The cost of living crisis has highlighted the central role that our privatised energy system plays in organising society, acting as an engine of inequality. During 2022, BP and Shell made over £24 billion and £31 billion in profits, respectively, while millions were pushed into fuel poverty. In the same year that British Gas were caught using debt agents to break into the homes of vulnerable people, forcing them onto more expensive prepayment meters, Centrica (who own British Gas) tripled their yearly profits to £3.3 billion. Many have rightly called out the immoral behaviour of the energy giants, characterising our current situation as a cost of greed crisis. 

In response to this popular outrage, the Labour Party supported calls for a windfall tax on oil and gas company profits, arguing that it should be used to reduce household energy bills. However, by focusing solely on ‘excessive profits’, the fact that private corporations are driven to maximise profits under capitalism is obscured. Instead of trying to find compromise with fossil fuel giants, the privatised nature of our energy system must be called into question. 

Recently, it was announced that there would be no investment in new oil and gas fields under a Labour government. This is an encouraging development, but there are already more than enough barrels of oil and gas in operating UK fields to exceed our Paris Agreement obligations. In response to even more auctions of exploration and development licences for the North Sea, Labour must commit to capping extraction from oil and gas fields to keep global heating below 1.5 degrees. 

Instead, Starmer has been repeating fossil fuel industry talking points, giving them legitimacy in the process. When visiting the Imperial College Carbon Capture Pilot Plant, he stated that ‘developing carbon capture and storage technologies is vital as we journey along the road to net zero’. In isolation, this statement doesn’t reveal much. In the context of a party spokesperson disclosing that ‘Labour will manage existing oil and gas wells sustainably over the coming decades’, there is reason for concern. 

It is likely that Labour are hoping to rely on carbon capture and storage (CCS) as a technological ‘fix’, storing carbon emissions released from fossil fuel consumption underground. In theory, this compromise would enable energy companies to continue profiting off investments in already existing oil and gas fields. However, research commissioned by Global Witness and Friends of the Earth Scotland found that CCS cannot be relied upon to deliver necessary emissions reductions by 2030. 

Additionally, the research found that even optimistic forecasts do not anticipate significant CCS capacity until the 2030s. The promise of CCS is evidently being used to delay the necessary termination of fossil fuel operations. Making serious progress towards decarbonisation by 2030 demands that we accept oil and gas wells cannot be managed sustainably using the technology available. 

Many communities are highly dependent on the 260,000 UK jobs linked to the fossil fuel industry, meaning that plans are needed to protect impacted economies during the energy transition. We need look no further than the 2020 oil and gas price crash to understand the catastrophic potential of an unplanned transition under capitalism. During this period, the RMT estimated that at least 12,000 jobs were cut in the North Sea oil and gas sector. It is prudent to assume that the fossil fuel industry would behave similarly if forced to curtail oil and gas extraction. Democratic transition planning to diversify affected economies must start now so that workers and communities can be protected. 

When it comes to investing in the energy transition, it is important to expose the futility of trying to compromise with the fossil fuel giants. They are mandated to maximise wealth for shareholders, meaning that they would only shift to renewables if they were more profitable than oil and gas. However, they aren’t, with the rate of return on oil and gas at 10-15% and renewables at 4-8%. Recently, the CEOs of BP and Shell have admitted that they both plan on pursuing a narrower green-energy strategy, prioritising stronger returns from fossil fuel investments. 

This clearly highlights the limits of windfall taxes. In the absence of control over investment decisions, we can only moderate excessive corporate profits. Labour ’s proposal of GB Energy to provide publicly owned clean energy capacity is an important step forward, but it wouldn’t disincentivise oil and gas companies from doubling down on lucrative fossil fuels. Full public ownership of the energy system under worker and citizen control is required so that investment can be brought under democratic control. This would ensure that economic surpluses are invested in socially useful production, diverting vast sums of capital towards public owned renewables. 

In the absence of full public ownership , fossil fuel companies will continue to extract wealth to their shareholders. Between 2010 and 2020, BP and Shell spent £147.2 billion in the form of stock buybacks and dividends, wealth that should otherwise have been used to fund the energy transition. However, just because these practices are immoral doesn’t mean that we can rely on Labour to act in good faith. Accepting a £12,000 donation from Drax in September 2022, one of the largest single sources of carbon emissions in the UK, should be evidence of this. 

At Labour for a Green New Deal, we have launched the Public Power Now campaign to start to build this power both inside and outside the Labour Party, arguing that full public ownership of the energy system is foundational to a Green New Deal. Additionally, the Worker-Climate team is currently working on network-building to strengthen relationships and communications between trade unionists who are committed to using their power as workers to ensure a just transition is delivered. If you can help, join here. We need to build organised political power around our demands, otherwise we will see them abandoned entirely as Starmer gets closer to power.