Energy security is a must, but UK’s absurd oil and gas bill won’t help
Energy security is a pressing concern, but the UK’s absurd oil and gas bill is yet more evidence that the government is living in a parallel universe when it comes to energy policy, writes Nigel Pocklington
On Monday, the UK government passed the second reading of its oil and gas bill in the House of Commons, mandating annual licensing rounds for North Sea fossil fuel contracts on the false pretence that it will boost UK energy security.
While our energy security is indeed a pressing concern, suggesting that this proposed legislation will address the issue is yet more evidence that the government is living in a parallel universe when it comes to energy policy.
Events of recent weeks in the Red Sea remind us of the precarious nature of our energy security. Rising tensions which led to the US and the UK carrying out military strikes on Houthi bases in Yemen sent oil prices skyward. This matters here because Europe is now much more dependent on the Middle East for oil and gas since supplies from Russia were stopped, leaving us highly exposed to any escalation in the Gulf that could further disrupt supplies and potentially send prices soaring.
This comes just as UK energy prices were recovering from the impact of Russia’s invasion of Ukraine, which saw them shoot up primarily due to the UK being a net importer of gas.
Geopolitical tensions disrupt the global energy supply chain, and that has a direct impact on our little island, and on each and every one of us.
Sadly these tensions are unlikely to subside. The World Economic Forum’s latest Global Risks Report highlighted a rise in conflict among the top risks facing the planet. Global energy demand will also keep increasing.
This gloomy picture demonstrates why we need to urgently address our energy security with a long-term plan that actually makes sense.
Unfortunately, the UK government insists on repeating the complete falsehood that further fossil fuel exploration will boost the UK’s energy security; a claim that many experts have debunked. In reality, a very small proportion of the oil pumped from the North Sea is refined and sold in the UK. Analysis by Global Witness determined that 80 per cent of UK oil and gas was exported in 2022.
Cabinet ministers seeking to defend the argument by claiming pipeline connections would give the UK some sort of control of oil and gas in periods of international tension show how wrong saloon bar populism can be in energy policy. It is very simple — hydrocarbons are traded on a global market, where the price is set by world demand and supply. Good luck persuading anybody to invest the sums required to extract new reserves whilst also claiming that we would behave like Venezuela and sequester the assets.
The real answer is that the UK simply must reduce its reliance on gas and put decarbonisation at the heart of its energy security strategy.
As an island nation we have a tremendous variety of natural assets from wind and solar to tidal power, and a proven ability to scale up the supply of renewable electricity at an impressive rate – from 6.7 per cent of the UK’s electricity in 2010 to 41.5 per cent in 2022.
But new wind and solar sites are taking far too long to be connected to the grid. There are hundreds of onshore wind and solar projects waiting to be built, with construction paused because the sites won’t be connected to the grid for – in many cases – 10 to 15 years.
In November, National Grid’s CEO warned that fundamental reform of the UK’s electricity network planning was still necessary to deal with the growing bottleneck of clean energy projects waiting for a connection.
This reform and investment in National Grid is vital if the UK is to connect homegrown renewable energy providers to domestic energy users, and make serious progress in both our energy security and climate goals.
Renewables may not yet be able to provide 100 per cent of the solution to our physical energy security and protection against price volatility, but they are certainly our best.
Nigel Pocklington is the CEO of Good Energy