The Green Transition: A Rosebank by any other name would smell as sweet
Weekly analysis of the shift towards a new economy.
Dear Readers,
Happy Friday. Welcome to The Green Transition, brought to you by the New Statesman’s Spotlight policy team.
It’s been another terrible big week for the green transition, with the controversial approval of new drilling at the Rosebank oilfield. Essential analysis on all that below.
As ever, you can find our policy coverage here, with content from ministers and shadow cabinet members, backbench MPs, think tankers, academics, other experts, as well as our own in-house correspondents.
Have a great weekend.
Associate editor, Spotlight on Policy
A Rosebank by any other name would smell as… sweet?
Eighty miles north of Shetland lies the largest untapped source of oil in UK waters: Rosebank. This week, the UK government has approved drilling for its 300 million barrels of oil. For context, Saudi Arabia would pump that amount out every 25 days. For further context: once burned, that will be equivalent to the combined annual emissions of 28 low-income countries home to 700 million people, as the outgoing Green MP Caroline Lucas told the Environmental Audit Committee in June.
The move has caused intense consternation. Lucas called the decision a “moral obscenity”, adding that new drilling will make no real difference to energy/fuel costs for UK consumers because the oil will be sold at world market prices.
While the government says it's still committed to net zero by 2050, the independent Climate Change Committee (CCC) said in its 2023 report that the continuing short and medium-term need for oil and gas “does not in itself justify the development of new North Sea fields.” As if that wasn’t enough, the International Energy Agency (IEA) agrees.
It seems like “drill, baby, drill” and “net zero by 2050” mix like oil and water.
Justifying the move, the newcomer Energy Secretary Clare Coutinho has talked about “energy security” and reducing reliance on assorted despots like Russia and the aforementioned Saudis. But currently around eighty per cent of North Sea oil is exported rather than staying in Britain for domestic use – hardly contributing to a sturdy, self-reliant UK plc, according to critics. It’s all part of the government’s roll-back of its climate pledges – or as Rishi Sunak would put it, the “honest conversation” with the British people about the costs of the green transition.
Given all this, the Opposition has taken the brave step of saying that they don’t support Rosebank’s approval, but that they would not revoke the license if/when they enter Downing Street.
What’s more, the Labour grandee and former prime minister Gordon Brown went on ITV's Peston to argue that it was “the right decision that Labour and the Conservatives both support it” (even though Labour had said they *do not* support it, but that they would not revoke it, which in practical terms means exactly the same thing).
“As long as we’re on a trajectory to cut the use of carbon”, Brown continued, “then you’ll have to have either oil from Saudi Arabia or oil from the North Sea.” It was a supreme example of a politician explicitly linking the net zero transition to temporary (but apparently necessary) measures to boost fossil fuel extraction, against the weight of evidence from expert advisory organisations like the CCC and IEA.
This kind of contradictory, dual-pronged approach seems to be a hallmark of the centre-left. Joe Biden has won plaudits from lefties around the world for his government's major investment in the green economy, and its pro-labour approach. At the same time, Biden has approved oil and gas drilling at a faster rate than his predecessor, Donald Trump. US energy exports to Europe (in the form of liquified natural gas shipments) have boomed in the wake of the Ukraine war.
Brown’s justification for his (and his party’s de facto) support for Rosebank was telling: he said it was “better for balance of payments”. Balance of payments is the difference between what the country imports and exports. A balance of payments deficit on a country’s current account signals that it’s producing less than it’s consuming, which can only be sustained if countries in surplus are lending money to cover the difference. In this new “securonomic” era (as heralded by the Shadow Chancellor Rachel Reeves), the question of where something is produced, and who produces it, has returned to prominence, after decades in which open markets and globalised supply chains were thought to be the inevitable future.
For its supporters, Rosebank will provide more money to the UK exchequer than importing, it will create 1,600 jobs (likely pleasing unions like Unite and GMB), and it will contribute to a more positive balance of the UK’s current account (which has long been in deficit). Detractors point out that the main contractor, the state-owned Norwegian firm Equinor, will enjoy billions in tax breaks and capital allowances. The company, for its part, says they will pay a 75 per cent tax on their profits until 2028.
But what is certain is that, as much as politicians want it to be the case, it’s not possible to reconcile the net zero transition with new drilling. Honesty would require leaders to admit they are prioritising certain economic or political goals over climate targets. That circle cannot be squared.
In Brief
With friends like these: The Conservative MP Chris Skidmore has penned this piece for us on how the government’s row-back on net zero has damaged the UK’s climate leadership credentials. He was the minister that signed the net zero pledge into law, and later chaired the government-commissioned independent review into net zero, Mission Zero.
Johnny-come-lately: Shadow business secretary Jonathan Reynolds has this exclusive profile interview with Spotlight’s senior editor, Alona Ferber, in which he talks net zero, the green economy, and industrial strategy.
“Moral obscenity”: This op-ed from outgoing Green MP Caroline Lucas on the Rosebank approval is a must-read.
Think global, act local: Another from our excellent Research Brief series, bringing you a weekly round-up of a major policy paper/publication. It’s a great summary of Power in Place, a report from UK100 – a network of local council leaders committed to helping deliver net zero.
Onwards and upwards: Centre-right think tank Onward have this report on the public’s support for net zero. Despite Sunak’s gamble, Hotting Up reports that “the net zero by 2050 target enjoys strong support from the British public (56 per cent) and 2019 Conservative voters (49 per cent), far outweighing opposition (13 per cent and 20 per cent respectively).”
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I used to work in a team at Texaco Europe planning European refinery production and know that a refinery can adjust their equipment to receive a different grade of crude, so the export only argument does not hold. Also there is a carbon cost in bringing crude from the Middle East which would not be a transport carbon cost for Rosebank oil pumped ashore. While the UK needs to stop fossil carbon emissions by 2050, we need lots of energy to build the renewables to replace fossil fuels. The Rosebank oil will bring in more tax revenue to the UK exchequer to pay for the renewables, but imports of oil and gas will not.
"Shetland lies the largest untapped source of oil in UK waters: Rosebank. This week, the UK government has approved drilling for its 300 million barrels of oil. For context, Saudi Arabia would pump that amount out every 25 days. For further context: once burned, that will be equivalent to the combined annual emissions of 28 low-income countries home to 700 million people"
It's these well-written and often-time witty writings that makes me look forward to reading The New Stateman. It's an inspiration to many a journalist.