Meeting of the Parliament 15 January 2019
Today’s just transition debate enshrines the importance of building a fairer and more equal society while transitioning away from carbon-dependent industries, but we must also recognise the impact on working people and communities across Scotland that depend on high-carbon sectors, notably oil and gas, and the alternatives.
Scottish Liberal Democrats have consistently forced the pace in countering climate change threats. We established the first-ever renewable electricity targets and set up the Green Investment Bank. We have also pressed for incentives to help people to switch to ultra-low-carbon vehicles and for the right fuel poverty policy to make our homes warmer.
In today’s debate, and in the work of the commission that the cabinet secretary has set out today, there needs to be a particular focus on those sectors in which emissions levels have barely budged since 1990, which include buildings, agriculture and transport. Even though technology is getting cleaner, transport is still immeasurably challenging because of increasing demand and poor uptake of alternatives. That is why we do not support any plans for a £250 million tax cut for aviation. If I can encourage the Cabinet Secretary for Finance, Economy and Fair Work to act in one area, it would be in relation to today’s publication of a glowing press statement from Edinburgh airport, saying how well it is doing. Its growth and record number of passengers do not suggest that the industry is in great need of the cabinet secretary’s largesse, given that there are many other areas of pressing need, not least in environmental policy.
Before Christmas, EnQuest, the current operator of the Sullom Voe terminal, held a commemoration dinner to recognise 40 years of production. My whole life, as an islander, I have seen changes in the oil industry, which is literally on our doorstep. Oil and gas in Shetland still employs 150 to 300 personnel on site—and that is just the direct jobs. In the past year, 66 oil tankers went through Sullom Voe, exporting 5 million tonnes of oil—105,000 barrels per day; and 17 per cent of the UK’s undiscovered gas reserves are located west of Shetland. Total has made gas finds there and Chevron has sold the Rosebank field to Equinor, which was previously known as Statoil. There is a huge role for the Oil and Gas Authority in oil and gas export routes.
Given the context for the debate, the important point is about the Sullom Voe terminal’s environmental standards. The Shetland standard, which was put in place many years ago, cannot be compromised; yet EnQuest has declared its intention to save £50 million per annum on the terminal’s running costs. Shetland depends on our coastal waters to fulfil the potential of the £300 million seafood industry, as does the Government—the food and drink sector and export numbers would not look much without the salmon that is grown around Scotland’s coastlines. Therefore, cutting pollution control and readiness at the terminal is not acceptable. Shetland lived through the Esso Bernicia and the Braer spills. West of Shetland is a highly challenging theatre of operation. I expect—and Shetland expects—the oil and gas industry to maintain the highest standards of environmental protection and readiness in the event of any oil spill. I ask the Government to recognise that argument and to maintain a watching brief through the appropriate government agencies, including the OGA.
On Maurice Golden’s earlier point, the oil and gas industry is changing. Just before Christmas, Shell announced that it was changing its executive pay policy and, from 2020, linking that to carbon emissions; linking pay to hitting targets is a novel approach in the commercial sector—one that we might even try in politics one day, although I suspect that that might be going too far. [Interruption.] Don’t tempt me. Certainly, it is important to recognise that there is some change there.
As the cabinet secretary rightly said, we need a sense of realism in policy development in relation to oil and gas. By 2035, the maximum impact of alternative technologies will reduce UK oil and gas demand only to around 100 million tonnes of oil equivalent, which is more than the oil and gas UK industry will produce, according to current forecasts.
Dave Moxham of the just transition partnership said to a parliamentary committee:
“There is a tendency to look at the issue in straight quantum terms rather than to look at the quality of jobs and particularly middle-income jobs ... many people who previously worked offshore now work as labourers. There is nothing wrong with labouring work, but it is not particularly good for an economy that people who were on £40 an hour now work for £10 an hour.”—[Official Report, Environment, Climate Change and Land Reform Committee, 15 November 2018; c 23.]
That is a notable point that the Government might wish to bear in mind. The oil and gas industry remains a hugely valuable asset to the UK, currently supporting around one out of every 100 jobs in the UK.
Angus McCrone, of Bloomberg New Energy Finance, said:
“Electric vehicles ... account for only part of oil demand. Cars account for only about 20 per cent of world oil demand. Even on our very aggressive forecasts for electric vehicle uptake, we see only about 7 million barrels of oil per day being taken out by 2040 as a result of electric cars and buses.”—[Official Report, Environment, Climate Change and Land Reform Committee, 15 November 2018; c 27.]
Overall demand for oil and gas in the UK in 2017 was around 150 million tonnes of oil equivalent per year, which was a 15 per cent reduction on 2008—such change is another notable feature. Given that UK oil production was around 90 million tonnes in 2017, even if alternative technologies were exploited to the maximum extent, UK production would not surpass the level of demand.
I do not think that there is a contradiction between supporting an indigenous oil and gas industry—which supports hundreds of thousands of jobs and is already going through significant change—and supporting climate change action across Scotland, Europe and the world. Eighty per cent of the UK’s 27 million households are heated by natural gas, which has helped the UK to reduce emissions; it can be a transition fuel for the future.
Presiding Officer, if I may, I will make two brief points on agriculture, as other members mentioned it, too. It is important to recognise both that UK emissions from agriculture declined by 14 per cent between 1990 and 2016; and the dichotomy in existing policy, with high costs for new entrants into farming—and even crofting—and reductions in support payments. That will lead to two directions of travel for farming communities: larger farms—agribusinesses—will have the resources to invest in climate-emissions-reducing technologies; while small units and crofters will struggle to do so. Reducing the subsidy that could negate some of the risks of investment might further remove the incentive for smaller, sometimes part-time businesses to participate, thereby creating further inequalities across agriculture.
Backed by the National Farmers Union Scotland, the farming for a better climate initiative is good and I hope that the finance secretary will look at the funding for both that project and the task force that the Cabinet Secretary for Rural Economy mentioned in the Parliament last Thursday. If we genuinely want to see a shift, the £375,000 spent in that budget line might need to be reconsidered. Current agri-environment payments, which are important across most of Scotland, are based on income foregone and do not always provide sufficient incentive compared with the risks of participation. The task force needs to give further thought to that area.
In winding up, I recognise the importance—