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Explained | What is the row over UK’s Rosebank oil field?

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The story so far: Angering enivronmental activists across United Kingdom (U.K), the British government okayed one of the country’s biggest new oil and gas projects —the North Sea Rosebank field— on September 27. The Rishi Sunak government claims that the project was essential for securing the nation’s energy demands.

The move comes mere days after UK Prime Minister Rishi Sunak announced a delay in the ban on sales of new petrol cars from 2030 to 2035, claiming that he needed the public’s support in switching to net zero (carbon emissions). Mr. Sunak claims that Britain could afford to make slower progress in net zero emissions by 2050 as it was ‘so far ahead of every other country in the world’. The watering down of Britain climate action has triggered fears of other European nations following suit.

Mr. Sunak has stood firm by his decision to green light Rosebank, stating that it was a necessary domestic source of fossil fuel and that Britain would still be dependent on oil and gas as one of its fuel sources by 2050. His Energy Security Minister Claire Coutinho has stated that Rosebank will produce less emissions as it would eventually electrify the oil extraction process.

What is the Rosebank field project?

Located 130 kilometres north-west of Shetland islands, the Rosebank oil field was first discovered in 2004 by Chevron. While oil reserve capacity was demonstrated in 2019, the field has remained untapped till now. In 2019, Norwegian oil company Equinor acquired the licences for the project from Chevron. Known for tackling challenging deepwater untapped reserves, this joint venture by Equinor (80%) and British oil honcho Ithaca (20%) will drill for oil at a depth of 1100 metres under water. The project will be developed in two phases, with the first oil extraction scheduled for 2026.

Map of Rosebank oil field

Estimated to pump 300 million barrels of oil, the Rosebank field will comprise of 8% of UK’s total oil production and is estimated to generate 1,600 jobs during construction and 450 UK-based jobs throughout its lifetime — till 2051. Equinor estimates that the project investment will amount to £8.1 billion, of which £3.1 billion has already been invested in the first phase.

The project will reuse a Floating Production Storage and Offloading vessel (FPSO) previously owned by Altera Infrastructure. An FPSO is a ship-like structure which receives fluids through risers from subsea reservoirs and then separates them into crude oil, natural gas, water and impurities. In order to reduce carbon emissions, the FPSO will be prepared for future electrification, cutting down the upstream carbon dioxide (CO2) intensity from 12kg/boe (barrels of oil equivalent) to less than 3 kg/boe.

The Norwegian oil producer had first submitted its environmental proposal in August 2022, which was open for public consultation till September 2022. While initially questioning Equinor about the environmental impact of the project, the North Sea Transition Authority — UK’s oil and gas regulator— okayed the project after considering the project’s net zero action throughout its lifetime. After Equinor made a final investment decision, the Sunak government okayed the project on September 27, 2023, despite protests by climate activists.

The floating production storage and offloading (FPSO) unit for Rosebank, Petrojarl Knarr

The floating production storage and offloading (FPSO) unit for Rosebank, Petrojarl Knarr

Conservatives, Labour & Scotland: Where do they stand on Rosebank?

Throwing his weight behind Rosebank, Mr. Sunak highlighted how important the North Sea oilfield was for UK’s energy security and economy. In an interview with BBC Scotland, he said, “I don’t want our children to be dependent on foreign dictators like Putin for our energy”.

He added that while UK will switch to clean energy, he would prefer to use gas from domestic sources during the transition rather than “import [gas] from abroad at four times the carbon emissions.” The UK government has stated that if investment in new North Sea oil projects is stopped, the nation’s fuel imports will increase by 10% by 2035.

Britain’s Prime Minister Rishi Sunak leaves the stage after delivers a speech during a press conference on net zero targets, at the Downing Street Briefing Room, in central London, on September 20, 2023.

Britain’s Prime Minister Rishi Sunak leaves the stage after delivers a speech during a press conference on net zero targets, at the Downing Street Briefing Room, in central London, on September 20, 2023.
| Photo Credit:
POOL

Surprisingly, the Labour party, which opposes development in the North Sea, has said it will not reverse the approval to develop Rosebank if it wins the general election in 2025. Its leader Mr. Keir Starmer said that the party would accept the projects it inherits from this government to ensure stability, if it comes to power in 2025. His remarks were met by protests by Labour supporters outside shadow cabinet members’ offices.

Pulling up the Sunak government for reversing its net zero policies, Ed Miliband, the shadow Secretary of State for Energy Security said that the Labour party will tackle cost of living crisis and the climate crisis in tandem. Claiming that Conservatives lacked a vision for future economic growth, Mr. Miliband asserted that the only way to bring down household bills and secure UK’s economic future was by switching to green energy.

Criticising Mr. Sunak, Scotland’s first Minister Humza Yousaf claimed that Downing Street was in ‘climate denial.’ Taking to the microblogging site X (formerly Twitter), Mr. Yousaf pointed out that as Equinor planned to sell Rosebank’s oil at global prices, the fuel extracted from the site would not remain in Scotland or UK. He also slammed the UK government’s decision to commit to approving 100 new oil & gas licences, posting, “That isn’t climate leadership. It is climate denial.”

