COP26 politicians give thumbs up to oil and gas

January 11, 2022

No sooner had politicians signed the Glasgow Climate Pact in November, than the US government paved the way for new oil and gas output, by selling $191 million of new drilling licences.

ExxonMobil, Chevron, BP, Shell and 29 other companies bid at an auction for blocks in the Gulf of Mexico, in an area twice the size of Florida.

The sale came after the Joe Biden administration’s moratorium on new drilling was overturned in the courts. Earthjustice said the sale was a “climate bombshell”: if all that production goes ahead, an extra 600 million tonnes of carbon dioxide goes into the atmosphere.

On the plus side, the UK’s biggest new oil project, Cambo, suffered a blow, as Shell pulled out, after forceful mobilisation by climate campaigners. Siccar Point Energy, which owns 70% of the project, then said it is pausing work.

Extinction Rebellion in London, September 2020. Photo by Steve Eason

Cambo could still go ahead, though, and if it does, that will be thanks in part to the UK’s lavish tax breaks for North Sea producers. Siccar Point says the project is “not forecasted to pay taxes for many years”.

The company-friendly tax regime means that in 2020 the treasury collected a paltry £255 million from oil and gas producers, while handing rebates of £39 million to BP and £110 million to Shell. 

These tax breaks are just one part of a multi-billion-dollar mountain of subsidies for fossil fuel producers from rich countries’ governments.

And those subsidies form the background to COP26’s failure to tackle global heating, and to the decisions made there, which Climate Action Tracker estimates will lead to 2.1-2.7 degrees of warming, far above the 1.5 degree target.  

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