Why Sunak’s diluting of green policies is financially illiterate
04 August 2023
Following the Uxbridge by-election the Tory party seems to have decided that abandoning or at least diluting its green policies is an election winning policy. Whatever your take on the consequences for the environment, the decision makes no sense financially. It looks like a rushed and poorly thought out policy decision that’s going to rebound on them.
Issuing hundreds of new licenses for North Sea Oil extraction “to enhance energy security” might make sense had the UK not already been pumping oil in vast quantities since the 1980s. The North Sea is pretty much empty with the oil industry estimating that there are 2,700 million barrels of oil remaining. The UK uses around 580 million barrels each year. So if Sunak went flat out for energy security, issued extraction licenses like confetti and stopped all oil imports then North sea oil would be totally depleted in less than 5 years.
What is more likely is that the current status quo will continue where the UK imports around half of the oil it uses (mainly from the US and Norway) and gets the rest from the North Sea. In that scenario the oil runs out in just over 9 years – hardly a long term guarantee of energy security! Of course with Sunak issuing hundreds of new extraction licenses it’s likely that the 9 years will shrink. It has also been been widely trailed that he plans to remove the ban on ICE cars sales after 2035. This would be the greatest folly of all. It would perpetuate oil use and imports into the UK, remove incentives for infrastructure companies to invest in charging networks and cost a fortune. In the period until the North Sea oil runs out, assuming an oil price of $84 per barrel (it has been as high as $147!) then the UK will have spent $288 billion on oil imports and when the oil does run out the annual bill for UK oil imports will double.
This policy will be attacked by environmentalists but also attacked for its total lack of financial common sense. How can it make sense for the UK to continue to spend hundreds of billions on oil imports when there’s a much cheaper way of generating power domestically. It feels like the last gasps of a desperate man looking for anything to hang on to to prevent him and his party from sinking from sight. Going hard for green power not only costs less than continuing to import vast and increasing quantities of oil but is the only way the UK can guarantee energy security. We have a feeling Mr Sunak already knows that.
Gren Gale is a consultant in Remote Work and Project Management and has been named as one of the top 19 Key Opinion Leaders globally in remote work in Who’s Who in Remote Working? as an influencer in Who’s Who in The Future of Work? and one of top 50 Project Management Leaders internationally by Leaders Hum. He is author of the Remote Project Manager and Remote Work The New Normal.
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