Despite all the evidence that the world can’t remain below 1.5C of global warming if new oil and gas exploitation continues, yesterday the UK Government gave the go ahead for exploration and production in the North Sea. The Government argues that it is essential for energy security, will ensure prices can be lessened and that the UK will still need oil and gas after reaching net zero, stating that the country will still be dependent for a quarter of its energy on oil and gas, presumably totally offset by carbon capture!* North Sea oil and gas is also stated as being ‘cleaner’ despite dropping the requirements of the 2021 ‘climate compatibility checkpoint’ from subsequent energy security plans and the fact that the UK oil and gas industry doesn’t currently have the most stringent policies on flaring and venting. Carbon Brief Daily (1/8/23) points out that …An analysis published in 2022 found that, on average, UK production in the North Sea was nearly three times more emissions intensive than Norwegian production – the country the UK currently sources most of its oil and gas from – and has become more emissions intensive in recent years.

Unless the Government were to nationalise the industry the UK government will not be able to control prices as UK output will be insufficient to affect the global market; the UK also doesn’t have the refining capacity to prevent exports for refinement, about 80% of UK oil is currently exported. The Committee for Climate Change put the case against the continuing development of new oil and gas fields in February 2022 and Stop Cambo has a recent debunker of Government claims that UK oil and gas production would be greener and cheaper, see also Dave Waltham’s recent article. 

Carbon Brief (1/8/23) points out that….The government’s official advisors the Climate Change Committee has estimated that reaching net-zero would require investments of £1.4tn, with this total substantially offset by savings – largely in reduced fossil fuel imports – amounting to £1.1tn. This is before taking account of avoided climate impacts and other benefits such as cleaner air.

Chris Skidmore has tweeted about the decision… “This is the wrong decision at precisely the wrong time, when the rest of the world is experiencing record heatwaves.It is on the wrong side of a future economy that will be founded on renewable and clean industries and not fossil fuels.” Back in March Cambridge University organised over 600 scientists to send a letter to the PM asking him not to permit new oil and gas development, which was ignored. They have now sent a second letter adding that… “With searing heat around the world reminding us of the very real danger posed by climate change, we are even more disappointed that the government’s revised Net Zero Strategy did not rule out any new development of onshore and offshore oil and gas fields.”

Far better to ‘max out’ on renewables by creating the right financial and regulatory climate rather than continue to subsidise an industry which will either one day become a stranded asset or the profits of fossil fuel exploitation will be more than offset by the environmental costs which are becoming all too evident now. 

A visible, rising and predictable carbon tax** (as endorsed last week by The Times) would create the right signals for decarbonisation to become even more cost-effective against fossil fuels. If, of course CI were implemented, it would reduce the cost burden which the Government fears and which is driving so much of the current retrenchment on both sides of the political divide.

*In 2015 the Peterhead power station and the White Rose scheme in North Yorkshire was cancelled by the Government. BusinessGreen editor James Murray, writes: “[I]f these [CCS] projects are so critical to achieving net zero why has the government spent over a decade failing to deliver a functioning carbon capture project in the UK? Why is the expanding pipeline of new projects still waiting on clarity on the regulatory and subsidy framework in which they will operate? And does the government really think it can build this industry with just £20bn of funding over 20 years, especially when it has just moved to reduce the cost of carbon?”(see below). While there is a role for CCS and DAC it shouldn’t be used as an excuse to carry on exploiting fossil fuels, currently worldwide CCS projects capture about 40 m tonnes of carbon dioxide pa – equivalent to 10% of the UK’s annual emissions (and UK emissions are 1.1% of the global total).

 **The current main UK carbon taxation policy, ETS (which covers 40% of emissions) has itself been watered down so it is now half the EU ETS carbon price, the front page of the FT announced yesterday that ‘Britain makes it cheaper to pollute by watering down carbon market scheme’….. “Whitehall recently quietly announced changes to the UK’s carbon-trading scheme, including offering more allowances than expected to polluting industries. The move has pushed carbon prices to trade at a steep discount compared with those in Europe, sparking warnings from industry that it will undermine green investments and increase fossil fuel use.” It adds: “Since the announcement, the UK ETS has fallen to trade at a near-40% discount to its EU counterpart, at £47 a tonne compared with €88.50 (£75.86). The two schemes previously traded near parity; a discount first emerged this spring as traders grew nervous over the UK government’s commitment to matching the climate ambitions of the EU. The gap has widened this month.”