Why are climate activists opposing Rosebank?

Climate activists have already been seething over Mr. Sunak’s decision to water down the UK’s climate goals. Activists say that by pushing the ban on new petrol and diesel cars to 2035 and easing transition of home gas boilers to heat pumps, the UK will not be able to achieve its legally-binding 2050 net zero target. By estimations, Rosebank’s carbon emissions will be three times that of the nearby Cambo oil field — approximately 200 million tonnes of CO2, equivalent to operating 56 coal-fired power stations for one year.

Activists stage a protest against Rosebank outside a government Office in Edinburgh

Activists stage a protest against Rosebank outside a government Office in Edinburgh

The International Energy Agency (IEA) has indicatedthat for limiting global temperature rise to 1.5 degrees Celsius, no new oil and gas projects can be developed. The IEA has also estimated that demand for fossil fuels will fall by 80% by 2050 as more and more people switch to electric cars and solar panels. Hence, big oil fields like Rosebank are unnecessary for meeting energy demands, says the IEA.

Several British lawmakers have pointed out that Rosebank will not aid in bringing down household electric bills as most of the oil extracted (90%) will be sold to the global market across Europe. Equinor, meanwhile, has stated that its oil will be transported via the West of Shetland pipeline to support Europe’s ‘energy security.’ This will ultimately end up in the UK grid, securing the nation’s energy needs, the company avers.

What are the ecological effects?

The North Sea’s Faroe-Shetland Sponge Belt is host to deep sea sponges, a variety of clams and quahogs, already subject to a fragile ecosystem. In a protest held in January outside Downing Street, activists displayed a four-metre whale model — emphasizing the havoc oil pipelines will create when laid underwater along the migration corridor of the fin whale and the sperm whale.

During construction, noise pollution and sediment plumes would likely disrupt habitats of shellfish, marine mammals and cephalopods. Drilling may also harm delicate marine creatures like sponges, corals and slow-moving mammals. The biggest threat to marine life, however, is a deep-sea oil spill which would spread faster due to sea currents, damaging fauna like multiple species of fish, dolphins, orcas, and birds and disrupting the food chain in the area.

Windfall tax & oil incentives

Activists have also claimed that the UK tax-payers will hand over £3.75 billion to Equinor via tax breaks awarded to them by the government, just to develop Rosebank field for oil extraction. They further claim that once the plant is operational, the tax-payers are set to lose more than £750 million as Equinor will reap benefits from future tax breaks and profits earned in its oil sale.

Equinor’s Mariner field in the UK North Sea

Equinor’s Mariner field in the UK North Sea

However, Equinor and the UK government refuted any tax benefit for the oil company due to Rosefield. In the wake of the massive profits earned by oil companies during the initial days of the Russian invasion of Ukraine, the UK levied a 35% windfall tax called the Energy Profits Levy beyond the 40% corporation tax already imposed on oil and gas firms. Currently, oil companies like Equinor and Ithaca pay a 75% tax on their UK profits until 2028.

On the other hand, on June 9, 2023, the UK government announced the Energy Security Investment Mechanism which will go into effect post-March 2028. Under this scheme, if oil prices fall to normal levels (pre-Ukraine invasion rates) for a sustained period, then the tax for oil companies will return to 40%. The move is aimed attract investment in UK’s domestic oil fields — especially the North Sea region.



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Explained | Why is France seeing widespread protests over Emmanuel Macron’s pension reforms?

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The story so far: Protesters on Friday, March 17, clashed with the police at the Place de la Concorde in Paris, near the National Assembly (Lower House) building amid growing unrest over the ruling government’s decision to change the state pension age from 62 to 64, meaning people would have to work longer to get a full state pension.

Nationwide demonstrations, which have seen crowds of over a million people and large-scale workers’ strikes since the start of the year, have largely remained fairly peaceful. But on Thursday, March 16, riot police and protesters clashed in the capital after President Emmanuel Macron’s administration used a special provision in the Constitution to push through the contentious pension reform without holding a vote in the National Assembly (where it does not enjoy a majority) as the House plunged into uproar with Opposition politicians singing the French national anthem and holding protest signs in Parliament.

What does the new pension reform seek to do?

In France, all retirees get a state pension. This is how the system works— mandatory payroll taxes apaid by those currently working fund the pensions of retirees, meaning generations have been able to retire with an assured, state-backed pension. French politicians laud the system for creating “solidarity between the generations”.

Now, the government argues that as life expectancy in France increases and so does its ageing population (meaning more retirees than new entrants into the workforce), the current pension system will fall short in the coming decades. According to the administration’s projections, while there were 2.1 workers putting money into the system for every one retiree in 2000, this figure dropped to 1.7 workers per retiree in 2020, and is expected to further slide to 1.2 by 2070.

