On one level, it’s hard to get too upset at this point about Ed Miliband’s decision to ban all new oil and gas licences. After years of Conservative ministers heaping ‘windfall taxes’ on North Sea producers that were struggling to make a profit, it might be that this country doesn’t even deserve the sector anymore.
But it is still a deeply stupid decision for several reasons. So too is Angela Rayner lawyering her way out of the previous government’s decision to grant planning permission to the West Cumbria coal mine. Both are reminders that the Government’s dash for growth will come down to a battle between Labour’s brightest minds and its worst instincts.
What the decisions on the North Sea and West Cumbria have in common is this: they are exercises in making this country poorer in order to cook the environmental books.
Any sane strategy for hitting Net Zero must ultimately be demand-led. There are good and bad ways to push down demand for fossil fuels – investing in clean energy generation and technology versus simply trying to crush it through regulation, making us poorer – but that’s the only way it happens.
It might be different if the United Kingdom were the sole global producer of oil or coking coal. But it isn’t, and nor are our allies. As such, policies that arbitrarily cut domestic production simply shift market share (and jobs, and export profits) overseas.
That’s bad enough if it’s a friendly nation. But recall, Western nations are supposed to be trying to ramp up production in order to undermine Vladimir Putin’s war machine, which depends upon global oil prices remaining above a certain tide line. Keir Starmer, who yesterday reiterated this country’s commitment to Ukraine, should have a word with his Energy Secretary.
Happily, Rayner’s decision on the coal mine at least won’t leave the UK importing something it could produce. Less happily, that’s because we already made that decision higher up the chain: the coking coal West Cumbria would have produced is used in steelmaking, and we are now the only G20 economy (apart from Saudi Arabia, so it’s fine!) to have no virgin steelmaking capabilities left.
The same can’t be said of the North Sea. Shuttering domestic production will do nothing to hasten our transition away from fossil fuels – not unless the Government went full degrowth and followed it up by ramping up import tariffs on oil. If you want growth, that means lower energy costs for households and business – and that means imports.
It also overlooks the fact that oil is more than just a fossil fuel. The International Energy Agency forecasts that petrochemical production is going to drive half of all growth in oil demand between now and 2050; according to the World Economic Forum, plastics production will double in the next two decades and quadruple by 2050.
All of which is a long way of saying that we won’t stop needing oil just because we stop burning it, if ever we do. So long as we need plastic, it will continue to be a valuable export and, you know, an essential resource of human civilisation. We’ll still be using it here in Britain. We just won’t be producing it.
That won’t shrink this country’s environmental footprint one iota. But it might disguise it. Plastic, like petroleum, has downsides, especially in terms of pollution. It will doubtless comfort future policymakers, when the immortal AI voice of David Attenborough narrates his latest holo-documentary on the oceans, to be able to say that Britain plays no part in the plastics industry.
Except as consumer, of course, and a consumer paying twice at that – in direct import costs and foregone economic activity.
One can make the case that Labour’s neurosis about fossil fuels is sui generis, and doesn’t necessarily have broader implications for the Government’s growth push. People I’ve spoken to suggest that investors aren’t particularly concerned. Surely the recent decisions on data centres and onshore wind are better indicators?
But there is a difference between a stable planning environment and one where you can merely guess with some confidence the whims of the state. A call-in decision from the Secretary of State is supposed to be the highest court of appeal in our dysfunctional planning system; if Rayner has undermined it, the effects would ripple well beyond one mine.
This is, after all, the most marginal parliament (in terms of constituency majorities) since 1945. Even if that weren’t the case, Labour itself acknowledges that the current lead-in time for an onshore wind development is 13 years. Even if the Government can cut that – and we’ll see in the King’s Speech if they even try – that’s plenty of time for a Nimby-fuelled change of government.
If it turns out that the final court of appeal isn’t so final after all, that will naturally affect investor confidence, and increase the up-front cost to the state of hedging that risk.
Besides which, there are plenty of other contra-indicators when it comes to Labour’s instincts on growth. I’ve written previously about how its plans for new towns and greenbelt development look set to be kneecapped by insane regulatory standards; Jonn Elledge about the new Housing Minister’s unpromising track record. That’s before we even get to stuff like the Race Equality Bill.
Rachel Reeves seems at least to grasp the broad shape of the problem. But she can’t be everywhere at once, and this country’s problems are deep-seated. Will Labour MPs in newly-won shire seats stomach the local reality of liberalising planning and boosting development? If growth doesn’t distribute its prizes evenly, will ministers resist the urge to intervene?
Ultimately, the object of planning reform is reducing politicians’ scope for making arbitrary decisions such as Rayner’s. Any serious industrial strategy would require long-term certainty that precluded arbitrary decisions like Miliband’s. Until we have ministers prepared to accept that, there is no real hope of either.
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