Copyright © BusinessAMBE 2023
In recent weeks, Rishi Sunak has aroused the ire of many environmentalists. The British prime minister is defending the implementation of a more "pragmatic" policy on climate targets. This week, two events illustrate this new direction the United Kingdom has taken.
Sunak's choice symbolizes the dilemma facing many Western countries involved in a "green" transition. Some governments argue that it is not possible to move to carbon neutrality at high speed because it would threaten their security of supply and be financially damaging to their citizens. So more restraint is needed.
In the news: This week, two news stories have angered environmentalists in the United Kingdom:
Green light for Rosebank
The details (1): Promises for Rosebank.
- On Wednesday, Britain's oil and gas regulator decided to approve the launch of Rosebank. This is a major oil and gas project in the North Sea backed by Norwegian group Equinor and Israel's Ithaca.
- It is expected to produce 300 million barrels of oil over the life of the field, equivalent to about three days of global demand and about two-thirds of the UK's annual consumption. Production was expected to begin in 2026-2027.
- In its defense, Equinor argued that they had optimized their plans to reduce carbon emissions from the field, primarily through electrification of the extraction process, planned for 2030 or earlier. Moreover, the project developers claimed that the UK would need oil until at least 2050 anyway (as Sunak had said), so it was better to produce it themselves than import it.
- "Producing it yourself offers more energy security, less CO2 per barrel, more jobs and a stronger economy," argued Gilad Myerson of Ithaca Energy. The government is satisfied, the opposition much less so.
The reactions (1): the government cheers, the opponents are outraged.
- The arguments of Equinor and Ithaca impressed the British government.
- Sunak praised the decision as a "good long-term decision for the UK's energy security."
- "We are investing in renewable energy, but we need oil and gas in the transition to carbon neutrality, so it makes sense to use our own supplies in the North Sea," said Claire Coutinho, the energy minister.
- On the other hand, opponents are furious.
- Scottish Prime Minister Humza Yousaf called it a "denial of the climate." He also expressed concern that "most of what is taken from Rosebank will go abroad and not stay in Scotland or the United Kingdom."
- For British Green Party MP Caroline Lucas, this approval is "morally reprehensible."
- For Scottish Labour MP Monica Lennon, it is "ecocide."
- Perhaps the most moderate but even more remarkable position is that of conservative Alok Sharma. The former Secretary of State for Energy under Boris Johnson and chairman of the COP26 in Glasgow declared himself "concerned about the breakdown in the British political consensus on climate action." "Leading a green growth program is good for the economy, investment, jobs and the environment," he stressed, recalling that Sunak's policies were no more so. Sharma will not run in the upcoming elections.
Termination of Sanquhar II
Details (2): A new wind power project halted.
- The same day, Community Windpower announced that they were halting the development of Sanquhar II. This project was supposed to be the fourth largest onshore wind farm in the United Kingdom and produce enough electricity to power about 350,000 homes. The farm should be fully operational by 2025-2026.
- The developer, one of the country's largest, explained that the project was not feasible partly because of rising costs and partly because of the tax on extraordinary profits it had to pay.
- According to Community Windpower's calculations, costs rose from £300 million to £550 million in just two years. The tax, a "huge hurdle," appears to have been the project's final blow. "Given the urgent need for more renewable capacity, this is a total political failure," lamented Rod Wood, CEO and owner of Community Windpower, as quoted by the Financial Times.
- As a reminder, this tax, which runs until the end of March 2028, is equivalent to a 45 percent levy on revenues from electricity sold for more than £75 per MWh. The daily electricity price in the United Kingdom is about £96 per MWh, notes the FT. So Sanquhar II, which had planned to sell its electricity at market rates without government support, was hit.
"We are not going to save the planet by ruining our people."
Background: the pragmatism and realism of Sunak.
- These two events occur while Sunak has chosen "pragmatism" and "realism" to achieve carbon neutrality by 2050.
- Last week, the British prime minister announced that the sale of gasoline or diesel cars would be delayed from 2030 to 2035. At the same time, he announced that restrictions on replacing old gas-fired boilers would be relaxed. This raised the ire of part of Britain's political class and environmental groups.
- Last summer, Sunak already caused a stir by promising hundreds of new permits for oil and gas exploration and exploitation in the North Sea.
- These two cases illustrate the Conservative government's new motto, very aptly summed up by Home Secretary Suella Braverman: "We are not going to save the planet by ruining our people." (kg/nd)