WhY the Oil Barons Can't Survive a Green New Deal
Craig Dalzell - 10th November 2021
Two years ago this week, Common Weal launched our Common Home Plan – the world’s first national-scale, fully costed, comprehensive Green New Deal plan. It is a 25-year plan that, had it been enacted immediately, would have seen Scotland become a Green New Deal nation before 2045. Not merely “Net Zero” but deeply carbon negative, thus helping repair the damage we’ve caused to the planet and greatly improving the lives of everyone in Scotland. We’re now two years late in starting that programme – meaning either that its completion will be two years late or that we’ll need to work even harder to make it on time. Not that the plan has even been accepted either by the Scottish Government or by any of the dignitaries in Glasgow at the moment who, if our observations are accurate, are still themselves many years behind even where the talking points need to be if we’re going to meet our climate ceilings – never mind their promised actions.
Nevertheless, there are some signs of progress in that debate. This Wednesday in The Herald there were a series of articles that caught my eye. It turns out that properly insulating homes is absolutely vital to meeting climate targets and would eliminate fuel poverty, but it’s too expensive to be left to individual homeowners. Replacing petrol and diesel vehicles one-to-one with electric ones without reducing traffic volume is just about the worst way to decarbonise transport. Agricultural emissions mean that massive changes are needed to the way we produce food in Scotland. Rather than waiting for the world to catch up to the fastest climate movers, we should showcase those early movementsand allow everyone to learn by doing. And finally, Scotland’s geothermal energy potential could be a huge but it has so far been almost completely overlooked.
If Herald readers had bought our book two years ago, they’d already know all of this but still – it’s good to see them catching up.
The last story on that list – being that it highlights the potential of offshore rigs – brings me to the topic that I was going to write about this week before I opened the papers. One of the fronts in the pushback against a Green New Deal is the idea that we can meet our climate change requirements while still pumping oil and gas. This is a pervasive idea that cuts across many elements in Scottish politics. Boris Johnson’s “Net Zero” plan involves almost no reduction in oil production even in its most radical scenarios. Nicola Sturgeon was infamously hesitant to condemn the new Cambo oil field when confronted on the issue. Many Unionist campaigners use the development of the oil and gas sector as one of the much-vaunted “Union Dividends” whilst independence supporters – even some with otherwise relatively green credentials – argue that as “It’s Scotland’s Oil” we should get it out of the ground as quickly as we can so that we can fund the Green transition.
Within this black, black coalition is a subset of voices that argue that the oil must flow because we need it for so many things other than fuel. It’s useful stuff, why not use it?
I believe this group misunderstands just what the oil sector is actually used for in our lives and how the Green New Deal will affect not just the supply side of that industry but demand for the sector.
Let’s get the bulk of it out of the way. We burn approximately 80% to 90% of the oil we extract from the ground as fuel. There isn’t a huge difference in this number whether you look at global averages, the EU or the USA. The largest, by far, use of oil is as burnable fuel. Around two thirds of all of our oil is used in the transport sector. About half is burned in cars.
So immediately, we can see that even if we botch every aspect of the Green New Deal except electrifying our cars, the global demand for oil could drop by half (well...unless one of the things we botch is the required reinforcements of the electric grid meaning we have to recharge our electric cars with diesel generators and there isn’t enough chip fat to go around).
But as I say, some pro-oil activists insist that the sector could continue based on the 15% (on average) of “other uses” we have for oil outwith as a fuel.
Using the US data above we can see that one of the largest “other” uses for oil is as a petrochemical feedstock – most industrial chemistry from pharmaceuticals, through fertilizers, plastics and even the “non-brewed condiment” you’ve probably put on your chips started at least in part as oil. A lot of this will have to go along with the oil as part of the Green New Deal. Not necessarily the “vinegar” for your chips, but at least the plastic bottle it was served in and quite likely a good chunk of the fertilizers used to grow the tatties. Plastic waste is an immense global catastrophe that we would have to deal with even if there wasn’t a simultaneous climate emergency and despite advances like the Green Revolution literally saving one billion lives from starvation it has done it in a way that is rapidly leading us towards soil erosion, nutrient depletion and other unsustainable cliff-edges facing our global agriculture. As I’ve said before. Net Zero is not a Green New Deal and if we only do the first part, we still face global ruin. A very large fraction of this entire category needs to be replaced with organic and agroecological farming methods to save our soils and different materials to replace the plastics we wrap many of our goods in. For feedstocks that can’t be reduced (e.g. for pharmaceuticals), we have to use alternative sources instead – more on that later.
