The government will grant hundreds of new licences to extract oil and gas from the North Sea, Rishi Sunak said on Monday.
The initial decision was announced last year, but Mr Sunak reiterated the plan this week alongside “millions of pounds” for so-called “carbon capture and storage” technology — which the government says would help reduce Britain’s greenhouse gas emissions.
But the new North Sea licences are extremely controversial — with the Scottish Green party describing the announcement as “utterly reckless”.
One of the government’s key arguments to support the move is that it will help Britain’s energy security in the face of “foreign hostile actors like Vladimir Putin”, in the words of one minister.
Mr Sunak himself told the House of Commons in June: “Putin’s weaponisation of energy has amplified the need for greater energy security, which is why we deliberately launched a new licensing round for the North Sea.”
Let’s take a look.
What more oil and gas exploration might mean
Perhaps understandably after the massive gas price shock Europe experienced in 2022, the government’s focus has been on the role that Russia can play in affecting wholesale prices. But it’s a bit of a leap to say that more North Sea oil and gas is the solution to this problem.
For starters, even before Putin’s full scale invasion of Ukraine, we only imported around 4 per cent of our gas directly from Russia.
So the issue isn’t that we’re heavily reliant on fossil fuels from Russia — because we’re not. The reason the UK suffered an energy price hike after the war began is because UK energy companies have to buy gas on the global gas market at prices set by international traders. It was that global price that rose, and which determines the amount UK consumers pay for energy.
And perhaps more importantly, we export much of what we extract from UK land and waters — around 80 per cent for oil .
The private companies that own the fields are under no obligation to sell the oil and gas to UK energy suppliers. So even if we extract more fossil fuels in the UK, there’s no reason to think it would end up being used in British homes and on British roads at a price that’s any lower than the amount companies pay on global commodities markets — it’s a free market where the fossil fuels go to the highest bidder.
To create a direct link, the government would likely need to introduce trade tariffs or other measures to make it more attractive for the companies to sell oil and gas produced here to UK companies. But the government has never said this is part of its plan.
For natural gas the picture of imports and exports is more complex.
The department for Business, Energy and Industrial Strategy told us: “The reason UK gas production helps UK energy security is because virtually all of it is sold into the UK domestic gas market. This is because it is often cheaper to ship gas domestically than to foreign markets”.
The government keeps extensive records on energy, so FactCheck asked the government for clarity on this and data to back the statement up — but it wasn’t able to provide any.
There are also questions over timelines for fossil fuel production and future demand.
According to the UK government’s statutory advisors, the Climate Change Committee (CCC), newly issued oil and gas licenses take around 28 years to begin producing — so any new oil and gas fields wouldn’t have an effect for decades.
But in this time the UK will have more electric cars, have more electric heat pumps for heating homes and may have more zero-carbon power sources like renewable energy and nuclear. If that’s the case, we wouldn’t need that extra fossil fuel production — our energy status would be secured by other means.
The CCC recommends that the government stop new oil and gas exploration. It says that the best way to protect consumer bills is to reduce all demand for fossil fuels — regardless of where they’re extracted — by increasing energy efficiency of buildings, increasing renewable energy production and electrifying what we can.
The government says increasing UK oil and gas extraction would help reduce our reliance on countries like Russia. But there are several problems with this argument. Most importantly, that even if companies extracted more oil and gas from UK land and waters, they’d be under no obligation to sell it to UK energy companies, nevermind at any lower price. The price UK consumers pay for energy depends on what’s happening in global commodities markets — not what’s happening in UK oil and gas fields.