The Green Transition: To drill or to drill?
Weekly analysis of the shift towards a new economy
Dear Readers,
Happy Tuesday from the Spotlight on Policy team. It’s Megan Kenyon here - standing in for GT regular Jonny Ball.
We have a brilliant piece this week by Harry Clarke-Ezzidio on the case against two new oilfields in the North Sea which was heard at Edinburgh’s court of session last week.
But first; ICYMI, last week we published our latest Spotlight supplement, focussing on Party Policy. It includes a super piece by Jonny on whether the UK can do ‘budget Bidenomics’, Chris Skidmore on why the UK must show climate leadership and my interview with Bill Browder. Check them all out - or - if you fancy it, pick up a copy from your local newsagents.
Enjoy! Lets get to it.
***The “Champions of Change” - a group of progressive and ambitious businesses from around the world, have signed an open letter calling on the world’s governments to negotiate an ambitious Global Plastic Treaty that will cut plastic production for good - and make it easier for companies to do the right thing. These are companies who are aiming to operate without contributing to the plastic crisis.***
To drill or not to drill?
On Monday 11 November, a host of climate activists, three oil and gas companies, and their lawyers all arrived at Edinburgh’s Court of Session. This unlikely arrangement came together for an ongoing judicial review that could change the shape of the UK’s legally binding course towards net zero. It’s central claim? That “for decades, fossil fuel companies have gotten away with disclosing only the pollution caused by getting the oil and gas out [of] the ground, while completely omitting the devastating harm from actually burning it.” It is a case which could see the new Labour government keen to be both business friendly and, following renewed pledges at Cop29, environmentally conscious, trapped in a bind.
The case was brought jointly by the environmental groups Uplift and Greenpeace to revoke the licence given by the previous government approving oil and gas drilling in Jackdaw and Rosebank – both of which are oil fields in the North Sea. (Rosebank is the UK’s largest untapped oilfield). The North Sea Transition Authority, which regulates the UK’s oil and gas licences, gave consent to drill at Jackdaw (backed by Shell) in 2022, and Rosebank (funded by Norwegian gas giant Equinor and Aberdeen-based Ithaca Energy) last autumn. In their respective applications, only the direct emissions caused by extracting oil and gas from the projects were accounted for in each Environmental Impact Assessment (EIA), but not the “downstream” CO2 its produce would later emit, meaning that it was “unlawfully approved” by regulators, the climate groups contest. Confidence in this assertion was bolstered by a June ruling in London’s supreme court over a challenge to plans to drill oil wells near London's Gatwick Airport, which concluded that downstream emissions are “effects of [a] project” and must be included in an EIA for approval. That particular challenge was brought forward by Uplift and the climate activist Sarah Finch.
“We’re here today in court on the same grounds,” said Lauren MacDonald, a lead campaigner at Uplift, referring to the June victory in the courts. Activists claim that burning the oil and gas produced by Rosebank would emit more CO2 than the 28 poorest countries do in a year. Speaking outside Scotland’s supreme court in Edinburgh, flanked by a litany of signs (“Climate Justice Now!”; “Insulation, Not Exploration”), MacDonald added: “We are on the precipice of a massive victory for climate”.
It puts the Labour government and its key figureheads in a tricky position. In 2023, while in opposition, Ed Miliband described Rosebank as a “colossal waste of taxpayer money and climate vandalism” - though he didn’t pledge to formally stop the project when he would eventually become Energy Secretary earlier this year following Labour’s election win. The government - having already committed to ban new oil and gas licences, but not cancel existing ones - said it would not defend Rosebank. Chris Pirie KC, representing the government, suggested in court last week that if the licences were overturned Miliband and the government would not require the assessment process to start again, but to request additional information from the firms involved about the climate impact of its produce, before making a new decision.
There is an implicit agreement between those involved in the Scotland case - following the June ruling in London - that the licences were granted unlawfully. The fallout from the ruling will test Labour’s overlapping and conflicting business-friendly and environmental agendas to the extreme. They congregate around three core areas: private sector investment, jobs, and climate impact.
Crowding in private investment is the lynchpin of Labour’s economic plans; particularly when it comes to funding green infrastructure projects. Both Rosebank and Jackdaw, however, are privately funded: Jackdaw has been propped up with £1.1bn by Shell, while Equinor has coughed up double that for Rosebank. A lot of jobs are potentially at stake. Jackdaw claims that it will provide at least 1,000 jobs between 2023 and 2025, while Rosebank has earmarked over 4,000. (The former is set to formally open in 2026, and the latter shortly after.) The KC representing Jackdaw warned in court that even a temporary pause, followed by a hypothetical re-approval, could see the project being “brought to a permanent end”. Though this case centres around fossil fuel extraction, perceived instability over the government and its legislative frameworks could have a negative knock-on effect on the coveted green finance investment it desperately seeks, and the subsequent jobs that would come from them. “Certainty and predictability is critical in highly-regulated industries," Equinor’s KC told the courts, "those making major investment decisions need to be able to ascertain the risk of proceeding."
But the optics of proceeding with Rosebank and Jackdaw are not good. And going ahead with them could be bad for climate policy. This is now especially true given Keir Starmer’s new pledge, announced at Cop29 last week, for Britain to cut its net emissions by 81 per cent by 2035. Analysis from Uplift suggests that emissions from Rosebank’s operations (not counting its downstream output) would contribute to pushing Britain’s oil and gas industry beyond its legally binding targets by around 10 per cent between 2028-2032, and 20 per cent between 2033-2037, as set by the Climate Change Committee. "There's no world in which you could have a robust environmental assessment that takes into account those downstream emissions and decide that those environmental impacts are acceptable," said Tessa Khan, Uplift’s executive director.
Keir Starmer disagrees. He told attendees who jetted in to Baku, Azerbaijan for Cop that the UK’s renewed targets would be "difficult" but "achievable", something backed by the interim chair of the CCC, Professor Piers Forster. (Emma Pinchbeck, its new permanent chief executive, recently spoke to our Megan Kenyon.) There has been enough of a sunk cost that means that a full-on U-turn is unlikely: work has already begun on Jackdaw, and Equinor’s lawyer has claimed a delay and possible restart on Rosebank would cost up to £800m and put the project “in limbo for years”. The judge overseeing the judicial review in Scotland, Lord Ericht, retired last Friday to consider the arguments and come to a decision, which could take months. “It's a very difficult matter and it's a very important matter,” he said during his closing remarks. If, as widely predicted, he deems that the licences were granted unlawfully, what to do next with Jackdaw and Rosebank, and how it fits in with Britain’s carbon cutting future, is harder to predict.
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The Green Transition is produced by Spotlight, the New Statesman's online policy section and print supplement. Spotlight reports on policy for the people who shape it and the business leaders it affects. Explore our in-depth reporting and analysis here.
Thank you for reading.
Please send any news or comments to: jonathan.ball@newstatesman.co.uk
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