Image source, Getty Images
- Author, James Kok
- Role, Scotland Editor
-
When BP found oil in the North Sea in 1970, Aberdeen found gold.
The discovery of the gigantic Forties Field sparked an economic boom that brought jobs to the city, profits to energy giants and taxes to the Treasury.
It also fuelled the rise of nationalism, with the British government privately acknowledging that oil had the potential to make an independent Scotland one of the richest countries in Europe.
North Sea production peaked 25 years ago and this general election focuses on the transition to renewable energy, including wind, wave and solar.
The UK’s main political parties have committed to achieving ‘net zero’, which means a country removes more greenhouse gases from the atmosphere than it puts into it.
But when it comes to the pace of change, they are pulled in different directions.
Environmentalists are urging the UK to immediately cut production of fossil fuels such as oil, gas and coal.
Industry leaders, union members and local officials are all concerned about the economic impact of a rapid transition to greener energy projects.
If you were to immediately stop oil and gas production, says Andy Shirreffs, who works offshore, “you would bankrupt this area. This place would be destroyed.”
“This is how I earn my bread,” he adds. “This is how I feed my children and educate them and if I can’t do that, then I’m struggling.”
Are oil and gas companies struggling?
In 2022, after global oil prices were boosted by Russia’s invasion of Ukraine, BP earned $27.7 billion. Shell’s profit was $39.9 billion, the highest in its 115-year history.
The British Conservative government responded with a windfall tax, a levy imposed on companies that profited from something for which they were not responsible.
The overall tax rate on oil and gas production was increased to 75%, which will apply until at least March 2029 if the Conservatives win Thursday’s election.
The Labour Party wants to increase the rate to 78% and abolish a number of tax benefits for investments.
The Liberal Democrats’ manifesto proposes a “real, one-off tax on the super profits of oil and gas producers and traders”.
The Scottish National Party says it supports the current windfall tax rate and calls for more powers over tax to be devolved to the Scottish Parliament.
Ryan Crighton from the Aberdeen and Grampian Chamber of Commerce says the windfall tax was originally intended to be a one-off, but has now been extended for six years and is having a positive impact on jobs.
He is even more concerned about the possible elimination of tax breaks for investments, which he says would mean that companies “can no longer invest their profits in new projects and thus create more jobs in the economy”.
The issue is a hot topic in three constituencies in the north-east of Scotland, with polls suggesting the SNP is set to challenge the incumbent Conservatives after boundary changes.
But politicians also face more fundamental questions about the UK’s energy mix.
First, who owns the country’s natural resources and who gets to benefit from them?
Campaigners for Scottish independence have long argued that the wealth beneath the North Sea should have been exploited for public rather than private gain.
They point to the example of Norway, which in 1972 set up a state-owned company to extract its share of North Sea oil and invested the proceeds in a sovereign wealth fund.
The debate over public versus private ownership has flared up again when it comes to renewable energy.
In 2022, Labour pledged to set up Great British Energy, a “public clean energy company” that the party later said would operate like Sweden’s Vattenfall or Denmark’s Orsted.
But in later interviews, senior Labour figures including leader Sir Keir Starmer said GB Energy would be “an investment vehicle…not an energy company”.
Trade unions would like more clarity about the plans.
Unite, which says it has thousands of members in the offshore oil industry, has refused to endorse Labour’s manifesto, partly because of the party’s energy policy.
Last week, the union, which has previously donated large sums of money to Labour, organised a demonstration in Aberdeen, explicitly criticising the party.
Union members chanted with banners: “No ban without a plan”.
“We don’t want what happened to the miners to happen again,” said Unite organiser Claire Peden, adding: “We say no more blank cheques for the Labour Party.
“If they don’t side with the workers, and they don’t side with the communities, then it’s clear that that funding goes to these kinds of campaigns instead of to the party.”
Ms Peden says that under current Labour plans, around 100,000 workers could lose their jobs, including 35,000 in Scotland.
Are such warnings credible?
It depends, says Prof. Paul de Leeuw, director of the Energy Transition Institute at Robert Gordon University in Aberdeen.
He says that if there is “no support for the industry” and all investment is immediately halted, it will have “huge implications for employment”.
But, adds Prof. de Leeuw, that is “unlikely” because “what we will hopefully see is a compensation from the renewable sector. One is going down, the other is going up”.
“We have to get it just right,” he concludes.
That leaves open the other fundamental question: should new oil exploration be allowed at all?
The Conservatives say yes. The SNP and Lib Dems maybe. Labour, no.
Some climate activists argue that this is not enough. They argue that even existing drilling permits should be revoked and production stopped immediately.
Critics of that position say the British economy is still heavily dependent on oil and that closing the North Sea would only force the country to import more oil from abroad.
Environmentalists point out that human activity has been the main cause of climate change since the Industrial Revolution transformed the British economy from agriculture to manufacturing in the 18th century.
“Burning fossil fuels releases carbon dioxide into the air, warming the planet,” the Met Office explains.
“I am so disappointed that there is so little leadership, so little courage and daring,” said Alison Stuart of the campaign group Aberdeen Climate Action.
“We need to get to net zero,” she adds.
A quarter of a century after the peak of production, that is not up for debate in Aberdeen.
It is the speed of that change and the way it is handled that creates disagreements.
It appears that whoever forms the next government will have a major challenge arranging the transition.
More information about the policies of all parties in the field of oil, gas and climate change can be found in our manifesto guides.