Climate advisers: Cut fossil fuel demand as best way to protect from high bills

A new ‘oil and gas bonanza’ in the North Sea would have almost no impact on the prices consumers pay for energy, the Climate Change Committee said.

24 February 2022

Weaning the UK off fossil fuels, not more drilling in the North Sea, is the best way to protect consumers from high energy prices, climate advisers have said.

The Government has faced calls from some quarters to boost domestic production of oil and gas, including from the North Sea and even by restarting efforts to roll out fracking, to address the soaring price of energy and fuel.

But its advisory Climate Change Committee (CCC) warned those “advocating a new oil and gas bonanza in the UK” that high oil and gas prices are driven by global markets and increasing UK fossil fuel extraction would have virtually no impact on bills.

The CCC also said granting new licences for exploration was not likely to lead to production for several decades, by which time the UK needs to have slashed its use of oil and gas significantly to meet its climate targets.

The best approach to reducing consumers’ exposure to volatile prices is to cut demand for fossil fuels, through home insulation, heat pumps, electric vehicles and developing more wind and solar power, the advisory committee urged.

It pointed to estimates that showed if David Cameron’s promise to “cut the green crap” had not reduced energy efficiency improvement rates from 2012, and plans to make homes greener in 2016 had not been halted, people’s bills would be £40 less than they will be in April.

And if the Government’s target to have 40 gigawatts of offshore wind by 2030 were in place today, it would save a further £100 off bills.

The committee also said a commitment to no new oil and gas fields would boost the UK’s diplomatic efforts to push for stronger global climate action – and send a “strong message” at home to consumers and investors.

But the committee stopped short of recommending the Government call a halt to oil and gas development in the North Sea, acknowledging there was uncertainty about the climate impacts of such a move.

Global carbon emissions from burning fossil fuels
(PA Graphics)

And it said there are other issues such as energy security that are beyond its remit, which ministers must balance up in making a decision.

In a letter to Business Secretary Kwasi Kwarteng, the committee does say it supports a tighter limit on production, with stringent tests and a presumption against exploration.

The committee set out its views in response to a Government consultation on a potential “checkpoint” with tests to assess new oil and gas licences for whether they are compatible with the UK’s climate objectives.

The CCC said emissions associated with extracting oil and gas in the UK were lower than global averages, which could mean domestic supply would be cleaner in meeting ongoing need for fossil fuels than imports.

But more production here could support a larger global market for fossil fuels, undermining global climate goals.

The committee also said there were economic benefits from North Sea oil and gas, such as jobs, though these were less than before, and the Government could raise a windfall tax on energy companies if it chose to do so.

But the committee’s chief executive Chris Stark said: “We want to bust the myth that the answer to the recent increases in the cost of gas and now increasingly the cost of oil is to turn immediately to more UK production.

“I’m afraid that is naive. A message for those who are advocating a new oil and gas bonanza in the UK is it will take too long to ramp up, it will have almost no impact on the price paid by consumers for oil and gas.

“The very best way to shelter ourselves from the kind of price volatility we are now seeing is to pursue net zero.

“If we become more energy efficient, if we generate electricity through cheap renewables, and a bit of nuclear, we transition to that more electrified economy with electric cars and heat pumps, it’s a winning strategy for the climate, it’s also a very good strategy for energy security going forward.”

He said the UK should go even faster towards “net zero” – its legal target to cut greenhouse gas emissions to zero overall by 2050 – if it can.

Lord Deben, the committee’s chairman, said: “The truth is people’s gas bills, the price of gas, is very, very marginally affected by what we produce in this country.

“The thing that makes the difference is if we move faster towards cheaper forms of generation, to offshore wind, onshore wind, photovoltaics,” he said, adding energy efficiency was also very important.

The committee also said the climate “checkpoint” should also be applied to fields that have received licences but not yet been consented for development, not just new licensing.

Heather Plumpton, policy analyst at Green Alliance, said the CCC’s intervention was a “clear blow” for the fossil fuel industry.

“The climate advisers say with absolute clarity that increasing domestic extraction would have a minimal impact on prices faced by UK households – and reiterate what the Government itself knows to be true: that the Government’s primary focus should be accelerating the transition away from volatile fossil fuel markets to an energy efficient, renewables-based power system,” she said.

Rosie Rogers, head of oil and gas transition for Greenpeace UK, said: “Anyone who’s read this advice and thinks the North Sea’s future lies in oil and gas is utterly deluded, because it will take decades and won’t ease energy bills.

“What we need to tackle bills and climate change is home insulation, heat pumps, electric vehicles and renewable power.”

A Business Department spokesperson said: “There will continue to be ongoing demand for oil and gas over the coming decades as we transition to cleaner and cheaper forms of energy generated in this country.

“As the Business ​and Energy Secretary has said, turning off North Sea gas overnight would put energy security, British jobs and industries at risk, and we would be more dependent on foreign imports.

“We welcome the committee’s acknowledgement that carbon budgets can still be met if new oil and gas fields are developed in the UK.”

Mike Tholen, sustainability director for industry body Offshore Energies UK, said: “The committee on climate change recognises that there is a continued role for domestic production if we can accelerate our climate ambitions, and we hear that challenge today.

“We are demonstrating by our actions that we are capable of delivering our climate commitments and will continue to do so while providing energy security for the UK.”

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