The next largest fraction of “other” is as “asphalt and road oil”. Basically, whenever we build a new road a large part of the construction (e.g. the famous Scottish invention of tarmac) involves heavy oils and bitumens. If we don’t go down the “worst possible” route of reforming transport then we’ll almost certainly be reducing the total volume of cars and other vehicles on the road. This – almost by definition – means less need for roads. Particularly, less need for massive, multi-lane motorways and cities that increasingly seem to consist of more parking surface than greenspace (for the opposite idea, see Hamburg’s new Green Network plan).
Next on the “other” list is “coking agents”. These are petrochemicals used as fuels but also as catalysts and co-reactives in certain industrial processes such as smelting. Steel production is a major user of coke. Again, in the Green New Deal we will almost certainly use a lot less steel for construction (We will soon be publishing a policy paper on “plyscrapers” – all-wood construction, multi-storey buildings. See this video on a case study of such a building that we highlighted in Our Common Home). Of the steel that remains in our economy, we can replace essentially all of that coke with hydrogen. In 2019, this was still a likely but speculative idea that we called for Scotland to try to push and become world leader in. In 2021, Sweden beat us to it.
Just those four categories make up around half of the “other” uses of oil and as we can see, most of them can be reduced or eliminated. Other “others” like lubricants, napthas and waxes make up even smaller fractions of the whole and can be treated essentially in the same way as plastics. If they can’t be reduced or eliminated by design then natural or synthetic alternatives can be produced. Alternative sources of hydrocarbons might be needed for some of the remaining products on our list but we already have a solution available. Biofuels are now an established part of the hydrocarbon world. They make up a relatively small proportion of total hydrocarbon production but - again – that’s in relation to the huge amount that we burn. There’s already enough biofuel in the world that the UK has recently upped the fraction of the stuff that is in your petrol tank to 10%. There was a major crisis a decade or so ago when the rise of biofuels hit the point that their threatened to compete with foodcrops for land and attention – almost sparking a global famine – but at this point the world now produces enough biofuels that we could probably cover all current non-fuel needs for hydrocarbons. So long as we have these biofeedstocks, water and electricity, we can crack them into just about any hydrocarbon we can think of.
Don’t think the oil and gas sector doesn’t know this. This is why they’re clinging on to the “other uses” argument and why they are trying to create artificial demand for an extracted product that the world may soon simply not need. This is why they want the hydrogen economy to start (and end) with “blue” hydrogen – derived from methane rather than “green” hydrogen’s water and electricity. This is also why they are pushing for that hydrogen to be rolled out in sectors such as home heating. If demand for the stuff can be made to exceed the production capacity of renewable sources then look who has to come crawling back to the oil barons like we never even tried to leave them.
Will oil and gas extraction still be a thing at all in a Green New Deal world? I think I’ve shown here that it needn’t be at all. But even in the much more limited “Net Zero” world, the oil barons lose a huge amount of their power and influence.
There is precedence for that kind of economic phase-shift. The early 20th century saw the development of the automobile and signalled the end of the Age of the Horse. Untold numbers of people working in the “Horse Sector” from farriers to livery yards lost their jobs. In 1900, a photo was taken of 5th Avenue in New York, USA. In the traffic there are multiple horse drawn carts and only one car. By 1913, the same street was photographed with multiple cars and only one horse drawn cart. The USA’s horse population peaked in 1915 and has declined by about 85% in the time since – coincidently roughly the same amount that the oil industry could decline even if all we do is eliminate it as a fuel. Horses still exist, but the industry is now very different from the one that dominated overland transport for millennia before that peak.
So to those who still want to get their hands on “Scotland’s Oil” I want to ask: What does the Scottish oil and gas sector actually look like if we shift the world such that the vast majority of its customers no longer exist? Will the North Sea be economically viable even in the most limited sense if that happens? If we try to keep it pumping, will we lose our economic edge to those countries – like Sweden – who are pushing oil out of even the most intensive “other” uses of oil? The oil barons of the 20th century are on the edge of going the way of the horse barons of the 19th. The choice for Scotland is whether we let them go...or we let them pull us over with them?