Here’s the February programme – our second consecutive show focussing on the Arctic. Our guests this week are:
- Joan Walley MP, Chair Environmental Audit Committee
- Charlie Kronick, Greenpeace UK
- Louise Rouse, Fair Pensions
- James Marriott, Platform
In January’s Climate Radio we explored how the observed rate of change in the polar north is surprising scientists into revising their projections for the speed at which global warming will unfold – unless we take urgent action. But where scientists see warning signs and a wake up call, oil companies and their friends in government see only economic opportunity. So this month we take a look at where some of the battle lines lie in the fight to stop the Arctic being drilled for oil and gas and how concerned citizens can get involved and help win the war.
Last September a cross-party parliamentary committee of MPs in the UK called for a moratorium on drilling in the Arctic – concerned about the potential impact on climate change and about the lax safety regime surrounding this high-risk activity. In January this year, the UK government responded by rejecting the committee’s key recommendations and using old science to suggest that Arctic drilling could be compatible with avoiding dangerous climate change. At the same time a Freedom of Information Act request discovered they the government had been lobbying against EU legislation designed to make Arcitc drilling safer.
Over the course of 2012 Shell’s claims that they were “Arctic Ready” collapsed after a succession of calamities and oil companies and investors started getting cold feet. In this programme we also look at how Shell’s Arctic drilling plans poses a risk to your pension and what you can do about it.
Arctic Drilling and “Dangerous” Climate Change
There is enough carbon in known fossil fuel reserves already to fry the planet. That’s before we add in new resources from the Arctic which are currently classified as “undiscovered”. So it is difficult to see how Arctic drilling could ever be compatible with avoiding dangerous climate change. The UK government’s attempt to show that it is (p.5) is not looking very convincing.
The government is using figures from the International Energy Association’s 2011 World Energy Outlook to show that Arctic drilling could proceed and still keep global average temperature rise within 2C. The first thing to notice is that the IEA’s principle concern has always been “energy security” with environmental security always ranking much lower on its priority list. When answering a question of science, the government should be using the latest and best science rather than the science chosen by the IEA.
Nevertheless Greenpeace has taken the government’s argument at face value and found it wanting for the following reasons:
- the government should have been using the IEA’s latest figures from WEO 2012 (not 2011)
- these figures show that oil “production figures [under the 450 Scenario] in the WEO 2012 indicate that world oil supply – a combination of existing production – plus fields yet to be developed, but already discovered – will meet that demand. This does not include Arctic fields [which IEA 2012 define as] yet to be discovered.”
So even on its own terms, it would seem the government’s argument has no legs. That’s even before we consider that:
- the IEA “450 Scenario” only gives a 50% chance of staying within 2C
- the highly rigorous Carbon Budget developed to inform the UN climate talks in Copenhagen in 2009, suggests that we can only release 20% of the carbon that is already contained in fossil fuel companies reserves if we want to give ourselves an 80% chance of staying below 2C (which is obviously still not a guarantee)
- 2C is no longer regarded as safe by scientists
- Leading climate scientist James Hansen and colleagues have calculated that we need to reduce atmospheric CO2 from current levels to between 300 and 350 parts per million “if humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted” so the “450 Scenario” that the government and the IEA are relying on is dangerously out of date
- even the IEA thinks that with our current policies alone, we are heading for a catastrophic 6C of global warming, so we should be grabbing every available opportunity to stop ancient carbon reserves being released to the atmosphere
Shell’s Comedy of Errors
The good news is that Shell’s record in the Arctic has been such a litany of disasters that any government wanting to explain a policy u-turn on the Arctic just has to point to this appalling safety record on the one hand and the inordinate risks (ecological, social, financial) on the other. Here are some highlights from Shell’s Arctic adventures in 2012:
- February: US Government Accountability Office concludes Shell is insufficiently prepared to meet the various challenges associated with Arctic drilling
- July: Shell briefly loses control of its Noble Discover rig after slipping its mooring and comes close to running aground; Shell’s spill response barge repeatedly fails to obtain Coast Guard certification; sea ice blocks access to the drill site
- September: Shell is forced to postpone exploratory drilling until 2013 after repeatedly failing to receive Coast Guard approval for its containment barge; after just one day of beginning to drill two preparatory wells, Shell suspends the operation when a 360 square mile ice pack heads towards the site
- September: Shell’s oil spill containment system test was a “spectacular failure” in which the containment dome was “crushed like a beer can”; the public only find out about this in December through a Freedom of Information request by a local public radio station
- November: Shell experiences numerous complications getting its Kulluk rig out of the Beaufort sea as winter sea ice approaches
- November: Shell’s Noble Discoverer drilling rig catches fire, an explosion is felt 200 yards away onshore
- December: The engine fails on the vessel towing Shell’s Kulluk rig; in difficult weather conditions, the Kulluk breaks free from a replacement towing vessel and Kulluk runs aground on the island of Sitkalidak; it is possible that Shell put the Kulluk on an accelerated schedule in order to avoid paying taxes (Repeated Misadventures)
- February 2013: Shell has sent its two Arctic drilling rigs to Asia for extensive repairs, putting its drilling and exploration activities in the region this year into question.
Shell is the company that in 2011 ran a campaign telling us that it was Arctic Ready. In the face of all the evidence to the contrary, in July 2012 the Vice President of Shell Alaska Pete Slaiby was sticking to this line asserting that “Shell has been Arctic-Ready for Years”.
Shell’s Drilling Plans Under Review
Shell’s drilling operations are currently on hold while the US Department of the Interior conducts a review of Shell’s activities in the Arctic looking at the company’s safety management systems; its oversight of contracted services; and its ability to meet US standards for Arctic development.
