‘Unlawful and irrational’: UK Government taken to court over oil and gas subsidies

Environmental campaigners have launched a legal challenge against the UK Government, arguing that its continued support for expanding oil and gas production in the North Sea is incompatible with its climate laws and commitment to ‘levelling up’.

Brought forward by new campaign group Paid to Pollute, the application is for the High Court to conduct a judicial preview of the Oil and Gas Authority’s (OGA) recently updated strategy.

The campaigners, represented by law firm Leigh Day, claim that the strategy is not aligned with the UK’s legally binding net-zero target. This criticism had already been levelled at Ministers several times – most recently with the publication of the North Sea Transition Deal.

Of particular contention is the fact that the updated OGA strategy states that the sector has a “legal duty to maximise economic recovery” of oil and gas. Campaigners claim that this paves the way for new sites, and for uneconomic operations to continue to be propped up by subsidies.

Another point raised by the campaigners is that the strategy states that the oil and gas sector will“assist the Secretary of State [Kwasi Kwarteng] in meeting the net-zero target by reducing… greenhouse gas emissions from sources such as flaring and venting and power generation, and supporting carbon capture and storage projects”. Campaigners would, instead, like to see the sector focussing on capping and downsizing production.

Social implications

Aside from the climate implications of the strategy, the Paid to Pollute application claims that the framework is not in the best interests of the UK economy and taxpayer – and that, specifically, it conflicts with the Government’s commitment to ‘levelling up’ and to delivering a ‘just transition’ for communities currently dependent on fossil fuel revenues, such as Aberdeenshire.

“Every year, oil and gas companies receive subsidies worth hundreds of millions of pounds through reliefs on decommissioning offshore installations, reduced tax rates and tax allowances,” Paid to Pollute said in a statement. “In 2015/16 and 2016/17 the UK government gave more money to oil companies than it received in taxes.”

Leigh Day lawyer Rowan Smith said: “Our clients’ case is that the OGA’s new strategy encourages companies to produce oil and gas without considering the economic repercussions of that on the public purse and the UK as a whole. This means that, in some circumstances, such production is not ‘economic’ for the UK as a whole, but the OGA is still seeking to maximise it.”

The core claimants in the case are medical student and environmental activist Michaela Loach, SNP Common Weal organiser Karin can Sweeden and former oil refinery worker Jeremy Cox.

Cox said: “The UK provides more subsidies to the fossil fuel industry than any country in the EU but these massive handouts aren’t creating benefits for oil and gas workers or the public. In fact, as more and more money has flowed to the industry, conditions have only got worse for workers and the UK tax take has declined.”

Other green groups supporting Paid to Pollute’s case include Greenpeace, Oil Change International and Friends of the Earth.

edie has reached out to OGA and the UK’s trade body for the sector, Oil and Gas UK (OGUK), for comment.

A spokesperson at OGUK said: “Our industry has never been the recipient of subsidies, has contributed £350bn to the UK economy since oil and gas production began, and will use its essential expertise to accelerate the transition to a low carbon economy”.

By Sarah George

This article was originally shared on edie.