(Bloomberg) -- Prime Minister Rishi Sunak committed to granting hundreds of new licenses for oil and gas production in the North Sea, as his governing Conservatives intensify efforts to draw a political dividing line with the poll-leading opposition Labour Party on energy policy and the environment.
The government said the first new permits in the current licensing round will be issued in the autumn, with over 100 expected in total. It also suggested a commitment to future licensing rounds — though that would hinge on Sunak’s party holding onto power in a general election expected in 2024.
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Energy and climate policies have risen up the political agenda following Russia’s invasion of Ukraine and a cost-of-living crisis, which has fueled concerns that green policies can hurt household finances. Critics have warned that the UK has failed to invest enough to beef up energy independence as other countries, such as the US, pump money into green technology.
The move is about “strengthening our energy security,” Sunak told BBC Radio Scotland on Monday. “We’re still heavily impacted by what happens when energy supplies are weaponized by dictators.”
But Sunak’s Conservatives also see energy and climate change as areas to try to score points against Labour leader Keir Starmer. The Tories interpret their narrow victory in a special election in northwest London this month — in large part due to local opposition to new charges for vehicles falling below emissions standards — as a sign that skepticism about green policies is potentially fertile ground ahead of a general election expected next year.
That point is bolstered by the fact few energy experts believe boosting North Sea licenses will have a dramatic impact on energy security. UK oil and gas production peaked about 20 years ago and has been in near-constant decline since. New fields are still being found and exploited, but the size of the discoveries has declined considerably since the North Sea’s heyday and the bulk of the resources have already been produced.
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Given the difficulties involved, it’s likely that projects licensed in the current round could end up coming online just a few years before the government’s own legally-binding 2050 to meet net zero carbon emissions. That’s the moment when critics argue oil and gas should largely be removed from the UK’s energy mix — or scaled back dramatically.
It’s also a major risk to be perceived to be backing away from tackling climate change, at a time when the examples of the impact of global warming are becoming more prevalent. Speaking on Bloomberg TV, Fortescue Metals Group group founder Andrew Forrest warned that he would start pulling investments out “if I see this country steering itself over a cliff backing fossil fuels.”
Sunak’s political shift is also worrying more moderate members of the Conservative Party. The announcement on new North Sea licenses is “the wrong decision at precisely the wrong time when the rest of the world is experiencing record heat waves,” Tory MP Chris Skidmore, author of an influential government review into net zero, said on social media on Monday.
“It is on the wrong side of modern voters who will vote with their feet at the next general election,” Skidmore said. “It is on the wrong side of history.”
Sunak’s press secretary rejected Skidmore’s assessment in a regular briefing on Monday, saying the prime minister regards energy security and getting energy bills down as being compatible with wider climate and net zero goals.
Still, Sunak is clearly wary of doing too much to alienate more moderate voters who prioritize efforts to protect the environment and tackle climate change. Monday’s statement tried to strike that balance — the promise of more oil and gas licenses, coupled with support for two new carbon capture projects in Scotland and northern England and a restatement of the government’s commitment to reach net zero carbon emissions by 2050.
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Speaking to broadcasters on a visit to Aberdeenshire, the prime minister said approving new licenses “entirely consistent with our plan to get to net zero” because “shipping it from halfway around the world” uses “two, three, four times” the emissions than sourcing oil and gas domestically.
“Of course I am committed to net zero,” Sunak said. “But I’m also committed to our energy security and we will get to net zero in a proportionate and pragmatic way that doesn’t unnecessarily burden families with costs or hassle that they don’t really need in their lives.”
The government, though, has previously said producing more North Sea oil and gas would not bring down prices because the volume the UK produces is outweighed by global factors. According to Sunak’s press secretary, the prime minister thinks investment in future technology, combined with producing more and importing less, will help control consumer bills.
Just as on housing and tax and other issues, Sunak faces competing pressures on energy and climate policy from different Tory factions. The climate-skeptic, right wing of the party want him to go even further in scaling back green ambitions, and Sunak so far has so far resisted their demand to push back the 2030 ban on the sale of fully petrol and diesel cars — even as the prime minister still tries to appeal to the traditional motorist lobby.
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“I just want to make sure people know that I’m on their side in supporting them to use their cars to do all the things that matter to them,” Sunak told the Sunday Telegraph newspaper. “The vast majority of people in the country use their cars to get around and are dependent on their cars.”
A major problem facing Sunak is the issue of credibility after 13 years of Conservative-led governments. That means that when the prime minister talks about problems facing motorists and the car industry, he’s also referring to the impact of policies introduced by his previous Tory administrations. Brexit has hurt domestic carmakers, while Sunak also does not typically talk about the looming impact on UK finances from Britons switching to hybrid and electric cars, and the implicit threat to the government’s tax take from fuel duty.
“He is in trouble on so many other fronts that he is scrabbling around for something that he believes might gain some traction with the voters who seem to have deserted the party since 2019,” said Tim Bale, professor of politics at Queen Mary University London. The shift “will encourage his base to turn out, and since some Conservative voters seem to have a bee in their bonnet about the war on motorists and are often concerned with the cost of green policies, this seems to be a fruitful avenue for him.”
Labour has leveraged voters’ demand for change into a poll lead of about 20 points in national surveys. Ed Miliband, the party’s climate change and net zero secretary, accused the Tories of waging a “culture war on climate.”
“Every family and business is paying the price, in higher energy bills, of 13 years of failed Tory energy policy,” Miliband said on Sunday. “It is absurd that having left this country so exposed, the Conservative Party is asking the public to believe they can fix it.”
--With assistance from Francine Lacqua.
(Updates with Bale comment in 19th paragraph.)
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