Last week it was revealed that the chief executive of fracking giant Cuadrilla penned a letter to UK MPs calling on them to relax regulations on the strength of earthquakes that are allowed during the fracking process. Despite heavy opposition from locals and environmental activists, Cuadrilla was given a licence to begin drilling at their Preston New Road site in mid-October last year. However, after just a month of drilling, operations were forced to shut due to a 1.5-magnitude earthquake being recorded near Blackpool.
Thankfully, and even a little surprisingly, the Conservative Energy and Clean Growth minister, Claire Perry, has refused to ease regulations for Cuadrilla, stating that they never communicated during the licensing phase that they would be unable to continue without a change in regulations.
What the Cuadrilla chief executive is essentially asking is ‘please allow us to put people and the environment at greater risk just so we don’t have to stick to the current regulations’. He’s also doing this after agreeing to the environmental regulations that came with the fracking licence. Given that many countries have either banned or placed a moratorium on fracking due to the earthquakes that they cause, asking for even greater leniency should have seemed like a very long shot…
The Ground-Breaking Process
Not because of its modern technology, but literally because it breaks through layers of rock into shale oil deposits, extracts oil and then fills the space left with a mix of water, chemicals and sand. There’s more detail on the process in one of my previous blogs: Natural Gas Exploration should Frack Off
The controversial method of oil extraction has come under heavy criticism from environmental campaigners and many locals that would be affected by the earthquakes that often occurring during the fracking process. Many other licenses are still being fought around the country as the Conservative government continue to push fracking as a viable fuel alternative to traditional oil and gas. The site at Preston New Road was the first to begin drilling, but events here should delay others being issued licences and should encourage more countries around the world to avoid fracking.
Paying for the Clean Up
The resistance shown by locals and environmental campaigners against fracking is an example of how the British public are rejecting the extraction of fossil fuels and prefer to look towards renewable sources of energy now and into the future. But it’s not just the battle to stop the fracking industry, it turns out we could all be paying for the mess left behind by the oil industry.
In an article published today in the New Statesman, taxes paid by the British public are helping oil and gas companies decommission rigs in the North Sea and it could cost us as much as £77 billion. The current cost to the public is estimated to be around £24 billion, but the Oil and Gas Authority (OGA) has reported that costs of decommissioning could be much higher prices due to uncertainty in the operators decommissioning costs, oil prices and exchange rates.
Currently, operators in the North Sea can deduct up to 75% of their spending on decommissioning from the taxes that they have paid anytime between the present day and 2002. In 2016-17, due to low oil prices, the oil and industry contributed no tax to the HMRC. Instead, they were repaid £290 million in taxes when decommissioning costs were considered. Also, should an oil and gas company go bankrupt or be unable to pay to decommission oil rigs they have operated in the North Sea, the entire cost of decommissioning and cleaning up rests on the shoulders of the British taxpayer.
Ludicrous.
But What About the Polluter Pays Principle?
The British government, in allowing oil and gas companies to essentially be paid to clean their mess up, are completely ignoring the ‘polluter pays principle’; a principle in environmental law that states the party responsible for producing pollution is responsible for paying for the damage done to the natural environment.
Whilst it isn’t an oil spill or any other environmental disaster that’s being cleaned up, leaving a rig to rust in the North Sea is surely polluting the region? So why should taxpayer money go towards cleaning the mess of others?
The significant tax breaks were brought in to make oil extraction in the North Sea more attractive to the oil and gas industry. As the price of oil has increased due to the cost of extracting North Sea oil and gas, further tax cuts to the oil and gas industry were brought in to keep it competitive with international sources. Now we find ourselves in the position where we will be cleaning up the mess that has been left for decades to come, all at a cost to the UK taxpayer.
Moving Forward
British taxpayer money being used to decommission the mess that the oil and gas industry has left, and will continue to leave, in the North Sea is an incredible misuse of public funds. The Conservative and past Labour governments addiction to fossil fuels and the need to keep the North Sea oil and gas industry attractive to investors has meant that future generations will be funding the future clean up of rigs.
This addiction to fossil fuels and huge tax breaks offered to the oil and gas industry mean that the UK lags a long way behind many other European countries when it comes to investment and as countries around the world transition to a clean energy future, the UK will remain stuck, tied to fossil fuel interests. All because we wanted to make it attractive to investors.
It is vital that this stops. Taxpayer money should not be used to clean up the mess of the multi-billion pound oil and gas industry that is still turning over profits in the face of the climate disaster we find ourselves barreling towards. Bonds that put money to one side to be later used in the decommissioning of oil rigs should be created for any company looking to extract oil from the North Sea. Money that is then saved from decommissioning the leftovers of oil and gas should go towards investing in renewables and the cleaner technology of tomorrow.
It’s time we left the fossil fuels behind and work towards a cleaner, healthier future for all.
