coal, oil and gas extraction projects in the next few years.’
Despite pledging to end overseas support for fossil fuels as the first major economy in the world, the UK is currently sending $1.15 billion to an offshore gas project in Mozambique which, over its life cycle, will emit more than all 27 EU
countries combined. While new pledges do not apply retrospectively, the UK Government is under immense pressure to cease such support and has been taken to the high court over the Mozambique project this month.
Although the Group of Twenty (G20) forum agreed in 2019 to end fossil fuel subsidies, governments have been circumventing their pledges by giving tax breaks to oil and gas companies. Currently, the UK has the highest fossil fuel subsidy
figure in the G20 after almost doubling support since 2016, whilst failing to plan for a managed phaseout.
The UK Government has a cosy relationship with big oil and gas
The UK is the most profitable country in the world for oil and gas exploration, with petroleum revenue tax permanently zero-rated and the government receiving less than two US dollars per barrel of oil (compared to $22 in Norway).
Our own laws require us to drill for every last drop of oil, as long as it can be extracted profitably, under a policy named ‘Maximum Economic Recovery’ (MER). By being constrained to what is profitable for oil companies, MER has been
criticised for its narrow view of what is economic.
Since signing the Paris Agreement, the UK has paid a total of £14 billion in subsidies to the industry, billions of which came from taxpayers’ money. Those public payments were the focus of a recent lawsuit by campaign group Paid to
Pollute, who sued the Oil and Gas Authority—a Government body—claiming that the exclusion of tax in the context of economic recovery is unlawful. The case went to the high court on December 8th 2021 and is now awaiting judgement.
‘The UK is the most profitable country in the world for oil and gas exploration.’
Climate court cases have been increasing in number and overwhelmingly come with favourable environmental outcomes. The UK Government is more than aware of this and is currently pushing through a bill restricting judicial review cases, which
form a large number of environmental cases. This sends a concerning message about the UK’s commitment to international law post-Brexit, and the rule of law in general.
The devolved nations are slowly waking up to the need for ditching fossil fuels, with Scotland distancing itself from the MER policy, and Wales having joined the Beyond Oil and Gas Alliance, which was formed at COP26.
The Government is currently developing a so-called ‘climate compatibility checkpoint’ for future projects, which will assess if new oil and gas licences are compatible with the UK’s climate change objectives—a suspicious policy when the
correct answer should be ‘no’ in every case, given that already operating fields will exceed our fair share under the Paris Agreement.
As climate leaders, we must prioritise a just transition
Oil and gas workers are finding themselves in a precarious position, with work security rapidly decreasing and no properly managed transition in sight. According to a recent survey, 80% of the workforce would consider changing careers—the
UK government must act now to make sure communities reliant on fossil fuels are not left behind and invest in skills, re-training and infrastructure for the emerging renewables industry.
Rather than finding loopholes to keep a dying industry on life support, we must now prioritise a just transition for oil workers into sustainable, unionised jobs. Without measures in place to guide the transition to clean energy, the
industry will keep pushing the argument that a fossil fuel phaseout will harm the economy and lead to increased unemployment.
With the right policies, a just transition can create three jobs for every one of the 40,000 fossil fuel jobs at risk. Research by Green Alliance has shown that shifting towards a circular economy could create up to 450,000 jobs by 2035—
the barriers are political, rather than technical.
‘With the right policies, a just transition can create three jobs for every fossil fuel job at risk.’
Phasing out fossil fuels has become a matter of morality, with recent research showing that 18% of global deaths can be traced back to air pollution caused by the industry— which could be cut in half by raising the price of fossil fuels.
The harm caused by fossil fuels amounts to $5.2 trillion a year, or 6.5% of the global economy.
For the UK as a whole, North Sea oil and gas have been borderline uneconomic for several years and the number of jobs has fallen by a third in the last six years alone. 80% of oil extracted from the UK seabed is exported, as it is too thick
for use in petrol and other high-value products, thwarting the energy security arguments which have been rampant since Cambo was officially paused.
Equity must be at the heart of a just transition. The UK has a historical responsibility for the climate crisis, which far exceeds that of India and China, which are frequently demonised to distract from the need to do our fair share to
reduce emissions. Developing countries are far more dependent on oil and gas revenues; in Iraq, 50% of public revenue comes from the industry, while that figure is close to zero in the UK.
More diversified economies must move fastest to end fossil fuel exploration and pay the climate debts they owe—in the form of loss and damage—in addition to the climate finance needed to aid decarbonisation in poorer countries. The longer
we leave the transition, the harder it will be to manage it. The consequences would be stranded assets and huge job losses, leading to economic instability.
Climate change is already devastating communities, landscapes and economies around the world, and the number of extreme weather events in Europe is increasing exponentially as action is taken nowhere near the urgency needed. The UK has a
unique responsibility as the birthplace of the industrial revolution, and will be judged harshly by future generations if it fails to act now to ensure a safe transition towards a more sustainable society.
Cambo may be halted, but the fight against fossil fuels is far from over.