Shell also faces a possible criminal investigation by the Department of Justice which is looking at 16 safety violations identified by the US Coast Guard in relation to the Noble Discoverer The US Coast Guard has also announced an investigation into the grounding of the Kulluk.
Interestingly in February, a month after the Department of the Interior announced its review, President Obama nominated Sally Jewell as the new Secretary of the Interior, replacing Ken Salazar who had been criticised for his closeness to the oil industry and his active promotion and expansion of offshore oil drilling. Under Salazar’s reign BP’s Deepwater Horizon and 100s of other offshore drilling projects were exempted from full prior environmental review. Speaking in 2010 after BP’s Deepwater Horizon rig exploded, director of the Center for Biological Diversity, Kieran Suckling said:
Salazar has been a major proponent of the offshore oil drilling industry. He passed legislation as a senator in 2006 to open up the Gulf of Mexico in the first place to offshore oil drilling. He gets campaign contributions by British Petroleum. And then he walks into this agency he is supposed to reform, and instead of reforming it, pushes it to do even more offshore oil drilling.
Calls for a Moratorium Grow Stronger
In September 2012, when the UK parliament’s Environmental Audit Select Committee recommended a moratorium on Arctic drilling and establishing a sanctuary in the Arctic where drilling would not be permitted, it was adding its voice to a growing global demand.
At the start of 2012, 573 scientists, 60 members of Congress and 400,000 sent letters to the White House demanding a halt to offshore drilling. This year a coalition of 18 US environmental groups called on Obama to suspend oil and gas drilling in the Arctic and as of February 2013, nearly three million people have signed Greenpeace’s petition to create a global sanctuary around the North Pole and ban drilling and destructive industry in the Arctic.
In August 2012, indigenous representatives at an international meeting issued a Joint Satement Of Indigenous Solidarity For Arctic Protection. The Statement was subsequently endorsed by the Alaska Inter-Tribal Council.
… Today we gather our forces and refuse to continue to stand silently by, witnessing the destruction of our land.
We stand together in our call for a ban on all offshore oil drilling in the Arctic shelf. We cannot accept the ecological risks and destructive impacts of a spill on our lands and in our seas. The irresponsible practices of oil companies everywhere have provided us with more than enough evidence that oil spills in the Arctic seas will be inevitable. At the same time there are no effective and tested methods to prevent or clean up oil spills in the freezing Arctic seas …
Oil Companies and Finance Get Cold Feet
Throughout 2012 both oil companies and the financial sector became increasingly chilly towards the idea of Arctic drilling.
In July BP suspended its Arctic Liberty project due to cost and safety concerns. In September Total’s chief executive warned against Arctic drilling saying: “Oil on Greenland would be a disaster, a leak would do too much damage to the image of the company.” That same month, Statoil said it was postponing its Arctic drilling plans in order to see whether Shell could “demonstrate exploration operations can be reliably and cost efficiently conducted in the field.”
In the financial sector, Investment Bankers Credit Agricole CIB have introduced a policy which prohibits the funding of new offshore drilling projects. In April,German bank West LB said it would not be funding Arctic drilling as “the risks and costs are too high” while Lloyds of London (self-described as “the world’s leading insurance market”) described Arctic drilling “a unique and hard to manage risk.”
Is Your Pension at Risk?
According to Fair Pensions, Shell is generally one of the largest holdings in every UK pension fund. The risk of an oil spill in the Arctic poses significant risks to investors in Shell. As Fair Pensions put it:
The financial impact of the Deepwater Horizon spill on BP plc demonstrates the company-wide impact of failings at a single operation. Investors should consider whether potential failing at Shell’s Arctic-conditions projects, which are driven by its Exploration & Production division, pose a significant risk to the overall financial health of the Shell group.
The Deepwater Horizon disaster saw BP cancel its dividend pay outs and the company’s share value experienced a long-term drop from which it has still not recovered. BP has been selling off its assets in order to pay for its costs in relation to the spill. These costs amount to over $40 billion so far with perhaps another $40 billion in the pipeline.
Increasingly we are seeing fossil fuel companies moving into a range of higher risk activities – such as tar sands, gas fracking, deepwater and Arctic drilling – as the “easy oil” runs out. Longer term, policies to limit climate change will turn many fossil fuels company assets into liabilities.
Fair Pensions has published a number of resources for investors concerned about the the risks of Arctic drilling. See the Action section below for actions you can take on this.
What Could the UK do if there was the Political Will?
Despite Prime Minister David Cameron’s husky-hugging election campaign trip to the Arctic, the UK seems to be actively hindering EU efforts to make Arctic drilling safer. It turns out that the Foreign and Commonwealth Office (traditionally very close to the oil companies and concerned with securing their interests) is leading on the UK’s Arctic policy – over-riding the Department for Energy and Climate Change and making a mockery of our UNFCCC commitment of avoiding dangerous climate change.
As the Environmental Audit Committee continues its work to dismantle the FCO’s false logic, we look forward to seeing the government accepting the common-sense recommendations of the committee and going further by playing an active role in advancing Arctic protection through such measures as:
- Joining those advocating publicly for a ban on Arctic drilling (eg senior White House figures Carol Browner & John Podesta)
- Using our influence positively in the EU
- Helping build an international alliance in favour of a ban on Arctic drilling
- Imposing restrictions on bank lending (RBS, Export Credit, International Finance Institutions including the World Bank)
Action You Can Take
- Sign the Greenpeace petition calling for the Arctic to be declared a global sanctuary
- Write to your MP about the issue – tell them why you care about climate change, make them aware of the EAC’s recommendations and the government’s refusal to implement them
- If you have a pension, start a conversation with your pension fund drawing on resources provided by Fair Pensions