Is UK energy policy becoming a political football?

In the past few weeks, the people of Scotland have witnessed just how important energy policy is as the UK looks ahead to a general election.

The Holyrood government rolled back Scotland’s climate goals in April, leading to the Greens and the SNP resolving their coalition and Humza Yousaf vacating the first minister job.

This is not just an issue in Scotland, the whole UK is seeing energy policy become a “political football” as parties hope to score points with those for or against oil and gas.

However, Jake Molloy, a member of the Just Transition Commission and a former trade union boss, has argued that transitioning to cleaner energy should “not be about scoring political points.”

Goals that are ‘setting yourself up to fail’

Recently, the Scottish government’s Cabinet secretary for net zero and just transition Màiri McAllan announced that it plans to abandon its ambitious climate target of reducing greenhouse gas emissions by 75% by 2030.

In return, Ms McAllan revealed that there would be a string of moves made to cut carbon emissions from heating, transport and agriculture.

The suite of measures related to electric vehicle charging ports, the rollout of zero emission vans and other vehicles, shifts in agriculture policy and moves to roll out low carbon heating in Scotland.

This came as Scotland looks to summer for the publication of the government’s draft energy plan.

After these announcements, Mr Molloy said: “What they could be doing and should be doing is setting clear policy ambitions.”

© Supplied by DC Thomson/ Scott Ba

The move sees the Holyrood government move away from legally binding annual targets – which it has missed for eight out of 12 years.

To this, Molloy commented: “I’ve never been a great supporter of the idea of setting yourself up to fail, in terms of ambitious targets which at the outset might appear achievable but in reality, everybody around them at the time was suggesting that was a pretty tough deadline.”

When the energy transition and the jobs it sets out to create become politicised the workforce within Scotland’s energy sector feel the impacts, Molloy shared.

He said: “There’s still some doubts, as to whether or not we’re going to see the jobs created which have been muted by all parties, not just the Scottish Government in, it’s the British Government in that respect as well.

“I think therein lies another problem with the targets they set themselves because they politicise them.”

‘The idea of this whole transition becoming a political football’

The Just Transition Commission member that he is not a fan of “the idea of this whole transition becoming a political football.”

Jake Molloy shared his belief that slashing carbon emissions is in service of stemming a “global crisis”.

He continued: “Within the transition is necessary to address the climate crisis. It’s not about scoring political points.

“I think we should really be putting all of that to one side, the whole point scoring process, and instead working collaboratively to achieve transition for the benefit of Scotland, for the benefit of the UK and the wider global crisis that we quite obviously now face.”

For Mr Molloy, softening targets is not necessarily a bad thing, what he wants to see is policy that addresses the crisis and moves the country closer to net zero.

Offering a solution

Not a man to point out a problem without offering up a solution, the Just Transition Commission member gave his two cents on how to stabilise the energy transition and move away from a low carbon policy penalty shootout in the looming general election.

Late last year the Just Transition Commission claimed that Scotland was not on track to deliver, and that “significant” further action is needed to support the workforce.

In its second annual report, the Commission said the country’s ability to deliver a just transition hinges on a “genuine whole-of-government approach to delivery.”

The report outlined: “Use of just transition as a ‘fix-all’ term without specific policies and actions to actually realise it must be avoided from now on.”

Taking this further, Molloy agrees with policies suggested by the trade body Offshore Energies UK and Aberdeen and Grampian Chamber of Commerce.

Both groups have previously argued for a cross-party regulator for the UK’s energy transition to ensure stability in the market while enabling green jobs to flourish.

The trade body called for an independent statutory body with the powers and resource to oversee the delivery of UK energy objectives and net zero commitments, ahead of this year’s Spring Budget that delivered an extended windfall tax for oil and gas operators.

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In November, Aberdeen and Grampian Chamber of Commerce called for a similar body in its 38th Energy Transition Survey.

Both groups have likened the new regulator to the Bank of England, which has maintaining monetary and fiscal stability as its central mission.

On this topic, Jake Molloy said he “absolutely” backs this idea and that it is important to move forward while the country is at a “tipping point.”

He said: “If we don’t get something sorted now in terms of an actual plan that the country, governments and workers can look to as the future then we risk losing.

“For me, this is an industrial revolution on a scale we’ve never previously seen.”

Looking “way, way back” to the 1900s through the transitions to steam and coal and then into gas, Mr Molloy said that “this is a transition which warrants the kind of involvement and planning to benefit the state and workers.”

He continued: “We’re not going to do that with this mish-mash of political point scoring, it’s got disaster written all over it.”

‘We’ve got to do it in a way which dispels the myths’

To achieve a transition that will benefit workers and the country as a whole, Jake Molloy says there need to be stability in oil and gas tax policy.

The UK’s windfall tax created a headline tax rate of 75% on the oil and gas sector, since this policy was introduced 90% of North Sea operators have cut spending.

Following this, UK operators such as Harbour Energy and Serica have laid out plans to acquire firms operating overseas to diversify their portfolios with the former picking up Wintershall Dea as part of an $11.2 billion deal.

Mr Molloy explained: “To do the transition, we’ve got to get stability into that as a mainstream, which we have for decades.

“We’ve got to do it in a way which dispels the myths and becomes clear and transparent and is understandable to the public.”

The former union boss said that confusion around decommissioning and “what was paid tax and how they can get refunds” needs to be clear to the public alongside “petroleum revenue tax.”

© Supplied by DCT

There are currently investment incentives laid out in the UK’s windfall tax that allow firms to cut their tax bill by putting money towards UK projects.

However, the Labour Party –which is polled to win this year’s general election – has set aside plans to hike the headline rate of tax to be in line with Norway’s while closing what it calls “loopholes”.

The Labour policy has been unpopular with oil and gas firms that have pointed out that despite Norway having a high taxation rate, the country heavily incentivises firms to spend money within its waters.

Recently, Serica Energy’s chief financial officer Martin Copeland told Energy Voice: “The Labour Party is fond of saying they want to put a Norway tax in, but they’re not proposing a Norway tax. They’re proposing a worse than Norway tax.

“There’s an element to which you think, if we’re going to have Norway, we might as well have the full-fat version of Norway and actually go to Norway, right?”