£1 Billion of Free Permits Given to Oil and Gas Giants to Prop Up Profits
According to openDemocracy, oil and gas giants were given £1 billion of permits for oil and gas extraction in 2022. Coupled with soaring energy prices, these companies have benefitted from record-breaking profits. Despite the government’s attempt at reducing emissions and charging these companies for every tonne of CO₂ they emit, 13.9 million permits were given away last year without a charge to these environmental polluters. A single permit averaged £79.20, which equates to around £1.1 billion in tax that remains uncollected.
John McDonnell, Labour MP, stated that this was a “staggering dereliction of duty by the government”. He went on to say that the “shocking scale of [government] giveaways to their friends in the oil industry warrants an independent inquiry into how these decisions were made, by whom and what influences were brought to bear.” The government defended its environmentally unfriendly handouts by saying it then stopped businesses from relocating to countries without carbon pricing mechanisms.
ExxonMobil’s 2022 profit was £46.6 billion. The government gave them £160 million of free CO₂ permits
Shell’s £33.3 billion profits for 2022 received £35 million in contract handouts
BP saw £23 billion in profit last year and were given £30 million in free CO₂ permits
Following these announcements, there has been uproar at the government for completely disregarding the principle of implementing charges for polluters in the first place. While millions of people have been plunged into fuel poverty, the government has had the backs of oil and gas giants instead of those that elect them. Some have called for free permits to be provided where incentives have been included for companies to go green as a way of phasing out our dependence on fossil fuels.
Last week, BP announced its 2022 profits. Where oil averaged $101 a barrel, it’s expected to stay around $70 for the rest of the 2020s, helping their profits soar for the rest of the decade. Although the company stipulated that it will invest more in low carbon energy for the next 7 years, it also stated that more investment is being directed to oil and gas extraction. The UN has recently warned that humanity is on a highway to climate hell, so announcing greater production of oil and gas production is beyond a controversial decision.
Oil and gas giants routinely defend their businesses by identifying the world’s dependence on their energy. Despite how fragile the system is when global events deplete supplies and raise prices, energy security from countries is essential to bringing prices down. Norway has famously had low electricity prices, mostly thanks to its large percentage of public ownership of renewable companies. As the second largest exporter of natural gas (after Russia), Norway has been in a much better position, but exporting cheap electricity to countries with prices so high has had a knock-on effect for raising their own prices. While short term solutions are to extract more oil and gas, the long term solution is more green energy, which needs more funding and should have free permits.