Does the decision by oil giant Royal Dutch Shell to pull out of the Cambo oilfield mark the end of oil and gas investment in the North Sea? For the planet’s sake, one would hope so. However, it may be more realistic to see Shell’s act as a first victory in a longer war to keep hydrocarbons in the ground. Campaigners say that there are dozens more offshore oil and gas fields coming up for approval in the next three years. To keep the climate safe and limit global temperature rises to 1.5C, none ought to go ahead. Oil majors have lost the battle for public opinion in Scotland and this has dramatically altered the calculations for the ruling Scottish National party, which for decades ran on oil. Without supportive politics, and with the science against them, oil majors – this time – bowed out.
Despite that, and despite brandishing its credentials as a climate champion at Cop26 in Glasgow last month, the UK government still wants extractive industries to suck the seabed dry. Rather than joining an alliance of nations – led by Denmark and Costa Rica, and including France and Ireland – which have set an end date for oil and gas production and exploration, Boris Johnson will allow companies to keep exploring the North Sea for new reserves.
The counter argument is that abandoning the North Sea will cost the UK jobs. But the appropriate policy response is to raise investment aimed at the transition to net zero. Last year a poll suggested that four-fifths of oil workers would consider leaving the industry. This is a pool of labour willing – provided there was a measure of security and reasonable pay – to transfer skill sets to the offshore wind and renewable energy sector. What has been lacking is the government drive to tap such desires.
One has to recognise that while fossil fuels fade, the geopolitics of energy will not. If the world achieves net zero emissions, it will not mean the end of oil and gas. The International Energy Agency (IEA) projected that if the world reached the goal of net zero by 2050, it would still be using nearly half as much natural gas as today and about one-quarter as much oil.
This would mean that as the UK constrains its domestic fossil fuel output, wealthy Gulf states that can produce oil cheaply will increase their market share. It would also see Moscow’s significance to Europe’s energy security rise before it falls. Adopting cleaner technologies will also, as the US academics Jason Bordoff and Meghan L O’Sullivan write in Foreign Affairs, give rise to new energy powers: half of the global supply of cobalt is in the Democratic Republic of the Congo; half of lithium in Australia; and half of rare earths in China. Trade may be used to pressurise countries considered too slow in greening their economies to pursue stronger climate policies.
This will be tricky to navigate for the most sure-footed of governments, let alone one that clomps around the world in shoes of concrete. The UK government must foster new technologies and use them to curb climate change, while lowering the geopolitical risks that such changes create. But Mr Johnson is prepared to sacrifice green targets to strengthen alliances; just ask Canberra. He also has a reputation as an unreliable ally, ripping up agreements within months of signing them. The essence of diplomacy is persuading others to do things you want. It is hard to see how Britain will convince anyone else to ditch fossil fuels when it won’t do so itself.
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