I’m a little sceptical of reports that Ed Miliband is prepared to back down and accept new drilling for gas in the Jackdaw field in return for being made chancellor. Last time that Miliband was reported to be on the point of granting permission for new oil and gas licences in the North Sea it turned out not to be true. He dug in his heels, and a hapless Keir Starmer let him do so.
Maybe Miliband’s ambition to be chancellor, and his desire to inflict a deeply left-wing fiscal policy on Britain, really does trump his net-zero zealotry
But maybe Miliband’s ambition to be chancellor, and his desire to inflict a deeply left-wing fiscal policy on Britain, really does trump his net-zero zealotry. Moreover, he has no doubt worked out that he could save face with the net-zero fundamentalists by letting his successor as energy and climate secretary announce the change of policy – once he has gone to the Treasury. Andy Burnham has previously said that he is ‘open-minded’ about new drilling in the North Sea.
Either way, the government is being driven towards new drilling in the North Sea by plain logic. To refuse to exploit the North Sea is not magically going to change the balance of Britain’s energy consumption: three quarters of our overall energy needs are currently met by fossil fuels. All it will achieve is to make us more reliant on imports, not least on the very ‘fossil fuel dictators’ Miliband says he wants to free us from.
It was revealed yesterday that the EU imported nearly ten million tonnes of liquified natural gas from the Yamal field in Siberia in the first half of this year. That is a source which Britain, too, is going to be forced towards as supplies from Qatar – one of the big sources of LNG – dry up as a result of the Iran war. Miliband’s policy of refusing North Sea development is in serious danger of lining Putin’s war chest. That is not to mention the environmental objections of imported LNG, which has a significantly higher carbon footprint as the process of liquification and gasification itself consumes around 10 per cent of the fuel.
Miliband has continued to insist that more North Sea production will not bring down energy bills for UK consumers because the fuel will just be sold on global markets at the internationally-set price. While you might possibly argue that in the case of crude oil, it is simply not true in the case of gas. Thanks to the greater difficultly in transporting gas, wholesale gas prices vary enormously across the regions of the world, depending on the local balance of supply and demand. More North Sea production will certainly have a downwards influence on prices because the transport costs can be reduced. The fuel should be availably quickly, too: the owners of the field claim that it could be producing 6.5 per cent of the UK’s gas needs by the coming winter.
For the moment, it is reported that Miliband is prepared to cede on the Jackdaw field but not the Rosebank field. The former is a gas field, the latter principally oil. While exploitation of Rosebank may not have a big impact on prices at the pumps, it would certainly bring in extra tax revenues. If Miliband does become chancellor, he may well appreciate those, as the alternative will be yet more tax rises or borrowing. Markets have already signalled that they will not take kindly to the latter, while the former may struggle to generate revenue given that businesses and wealthy individuals are already threatening to vote with their feet. We could be about to see an Ed Miliband with a very different perspective on the North Sea.
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