The government says the measure to gradually raise the legal retirement age by three months every year, till it reaches 64 by 2030, is “indispensable” in order to balance the pension system and keep it financially viable. While announcing the last-minute decision to use special provision 49:3 of the Constitution to pass the bill without voting in the National Assembly, French Prime Minister Elizabeth Borne said: “We cannot gamble on the future of our pensions. That reform is necessary.”

The change in retirement age from the current 62 to 64 means that people will have to work longer or contribute payroll taxes for a greater number of years to get a full state pension. By this logic of a phased increase of three months every year till 2030, those who were born in 1961 and were due to retire this year will have to work an additional three months in order to get a full pension. Those born in 1968 will have to be 64 and completed 43 years of work when they retire in order to get their dues.

There are exceptions, however. Those starting work between the ages of 14 to 19 will be able to seek early retirement, as will public workers engaged in physically or mentally arduous jobs. The government also says it will put in place a ‘seniors’ index’ to check if companies are making progress in hiring and training seniors so that they don’t get left out as the retirement age increases.

The reform will also put an end to a dozen or so “special regimes” with different retirement ages and benefits for different categories of workers including rail workers, electricity and gas workers, and central bank staff. However, the changes will only apply to new workers in these sectors—existing workers will still benefit from the special regimes.

The minimum retirement age only applies to those who have worked enough years to qualify. French newspaper Le Monde notes that like in the present system, many women who pause their careers to raise children and people who study for longer and start their careers late, must work till the age of 67 to retire with full pension benefits.

The government highlighted the potential outcomes of the pension reform, stating that new retirees will get a guaranteed minimum pension of not less than 85% of the total minimum wage— about 1,200 euros per month at current levels. The government also plans to index the pensions to inflation levels for those who receive minimum incomes, a year after retirement. It says that the pensions of the poorest 30% of retirees will increase by 2-5%. It also argues that while the new system will balance the pension budget by 2030, no reforms to the regime would mean an expected pension fund deficit of 13.5 billion euros in 2030.

Why has this made people angry?

France currently has one of the lowest qualifying ages for a state pension among big European economies. , The Guardian notes, and the government puts in a significant amount to support the social protection system.

The French cherish the retirement system, as well as national healthcare, as it is seen as hard-earned, having been introduced by the National Resistance Council after the Second World War, when the country was reeling from the aftermath of the war.

Generations of workers have accepted high mandatory taxes to fund the pension system because it creates interdependence and guarantees state-backed pension earnings. The new system means current workers will have to work longer to sustain pensions for the ballooning aged population. Life expectancy has also increased— it was 82 in 2020 as per World Bank figures.

Observers also worry that the reform will negatively affect blue-collar workers who often start working young, have shorter life expectancies, or have less optimum working conditions compared to white-collar workers.

Opponents of the reform argue that instead of altering the pension age, the government could have balanced the system through other measures— like increasing payroll taxes paid by workers, taxing the wealthy more, or not tying pensions to inflation. Others also argue that Mr. Macron’s government is amplifying the danger of the system’s projected deficit. The New York Times reported that France’s official body for monitoring the pension system has also said there is no immediate threat of the system going bust, adding that long-term deficits are hard to predict correctly.

Have pension reforms faced such opposition before?

Pension reforms have long been a contentious issue in French politics, having prompted widespread protests in 1995 and 2010. In fact, this is not the Macron administration’s first time facing harsh opposition to pension overhaul. Pension reform has been one of Mr. Macron’s campaign promises since he was first elected in 2017. In 2019, his administration attempted to introduce a different reform which would not raise the retirement age but get rid of the special regimes of benefits and pension ages for different categories of workers. These reforms were also met with large-scale street protests, strikes, and one of the biggest walkouts by transportation workers, impacting public transport. The reform was then stalled as a result of the pandemic.

What’s next?

After Ms. Borne used special powers to pass the Pension Bill in the Assembly without a vote, two Opposition Groups filed no-confidence motions against the Macron government. These motions were scheduled to be heard on Monday, March 20, but are unlikely to succeedin dislodging the government. Opposition parties from across the aisle would have to come together for such a vote to have a decisive outcome. However, one of the motions was filed by a group of parties on the Left while far-right leader Marine Le Pen’s National Rally Party brought in the second one. Another major party, Les Republicains, decided to stay away from no-confidence motions to avoid potential “chaos”.

Meanwhile, protests continued to intensify, turning violent in some places, with the police banning demonstrations in parts of Central Paris. So, far eight coordinated nationwide protests have taken place since mid-January along with regular demonstrations by civilians and a coordinated group of labour unions in various parts of the country.

A new day of nationwide industrial action has been planned for Thursday, March 23. Over 10,000 tonnes of garbage piled up on the streets of Paris as sanitation workers refused to end their strike, also blocking the waste collection plant hosting Europe’s biggest incinerator. Traffic and fuel deliveries were also impacted by protest actions. The left-wing CGT, one of the biggest trade unions spearheading the protests, has asked members to stop work at schools, factories, and other places. Teachers’ unions have also called for strikes this week.

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