UK has given oil and gas industry £13.6bn in subsidies since Paris Agreement, say campaigners

Campaigners taking the government to court over plans to expand fossil fuel production in the UK have said oil and gas firms have benefitted to the tune of £13.6bn from the UK government since the Paris agreement was drawn up in 2015.

Based on a new analysis of Organisation for Economic Co-operation and Development (OECD) data, the research highlights that between 2016 and 2020, companies received £9.9bn in tax reliefs for new exploration and production of oil and gas, and £3.7bn in payments towards decommissioning costs.

The campaigners suggested these payments and tax reliefs amounted to subsidising fossil fuel production.

Such financial incentives aimed at UK oil and gas companies are at the centre of a legal case that will be heard at the High Court on 8 and 9 December.

The campaigners, from environmental group Paid to Pollute, argue this is neither economic for the UK as a whole and also conflicts with the country’s legal duty to achieve net zero emissions by 2050.

Three environmental campaigners are challenging the UK government, arguing that the state-owned Oil and Gas Authority’s current mode of operation is unlawful because it encourages production of oil and gas.

OGUK, which represents the UK offshore oil and gas industry, is currently lobbying the government to approve up to 18 new projects, according to energy news website Edie.

This figure includes the controversial Cambo oil field off Shetland. However, the International Energy Agency has said new investment in oil and gas projects must stop this year if governments are serious about tackling the climate crisis.

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Drilling at Cambo could start as early as 2022 if the OGA gives Shell and Aberdeen firm Siccar Point the go-ahead. The field would be expected to operate for about 25 years, producing up to 170mn barrels of crude oil from 2025 until 2050, with plans for a second phase of production beyond that.

According to Greenpeace, the environmental damage would be equivalent to running 18 coal-fired power stations for a year.

Lord Deben, chairman of the Climate Change Committee, the government’s statutory adviser, told MSPs in Holyrood in August: “The justification for any new oil and gas exploration or production has to be very, very, very strong and I cannot say that I have so far seen any such evidence.”

Mikaela Loach, one of the campaigners taking the government to court, and who is a medical student at the University of Edinburgh, said: “The UK government’s support for new oil and gas not only undermines global climate goals and any sense of climate justice, it also risks wasting huge amounts of public money on projects that are more likely to line polluters’ pockets than bring any real economic benefit to this country.

“As a country with significant historical responsibility for the climate crisis, the UK has an obligation to be one of the first to move away from oil and gas production, deliver a just transition and, like Scotland, commit to financing communities that are already dealing with the impacts of the climate crisis.”

Jeremy Cox, a former oil refinery worker who is also a claimant in the high court case, said: “Just weeks after world leaders gathered in Glasgow and the prime minister urged them to keep the 1.5C target alive, the UK government will have the hypocritical audacity to argue in High Court that it should continue to subsidise new oil and gas production.

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“We know every new oil and gas project is incompatible with the 1.5C target. The UK should listen to the International Energy Agency and the United Nations, reject projects like Cambo and use the public money we’ve wasted on oil and gas extraction to fund a just transition and support other countries to decarbonise.”

A spokesperson for the Department of Business, Energy and Industrial Strategy told The Independent: “We cannot comment on ongoing legal proceedings.

“The UK does not give any subsidies to fossil fuels, and we follow the approach of the International Energy Agency. No other significant oil and gas producing nation has gone as far as the UK in supporting the sector’s gradual transition to a low carbon future, as demonstrated by our North Sea Transition Deal.

“While we are backing the UK’s oil and gas industry’s transition to green energy, there will continue to be ongoing but diminishing need for oil and gas over the coming years while we ramp up renewable energy capacity, as recognised by the independent Climate Change Committee.

“The Cambo oil field was originally licensed in 2001. Development proposals for oil fields under existing licences are a matter for the independent expert regulators. No decision has been taken yet.”


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