Are there lessons for Newfoundland in a Just Transition strategy for the U.K. Offshore oil industry?

sea-change-cover-212x300Sea Change: Climate Emergency, Jobs and Managing the Phase-Out of UK Oil and Gas Extraction was released on May 15 by Oil Change International, in partnership with Platform and Friends of the Earth Scotland.  The press release summary is here . The report examines the offshore oil and gas industry in the U.K., with special attention to the transition for workers and communities currently dependent on oil  – making it highly relevant to Canadians, especially Newfoundlanders.   Sea Change argues that  with the right transition policies, clean industries could create more than three jobs for every North Sea oil job at risk, which can enable an “equivalent job guarantee” for every oil worker.

The report contrasts two pathways available for the U.K. and Scotland to stay within Paris climate limits:   1. Deferred collapse, in which the countries “continue to pursue maximum extraction by subsidising companies and encouraging them to shed workers, until worsening climate impacts force rapid action to cut emissions globally; the UK oil industry collapses, pushing many workers out of work in a short space of time.” Or  2. Managed transition: in which countries “stop approving and licensing new oil and gas projects, begin a phase-out of extraction and a Just Transition for workers and communities, negotiated with trade unions and local leaders, and in line with climate change goals, while building quality jobs in a clean energy economy.”

To achieve the clearly superior “managed transition” pathway, the report recommends that the U.K. and Scottish Governments:

  • Stop issuing licenses and permits for new oil and gas exploration and development, and revoke undeveloped licenses;
  • Rapidly phase out all subsidies for oil and gas extraction, including tax breaks, and redirect them to fund a Just Transition;
  • Enable rapid building of the clean energy industry through fiscal and policy support to at least the extent they have provided to the oil industry, including inward investment in affected regions and communities;
  • Open formal consultations with trade unions to develop and implement a Just Transition strategy for oil-dependent regions and communities.

offshore oil rigOffshore Oil and Gas in Newfoundland: In Newfoundland, the importance of the offshore oil industry is evidenced by the fact that a  snap election was called shortly after the province reached agreement with the federal government on royalty payments on April 1.  The two governments announced agreement on  a “renewed Atlantic Accord”  – including the “Hibernia Dividend Backed Annuity”, valued at $2.5 billion for the province, according to a CBC report . This is new money that comes from Ottawa’s 8.5 per cent stake in the Hibernia offshore project, and will be paid out in annual installments over 38 years. According to the Q1 2019 Company Benefits Report ,   Hibernia operations employ 1,458 workers, of which 90.8% are Newfoundlanders.

The federal and provincial governments are also closely intertwined in a new consultation process which was launched for the Regional Assessment of Offshore Oil and Gas Exploratory Drilling East of Newfoundland and Labrador  in April, along with the Canada-Newfoundland and Labrador Offshore Petroleum Board. The provincial Minister is quoted in the federal press release:  “Our government is committed to working collaboratively with our federal partners to ensure responsible development of our oil and gas industry. The Regional Assessment is an important step towards exempting routine, low impact activities, such as exploration wells, where potential impacts and standard mitigations are well known, from federal assessment. This is another step we are taking to achieve the vision we set out in Advance 2030 to benefit all Newfoundlanders and Labradorians.”

The Advance 2030 document, released in 2018, is subtitled:  A Plan for growth in the  Newfoundland and Labrador Oil and Gas Industry, and is based on the government’s commitment “to resource development as a key economic driver and to positioning the industry for continued growth.”   In releasing the Advance 2030 report, the government announced some long-term targets, including the direct employment of at least 7,500 people in operations, drilling of over 100 new exploration wells by 2030, and doubling oil production by 2030.  That same Liberal government was returned to power as a minority government on May 16, and compiles news of oil and gas development  here .