Last month, the Scottish Court of Session ruled that the decision by the last government to approve the Rosebank oilfield back in September 2023 was unlawful, as it did not account for the largest set of emissions that would result from the project, those released by burning the oil extracted from the field. Since then, Rosebank has continued to make headlines, with the government being pressed to clarify its position.
Leaving aside the fact that the government cannot yet answer this question, because it cannot pre-empt the regulatory process for oil and gas consents, there are strong grounds for rejecting Rosebank. Some of these were set out in a recent blog by Caroline Lucas. This blog focuses on the economic arguments, as advocates of Rosebank will do.
The Sun, reliably wrong on climate, paints Rosebank as “Labour’s first big pro-growth decision”. The Times links Keir Starmer’s “build, baby, build” (yes, really) growth agenda to Rosebank. And the Labour Growth Group, keen to back any project badged as ‘growth’, reportedly backs Rosebank.
The trouble is that approving Rosebank would undermine the clear signal the government has given that the clean energy mission is central to its growth plan. It would call into question the government’s seriousness about green growth and hit the capital investment needed to deliver clean power and bring down electricity prices, just as Rishi Sunak’s equivocation over climate policy undermined investment.
The case for drilling oil is weak
Since winning the election on a green mandate, the government has rebuilt investor confidence. Approving the largest undeveloped oilfield in the North Sea will make the PM look like a Rishi Sunak tribute act.
As explained by the Sustainable Investment and Finance Association, “the long-term justification for capital expenditure on drilling new oil and gas sites in the North Sea like Rosebank has dwindled away…. The UK’s key growth sectors of the future are in renewable energy.” Rosebank would risk slowing the rollout of clean energy in the North Sea. It would compete for limited port space, vessels, raw materials and personnel.
What about UK taxpayers? Would Rosebank at least help the exchequer? Unfortunately not. With the developers receiving several billion pounds in tax breaks, the UK public would effectively carry 84 per cent of the cost of developing the oilfield, a huge transfer of wealth to the Norwegian state, which has a majority stake in Equinor.
Not drilling doesn’t increase oil production elsewhere
What of the line that if we do not produce the oil here, it will be produced elsewhere? The 2019 UNEP Production Gap Report describes this as “a popular misconception” which “defies basic economics of supply and demand”. The argument was rejected in last summer’s Finch case: “leaving oil in the ground in one place does not result in a corresponding increase in production elsewhere.”
Rosebank has to go through multiple stages before a decision can be made. The rules governing environmental assessments of UK oil and gas projects are currently being amended to account for the combustion emissions of burning the oil and gas reserves in a new field. Given that these are the most significant environmental impacts of any new oil and gas project, they will now be included in an environmental impact analysis. When the time comes to assess Rosebank’s combustion emissions, the evidence should be clear that it cannot be approved.
Rosebank undermines a serious growth agenda
But it should also be clear that Rosebank undermines any serious growth agenda, if the government has one, beyond abuse of “nimbys and zealots” and a desire to build stuff, any stuff.
No one seriously thinks Rosebank, if it is ever approved, will kickstart growth. A third runway at Heathrow, if it is ever approved, is many years away. The business case for the Lower Thames Crossing is very thin. Meanwhile, in an economy that is stagnant overall, the net zero economy grew by ten per cent last year.
Instead of seeking to make enemies of its allies, why does the government not tell the patriotic story of how the UK can combat climate change while also riding the coming wave of technological change: environment and growth? That would be powerful and popular.
Keir Starmer and Rachel Reeves once spoke in those terms. Ed Miliband still does, which makes him a hate figure on the right and a target for Labour schismatics. They should remember that, in July last year, millions of people elected a progressive government on a mandate of climate action.
Of course, the whole notion of progressive government is under attack across the world. But that does not mean climate change has gone away. The need for credible international leadership to avert catastrophe is greater than ever. At COP28, towards the end of Rishi Sunak’s premiership, UK climate diplomacy was badly undermined by the government’s enthusiasm for drilling the North Sea. A year later, at COP29, UK leadership was widely praised, partly because the new government had pledged not to issue new licences for the North Sea.
If Rosebank is given the go ahead, it will be noticed around the world. It will be yet another big blow to climate action. And it will certainly be noticed by investors – and voters – looking for some consistent, progressive policy from this struggling government.
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