Truss and net zero

This is the moment to be bold. With those words Liz Truss unveiled an energy policy that includes lifting the ban on hydraulic fracking and approving more North Sea exploration licences to boost domestic gas production.

The first week of the Truss premiership sent a shudder down green campaigners’ spines. But is it too early to cast her as a diehard climate sceptic?

First, a reminder of the good news. Britain is a global leader when it comes to cutting emissions, decarbonizing faster than any rich country over the past 30 years.

That’s not just to do with emissions from our domestic economy. The UK’s consumption emissions – a measure that includes the greenhouse gases associated with the goods we import – fell by 18 per cent from 2008 to 2017, a time when the economy was growing. 

The fear is that this progress could now be squandered under a government determined to drill every drop.

Reality could, however, come to the rescue.

• Fracking in the UK makes little sense – geologically or economically (leaving aside the fact that it’s deeply unpopular). Even in the industry’s best-case scenario, which assumes there would be no planning issues or protests, fracking would meet less than 5 per cent of UK gas demand over the next five years. “There’s probably less gas than we think there is, and it’s going to take a while to start producing.” says Sam Hall, Director of the Conservative Environment Network, a caucus of over 130 Tory MPs. “On the other hand, you’ve got onshore renewables which have faced planning barriers for years… There’s an opportunity to get a whole lot more wind and solar onto the grid because those are cheaper technologies and they’re more popular.” 

• North Sea exploration also appears to be a political, rather than an economic, choice. Ageing infrastructure and falling production levels now mean that the UK has the second highest operating expense per barrel out of the world’s 30 biggest oil producing countries. Granting 130 new licences might give the impression that Truss supports British energy, but will do little to ease bills in the short term: for North Sea oil and gas fields which started up in the last three years the average time from licence award to first production was roughly 27 years, according to Rystad Energy. “It’s about creating a political dividing line with Labour, as opposed to thinking that more licensing rounds means more money for the UK or more gas,” says Sam Alvis, director of economics at the thinktank Green Alliance. A case of vice signalling?

Cutting emissions has been legally binding since 2008, when the UK passed the Climate Change Act. Overturning this would require political energy. A greater risk is lack of action.

Here, Truss’s personnel appointments offer conflicting signals.

• There’s cause for cautious optimism in the appointments of Graham Stuart as junior minister for climate change and of Chris Skidmore to lead a review of net zero. Both have track records of pushing Prime Ministers to act faster on climate change, while Simon Clarke, a minister who led efforts to enshrine the UK’s net zero target into law, now holds the brief for housing – an area which accounts for 14 per cent of UK emissions. Kwasi Kwarteng, now Chancellor, has been publicly sceptical about fracking.

These positive moves are largely outweighed by two key roles:

• Jacob Rees Mogg, business and energy secretary, has called for “every last cubic inch of gas” to be extracted from the North Sea and has a history of misrepresenting climate science. Critically, Matthew Sinclair, Truss’s economic adviser, is the author of Let them Eat Carbon, a book in which he argues that cutting emissions may not be worthwhile if it entails a sacrifice of living standards. Sinclair does not appear to dispute the science, but argues for climate change policy to focus on resilience and adaptation. If he wins the argument, this will mark a major shift for the UK.

A joint letter on energy security from the respective heads of the Climate Change Committee and National Infrastructure Commission makes no mention of fracking or the North Sea, but instead urges Truss to tackle energy efficiency in buildings. It cites OBR forecasts that expect natural gas to remain expensive, at three to four times the average pre-invasion price, until 2027.

UK energy security, in 2023 and beyond, cannot rely solely on expensive gas. Truss has tacitly acknowledged that by voicing her support for more wind, solar and hydrogen “as long as it is in the right place”. But cautious, NIMBY-conscious policy won’t be enough.

Biden’s Inflation Reduction Act has demonstrated how it is possible to push through climate legislation camouflaged as free-market opportunity: it removed the wonkish language of “net zero” and offered a goodie bag of incentives for business. Truss should take note.

Triggered

Even if the world meets the more ambitious Paris goal of limiting temperature rise to 1.5 degrees, several climate “tipping points” would likely be triggered. That’s according to a study in the journal Science which found that there are at least four junctures in the climate system at risk of being crossed at that temperature. Tipping points at risk include the near-complete melting of the Greenland and West Antarctic ice sheets, more immediate loss of tropical coral reefs and thawing of high northern permafrost. All have potential to precipitate irreversible and dangerous changes to our fragile climate system. Last year the UN warned that the world is on course for 2.7 degrees of warming by 2100 unless countries take more steps to slash greenhouse gas emissions.

Dust dilemma
Californians face an unforgiving climate dilemma: conserving groundwater or having cleaner air. State law requires that 500,000 acres of farmland in the San Joaquin Valley, a major food producing area, need to be retired in the next 20 years in order to conserve enough water. But  a recent report from the Public Policy Institute of California says that is going to create significant amounts of dust in an area that has some of the worst air quality in the US. Residents of California’s Central Valley are on the hunt for solutions. Planting vegetation cover that doesn’t require too much water is one option. Spreading gravel to keep the dust down is another.

Musk’s masterplan
In a bid to shore up its supply chain, Tesla is seeking approval for a lithium hydroxide refining facility on the gulf coast of Texas – the first of its kind in the US. It’s been a while coming. Back in April, CEO Elon Musk hinted that the company might need to get into refining because of the rising price of lithium, up 120 per cent this year. He’s acutely aware that a decade ago raw materials accounted for 20-30 per cent of the cost of a lithium ion battery. Now it’s 70 to 80 per cent. “Increasing competition means that car makers will need to become miners,” writes Simon Moores of Benchmark Minerals Intelligence. Musk’s logic is that the more upstream mining and refining capacity his company has, the better it can ride out squeezes on rare metals, or any turbulence that might arise from China’s global market dominance.

Cop out
Two months out from Cop27 in Cairo and countries from the host continent are busy laying out their list of demands. After a three-day forum for African finance and environment ministers, a communique was released that called for a sharp increase in climate financing, while pushing back against demands for countries to move away from fossil fuels. It’s a powerful argument: Africa has benefited from less than 5.5 per cent of global climate financing despite emitting just 3 per cent of global emissions and suffering disproportionately from climate change. It is also home to some of the world’s most important carbon sinks, including the Central African Rainforest. The rest of the world faces a choice: cough up or cop out.

Thanks for reading.

Barney Macintyre
@barneymac

Jeevan Vasagar
@jeevanvasagar

If you want to get in touch, drop us a line at netzero@tortoisemedia.com

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