Financial

The UK provides tens of millions of pounds in tax breaks to the fossil fuel industry every year. This includes incentives for deepwater oil drilling in Scotland. It also includes government assistance to UK companies involved in oil drilling abroad through the Export Credit Guarantee Department, as well as loans through the various branches of the World Bank for fossil fuels.

The UK government also provides international oil companies with diplomatic support which has been instrumental for BP and Shell in order to get controversial contracts in places like Libya, Iraq, Azerbaijan and Russia.

it’s extremely difficult to estimate the total amount the government gives to support fossil fuels because the UK government refused to submit an assessment of its fossil fuel production subsidies to the G20. However, we do know that between 1998 and 2010, the UK Export Credits Guarantee Department provided over £200 million of under-writing support for oil companies alone. That means that UK taxpayers were providing the financial guarantee for oil companies operating outside the UK, and thus taking the financial risk for these companies.

At the same time, a significant part of the UK’s aid budget was channeled through the World Bank – whose various lending arms are estimated to have provided $4.7 billion in support of fossil fuels for the first ten months of the 2010 financial year dwarfing the amount spent on renewable energy and clean technologies.

When the Coalition government came to power they promised support for a low-carbon economy and pledged to reform fossil fuel support through the Export Credits Guarantee Department. So far, no change. While we are now facing deep cuts across many of our vital social services, government support for carbon intensive industry continues. How much we’re supporting it is still kept secret.

Regulation

Up until 2006, most of the US was subject to a freeze on offshore drilling after oil spills in 1969 and 1979 devastated US coastlines. This was reversed by President Bush in 2006 and Obama who in 2010 when they opened up millions of acres of sea floor to oil companies. In the wake of the Gulf of Mexico oil spill, President Obama reinstated a six-month moratorium on deep sea drilling until he understands what caused the BP disaster. The EU energy commissioner has called for an EU-wide moratorium on deep water drilling.

But so far, the coalition government in the UK have refused to call an end to new drilling in UK waters, arguing that everything is just fine with the regulatory regime. But there are worrying signs that cost-cutting measures, a lack of capacity and resources, an ageing infrastructure, and a trend towards “light-touch” regulation could lead to very dangerous situations in UK waters, as detailed in a new report from Platform.

BP and other oil companies operating in the North sea have already received warnings from the Health and Safety Executive that they are failing to operate rigs and other offshore equipment to appropriate standards. And come October BP plans to begin a deep drilling operation off the Shetland Isles to depths of 4,265ft.

In January 2010, the UK government announced that it is opening up waters all around the UK for offshore drilling, and invited oil companies to apply for licenses. The recent licensing round has so far attracted record numbers of bids, not least because it went hand in hand with the announcement of record tax breaks to encourage expansion of oil exploration, particularly in the region West of Shetland. These are some of the deepest in UK waters and industry bodies have admitted that the region is hampered by a “hostile marine environment, extreme weather and the shortage of infrastructure”, making projects “high risk and technically challenging”.

A Gulf-style blow-out off Scotland's coast would wreak havoc not only to fragile habitats and biodiversity, but also to the UK's economic recovery.

Globally direct subsidies to fossil fuels are ten times the subsidies to clean energy. It’s time for all of us to start investing in our future and a low carbon economy. Taking greater risks to reach the last oil on the planet is gambling with our future. That’s why we’re calling for:

• An immediate ban on offshore drilling and exploration of all high-risk unconventional oil sources (including in UK waters, in the Arctic and the Canadian tar sands)
• Phasing out of fossil fuel subsidies and an increase in support for clean energy
• Strong laws and policies that limit greenhouse gas emissions and stimulate the transition to the clean energy age.