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The politics of oil: how does it affect the UK?

13/02/2020

Oil is sometimes described as the lifeblood of the industrialised nations. In the UK, for example, oil meets 97% of UK transport sector demand. But as environmental concerns rise globally, how might this change in the future? Are renewables likely to fill the gap, especially with climate concerns, and how economically feasible is this?

The politics of oil: how does it affect the UK?

The status of energy in the UK

The UK has always had a strong dependence on oil, and it has been a particularly important factor in the strength of the British economy since the 1960s when the country began to develop strategic reserves offshore in the North Sea. However, the depletion of North Sea reserves means that the country is now increasingly dependent on unstable parts of the world for its energy supplies. 

There are now 120 onshore oil and gas sites with 250 operating wells in the UK, producing between 20,000 and 25,000 barrels of oil equivalent (BOE) per day. In 2014, the UK produced 1.42 million BOE per day, 59% of which was oil. The UK has seen a decline in the production of oil since 1999, and over 10% is now imported from other countries.

The country relies on imports for a significant proportion of its coal and gas: the UK currently imports nearly 75% of its coal from Russia, Columbia, and South Africa, and within 100 years, experts estimate that all the coal the country uses will be imported. More than 30% of the gas used by the UK is imported from other countries, notably Norway, Algeria, and Nigeria, and these imports increase to over 50% during winter peak season. 

According to Oil & Gas UK, Brent crude oil prices are projected to drop 12% in 2019, and, due to the continued uncertainty of supply and demand,  the oil market continues to be characterised by volatility. While some recovery in oil prices was realised in 2018 when Brent crude prices averaged about 31% higher than in 2017, prices remain about 10% below the ten-year average.  

Although the oil and gas extraction sector has been negatively affected by the fall in oil prices, sectors such as agriculture, air transport, refined petroleum manufacturing, and oil-intensive manufacturing will benefit as the price of their crucial input falls. 

Will renewables help the UK gain energy independence?

Despite the somewhat dismal outlook regarding oil, gas, and coal, the UK does have an abundance of a different type of energy, courtesy of the wind, sun, and sea—renewables. With some 40% of Europe’s wind energy sources, an average of 1,493 hours of sun each year, and over 7,000 miles of coastline, could green energy conceivably fill the gap and make Britain energy-independent again? 

Steps have already been taken in this direction. Wood fires have been producing heat since the earliest days of Britain, waterwheel technology was imported by the Romans in the 2nd century AD, and windmills first appeared in Europe during the Middle Ages. However, renewable energy sources first began to make significant contributions to the electricity generated in the UK in the mid-1990s. Focus on green energy has risen dramatically in recent years because of new UK and EU targets for the reduction of carbon emissions and commercial incentives for renewable energy, such as the Renewable Obligation Certificate scheme (ROCs), Feed-in tariffs (FITs), as well as the Renewable Heat Incentive. The 2009 EU Renewable Directive established a target of 15% reduction in total energy consumption in the UK by 2020.

According to green energy company Ecotricity, up to 50% of the UK’s energy needs could be met by wind sources and a further 20% generated via tidal power. While the UK certainly isn’t known for its sun, we still get enough to potentially glean a quarter of our electricity from solar power, and green gas sources—currently written off as waste—could cater for half of the country’s domestic gas needs. 

The UK is set to achieve an electricity-generation milestone this year. For the first time in more than a century, renewable electricity could be poised to overtake fossil fuels in the UK, according to a Guardian report. Research has revealed that green sources contributed more electricity to UK homes and industries than petroleum products during the third quarter of 2019, marking the first time that the electricity produced by wind farms, solar panels and biomass plants exceeded fossil fuels since 1882. The research confirms National Grid predictions that 2019 will be the first year since the Industrial Revolution that zero-carbon electricity will surpass gas and coal-fired power in the UK. 

Climate change: a hot topic in the UK

The goal of the Paris Climate Agreement is to keep global heating well below 2C above pre-industrial levels, and to aim for 1.5C. However, according to a recent report by the UN Intergovernmental Panel on Climate Change (IPCC), even the difference between 1.5C and 2C of heating will expose hundreds of millions of people to extreme heat, prolonged drought, catastrophic floods and worldwide poverty.

In the UK, climate change has been a controversial subject, triggering numerous protests and prompting the development of various policies intended to mitigate its effects. As in the rest of the world, the effects of climate change can be seen in the UK, where warmer temperatures, torrential rain, milder winters and unprecedented flooding is occurring at alarming levels. The climate crisis has even risen to the top of the UK’s election agenda, as reported by The Guardian on November 21. 

Current political discussion has increasingly revolved around the growing threat posed by climate change, although green advocates insist that these issues are not being considered seriously enough, and the need to take immediate action is still being largely ignored. Energy is one of the significant contributors to climate change, and the use of fossil fuels to generate electricity is believed to be pumping vast amounts of greenhouse gases into the atmosphere, amplifying sunlight, and trapping the heat in. This crisis has accelerated talk among the UKs political parties about where our energy comes from, and the environmental damage caused in its production.

According to The Guardian, the Labour Party has taken the unprecedented step of putting green issues at the top of its agenda—the first time either of the UK’s two major political parties has done so. Some of the initiatives discussed include an £11bn windfall tax on oil and gas companies, a projected million new jobs in a “green industrial revolution,” and more commitments toward moving to a net-zero carbon economy. The Liberal Democrats have also made the climate emergency a major priority, promising to generate 80% of the UK’s electricity from renewable sources by 2030, to move the net-zero carbon deadline up to 2045, to expand electric vehicles, and to ban fracking. The party said it intends to spend £100bn a year for the next decade on the climate crisis to replace high-carbon infrastructure and create new jobs. 

Unfortunately, the UK—like most of the EU’s larger member states—will likely miss some key environmental requirements to cut emissions of ammonia and PM2.5 by 2020. These goals were set forth under the EU’s National Emission Ceilings Directive and the Gothenburg Protocol, as well as the targets set out in the Water Framework Directive (WFD). In April 2019, the European Commission encouraged the UK to make additional efforts to meet its emission reduction commitments, and the DEFRA Clean Air Strategy published in January is attempting to put the country on track to meet its 2030 air quality targets.

Concern over climate change resulting in ‘climate anxiety’

The UK’s energy system is in the midst of rapid change, and public concern about climate change is at an all-time high. In 2017, the American Psychological Association (APA) produced a report explaining the impact of climate change on mental health, coining the term “eco-anxiety” and defining it as a “chronic fear of environmental doom.”

Although no statistics are available regarding the prevalence of eco-anxiety in the UK, some experts have noted a dramatic increase in the level of stress and worry surrounding the potential impacts of climate change on themselves, their children, and future generations. New National Grid research found that nearly seven of 10 people surveyed are concerned about climate change and feel that it is not being taken seriously enough by the British government and policymakers.

This eco-anxiety is likely being further aggravated by a perceived lack of urgency about addressing climate change and the impact that it will potentially have on future generations. Nearly 20% of the 18- to 24-year-olds participating in the research said they would be inclined to join a protest, perhaps having been inspired by Swedish student activist Greta Thunberg, who visited the UK during the summer of 2019. 

However, not everyone is stressed about climate change. Kwasi Kwarteng, the UK’s minister for energy and clean growth, seems to be mostly unaffected by climate anxiety. He was quoted in The Guardian report as saying that the UK is well on the way to ending its contribution to climate change by 2050: “Already, we’ve cut emissions by 40% while growing the economy by two thirds since 1990. Now, with more offshore wind projects on the way at record low prices, we plan to go even further and faster in the years to come.”

Jan Hill

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