Tom Baxter is senior lecturer in chemical engineering at Aberdeen University.
Recently I have been posting a range of decommissioning articles on a well-known career and business social media site. The posts were historic articles of mine questioning the appropriateness of the associated marine legislation and the UK’s current approach to offshore architecture removal. Much of the material was previous Energy Voice opinion pieces. The motivation for this was to raise awareness of my exposition of leaving clean architecture in-situ and to use the money saved to fund green energy projects. I hoped to stimulate debate and test the reaction to my exposition. The articles clocked over 30,000 hits. The responses received were overwhelmingly supportive. As expected though, on a complex issue like this, there were detractors.
My exposition assumed that, going forward from today, the planned decommissioning activities would cost the taxpayer around half the bill. I am in good company here as evidenced by the following;
Price Waterhouse
‘And with UK taxpayers effectively footing the bill for as much as half the costs of decommissioning following the introduction of new UK government reliefs, it is in all our interests for as much as possible of the work to be completed by the UK, rather than overseas companies, and to protect their revenue base.’
KPMG
‘The Wood Report estimates that the total decommissioning cost over the next 30 years could reach £50 billion with a significant proportion falling on the taxpayer. ‘
Wood Mackenzie
‘Governments in most regimes are responsible for a share of the costs. In the UK we forecast the government will spend around £25 billion on tax relief in the future (45% of the total remaining UK decommissioning bill).’
However, critics said it is not a cost to the taxpayer, it is a rebate of over-paid historical taxes. I just don’t get this position. Let’s say someone gives me £110 instead of £100 on the understanding that I will give the £10 back at a later date. I spend all the £110 on other things and have not put the £10 aside. The time comes to give the £10 back, I don’t have it anymore but I’m obliged to pay. It will now cost me £10. You can argue that I should have put the £10 aside but I didn’t, so it will cost me £10. Are we not in the same position looking forward with decommissioning? The taxpayer will pay half the costs – am I wrong?
Another consistent criticism was based on environmental benefit; the right thing to do was to remove as mandated by OSPAR 98/3. I repeatedly asked the critics to show me in OSPAR 98/3 where the science was that delineated the reason why removal was good for the environment. No one responded to that direct request. I can’t find the environmental motivation for removal in OSPAR 98/3 – am I wrong?
Some of the other criticisms follow. I suppose if I put my head up I should expect this type of response.
One such criticism was that I can’t be taken seriously because I have never worked on a decommissioning project. That point was completely bewildering. Why does lack of direct project experience dilute my ability to review OSPAR 98/3, assess associated environmental impacts or discuss costs and the UK tax framework? During my industrial career I established a decommissioning consultancy provision and had an environment team undertaking decommissioning Environmental Impact Assessments. Doesn’t that qualify me?
As a taxpayer, the largest stakeholder in decommissioning, all I’m asking for is an evidence based review of the current plans. A review using full cost accounting techniques, quantifying environment, economic and societal metrics, to show the taxpayer that we are doing the right thing by, in most instances, going for full removal. And before it all kicks off, I appreciate that there is not a universal solution – a case by case basis is required. Yes, and I also understand the complexities around liabilities. There are many ‘ah buts’, that though shouldn’t stop us looking at the alternative.
Recommended for you
