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Labour leader Keir Starmer’s proposal to block all new domestic oil and gas developments, announced during a visit to Scotland earlier this month, has sparked criticism from detractors within the press and the Conservative Party.
Secretary of State for Energy Security and Net Zero Grant Shapps claimed that “Labour’s plan to ban new oil and gas would be a disaster for your bills, the UK economy, national security and the climate,” while Prime Minister Rishi Sunak stated that “eco-zealots” from campaign group Just Stop Oil was “writing Keir Starmer’s energy policy,” arguing that “the only people that benefit from Keir Starmer’s energy policy are dictators and autocrats like Vladimir Putin”.
Large swathes of the media rushed to condemn the ban on new oil and gas after a Sunday Times editorial described it as an “economically risky idea that would risk leaving Britain permanently at the mercy of international price fluctuations”. According to an analysis by Carbon Brief, right-leaning newspapers published 10 editorials since the proposal was announced, branding the policy “incoherent” and “dangerous,” and claiming that it would increase Britain’s dependence on energy imports, undermining energy security and harming taxpayers.
Indeed, Spectator Chairman and former GB News Chairman Andrew Neil argued that Labour’s energy plans were “good for Qatar’s Emir, US big energy, even Kremlin [sic],” but “bad for UK workers and our trade deficit,” while The Daily Mail suggested that Labour’s proposals would involve “piling misery on millions of homeowners”.
Much of the criticism Labour has faced for its ambitious energy plans is speculative and inaccurate; around 80% of the oil extracted from the North Sea is exported owing to its incompatibility with British refineries, meaning that the development of new, domestic oil and gas is unlikely to improve the country’s energy security. Over the past decade, North Sea oil licences have increasingly been controlled by private or foreign investors in countries ranging from China to the Middle East; in 2020, 30% of oil and gas production was accounted for by private companies, compared to just 8% in 2010.
A Moribund Industry
Artificially kept afloat by government subsidies and generous tax incentives, the North Sea and gas industry has become a drain on the British taxpayer, having received £9.9 billion in tax relief for new production and exploration, alongside £3.7 billion for decommissioning costs between 2016 and 2020. From 2013, the amount of oil extracted from the North Sea declined so sharply that HMRC recorded a net loss from it between 2015 and 2017, during which time the British government subsidised North Sea oil and gas by £361 million.
It is unlikely that a declining, loss-making industry can alleviate energy poverty or provide security at a time of volatile, fluctuating energy prices, as even the energy crisis of 2021 still saw record gas exports to Europe. The prospect of extracting new fuel from the North Sea basin is so far-fetched that decommissioning costs now comprise an increasingly high proportion of the industry’s operating costs, having risen from 5% in 2010 to 15% in 2017.
Indeed, a February 2022 report published by think tank The Green Alliance stated that “extraction volumes from the North Sea will never be large enough to meaningfully impact gas prices in the UK without an export ban,” adding: “unless the government proposes to nationalise gas production, the logical solution is to move away from unpredictable fossil fuel markets towards cheaper renewable energy”.
Critics of Labour’s energy plans also claimed that blocking the development of new oil fields would instantly bring production to a standstill. Yet oil and gas licences typically take 28 years to develop new energy, by which time Britain will have reached its legally binding 2050 decarbonisation target. Keir Starmer has acknowledged that existing oil infrastructure will likely be maintained until renewable energy and low carbon insulation can supplant it; addressing a GMB conference last week, the Labour leader stated that “oil and gas are going to be part of the mix for decades to come, into the 2050s. I don’t think that part of our argument is heard loud enough or clear enough”.
As the demand for fossil fuels is due to fall rapidly over the coming decades, while climate change obligations agreed upon at the Paris Agreement are more vigorously enforced, it is unlikely that the oil produced by new fields will benefit the wider economy. The industry risks falling into obsolescence, as despite the government having given £20 billion more to fossil fuel producers than to producers of renewable energy since 2015, new infrastructure may be unable to recover a favourable return on investment as alternative sources of energy develop throughout this century.
Meanwhile, the costs of renewables continue to decline; the price of solar PV modules has fallen by 80% since 2010, while wind turbine prices have declined by 38% since 2009. It has been estimated that the inability of successive governments to adequately invest in clean energy generation has added £2.5 billion to energy bills, as onshore wind and insulation were slashed while gas prices tripled.
It is unsurprising that the Conservatives have stridently opposed banning the extraction of new oil and gas; last year, individuals and organisations linked to heavily polluting industries and climate science denial gave the party more than £3.5 million. Donations included £62 million from a firm owned by the director of oil and gas firm Tailwind Energy, and £1.5 million from aviation entrepreneur Christopher Harborne, the owner of AML Global. This company according to its website aims to “build and support a comprehensive fuel supply network using main and regional oil companies”.
Since Rishi Sunak became Prime Minister, the Conservatives have received £630,000 from four board members at leading Tufton Street think tanks, most notably the Centre for Policy Studies, whose director, Robert Colvile, wrote an article for The Times in January 2020 which claimed that government policy aimed at reached net zero targets would be “beset by vested interests”.
Colvile criticised “both people pleading for money for their pet projects, and the ‘green blob’ seeking to lure the government into ever more interfering, meddling, regulating and taxing in the name of saving the planet”.
The vocal opposition to Labour’s decision to ban the development of new fossil fuels from sections of the press and prominent Conservative Party figures indicates that the oil and gas industry still maintains a firm grip over mainstream politics. The North Sea oil industry is in terminal decline, accruing vast taxpayer subsidies and generous tax breaks to produce fuel of a diminishing quality, most of which is exported. Yet the Labour Party’s plans are derided as costly and unworkable, with critics erroneously claiming that new oil and gas is necessary for energy security.
As recognised climate science bodies such as the IPCC and IEA warn of the dangers posed by prolonged fossil fuel extraction, prompting increasingly stringent climate change commitments to be enforced worldwide, new oil and gas infrastructure, which will take decades to commence production, will become increasingly unviable. Yet this government remains committed to keeping this moribund industry afloat, while neglecting genuine solutions to reduce energy costs and address ecological breakdown.