Rupert Darwall

Rishi Sunak’s net zero u-turn

How time flies when there’s a real crisis. Just six months ago at the Glasgow climate conference, the Chancellor Rishi Sunak was pledging to rewire the entire global financial system for Net Zero. Sunak boasted that he was going to make London the world’s first ‘Net Zero Aligned Financial Centre’. It would mean forcing firms to publish plans showing how they will decarbonise and meet net-zero targets to be overseen by a transition taskforce. There was little fanfare when the transition plan taskforce was launched last week. Even though the taskforce is co-chaired by John Glen, the economic secretary to the treasury minister alongside the chief executive of Aviva, you won’t learn much about the taskforce from the Treasury website, which, however, does tell us which artist is going to design a new £1 coin.

The Treasury’s recently acquired modesty about blazing the net zero finance trail is explained by the energy crisis that threatens to overwhelm the economy and the government with it, just as the first energy crisis did for the Heath government in the early 1970s. The Chancellor now whistles a different tune. He is demanding that Shell and BP use their record profits to increase their investment in the North Sea to avoid being hit by a windfall profits tax. According to a heavily briefed report in the FT, Sunak wants oil and gas companies to raise their capital spending on UK projects to boost the country’s energy self-sufficiency. Wind and solar are not substitutes for oil and gas. Sunak’s goal of improving self-sufficiency therefore implies he wants more investment in fossil fuel production. But, as the FT notes, investment in the North Sea by energy companies has fallen 90 per cent since 2014.

High oil and gas prices should induce a supply-side response. In the past, they led to increased investment, which in turn led to increased output and falling prices.

Already a subscriber? Log in

Keep reading with a free trial

Subscribe and get your first month of online and app access for free. After that it’s just £1 a week.

There’s no commitment, you can cancel any time.

Or

Unlock more articles

REGISTER

Comments

Don't miss out

Join the conversation with other Spectator readers. Subscribe to leave a comment.

Already a subscriber? Log in