Britain’s wilful destruction of its oil and gas industry is beyond belief

North sea oil
North sea oil

Until last week, few would ever have heard of Horse Hill, near Horley in Surrey, still less been there.

By ruling against Surrey County Council’s decision to expand permits for oil drilling at the site, Britain’s Supreme Court has put this backwater of semi-rural, southern England on the map.

In the process, it has also put the kibosh not just on any prospect of oil production from this tiddler of a prospect, but in effect on all future hydrocarbon development in the UK, including very likely the planned Whitehaven coal mine in Cumbria and the Rosebank oil field in the North Sea.

The Supreme Court’s ruling is a death blow for an industry that has long been treated like a pariah, but is worth £60bn a year in exports, employs more than 30,000 people directly and indirectly, and last year contributed around £5.2bn of tax revenues.

That you would deliberately choose to destroy such a useful source of economic wellbeing would in any rational world be regarded as almost beyond belief.

Run-off from existing capacity will take some years to play out, of course, but beyond expenditure on maintenance and decommissioning, the judgment in effect means there will be no new investment to speak of from here on out.

It’s completely mad, but no matter; the pursuit of net zero must come first. No matter also that the decision will actually make no difference at all to emissions. It’s not just that the amounts projected to flow from Horse Hill are too trivial to be of any significance. It’s also that oil and gas not produced in the UK will simply be produced somewhere else instead.

Their lordships’ ruling merely displaces production from one place to another.

More than 70pc of Britain’s energy needs are still accounted for by fossil fuels; on any realistic assessment, this is likely to remain the case for years if not decades to come, never mind any attempt to transition away from them.

The effect of turning off domestic production is therefore to further increase Britain’s economic dependence on imports.

Already there is a substantial trade deficit in energy. According to the latest Office for National Statistics “Pink Book”, we imported £117bn of fuels in 2022 and exported £60.2bn. With the North Sea in precipitous decline, this deficit will widen, putting further pressure on the balance of payments. Already the UK has the second worst and most persistent current account deficit in the G7.

It might be argued, I suppose, that this doesn’t matter if renewables fill the hole left by oil and gas. Yet thus far there has been little sign of it. Yes, there has been a big increase in renewable forms of energy both in the UK and globally, but it hasn’t yet displaced demand for fossil fuels.

Greenhouse emissions are, to the contrary, continuing to hit new records globally. Here in Britain, we are merely offshoring a large proportion of them.

“Clean energy is still not even meeting the entirety of demand growth,” says Nick Wayth, chief executive of the London-based Energy Institute. “Arguably, the energy transition has not even started.”

There is little point in Britain self-destructively bending the knee before the climate change bandwagon if everyone else is studiously ignoring it. Biden’s America may have caught the green energy bug, but it is also still investing billions in oil and gas. Only in London and Brussels are the two thought to be incompatible.

The background to the Supreme Court judgment bears some repeating. Britain may have left the European Union, but the long arm of its diktats continues to reach deep into our affairs.

In ruling against Surrey County Council, the Supreme Court was instructed by EU Directive 92/11 as implemented by the Town and Country Planning (Environmental Impact Assessment) Regulations 2017. These require a full-scale environmental impact study to be conducted into most forms of development.

The UK had already voted to leave the EU by the time the directive took force, but had not yet formally done so, and was therefore still legally bound to implement European laws and obligations.

There was a chance to strike these out with last year’s Retained EU law (Revocation and Reform) Act, commonly known as the “Brexit Freedom Act”. As originally conceived, it would have revoked virtually all EU law.

But this year zero approach came to be seen as too abrupt and radical, and the Bill was substantially watered down under the presiding Business Secretary, Kemi Badenoch.

In any case, the EU requirement for an environmental impact assessment remains on the statute book, even if the scope and standing of any such assessment is very much open to interpretation.

By finding that Horse Hill bore responsibility not just for the emissions that the site itself produced, but also those arising from eventually burning the oil, the Supreme Court has adopted a particularly hard line approach.

The Court has also in effect defied government policy, which is to “max out” the nation’s conventional oil and gas reserves. Once more, it stands accused of judicial overreach. The courts have similarly frustrated Government attempts to stop the boats, and most famously to prorogue parliament in exiting the European Union.

Reductio ad absurdum, the European Court of Human Rights – which is not an EU institution and therefore still holds sway in Britain – recently opened the floodgates to all manner of climate change litigation by upholding a complaint by a group of elderly Swiss women to the effect that their rights to a family life had been infringed by the government’s failure to take sufficient action to shield them from global warming.

All over the shop, the courts are seizing powers that rightfully belong to elected politicians. Is it any wonder that European economies are in such a mess? There seems to be almost no development that is not open to legal challenge.

What used to be seen as a bulwark against the abuse of executive power threatens instead to become an instrument of economic paralysis. Like the fog in Dickens’s Bleak House, it has cast a pall over almost everything.

Good luck Labour with growth-enhancing planning reform, which promises quickly to get bogged down in the legal system. Similarly with boosting Britain’s shamefully poor levels of business investment, where litigation risk has become a powerful deterrent.

As for the North Sea, it perhaps doesn’t matter what the Supreme Court says, as Labour has declared that there will be no new licences anyway.

Not that it needs to be so explicit in its plans. An effective 75pc marginal rate of tax on North Sea profits has pretty much finished the industry off anyway.

And just in case there is anyone left foolish enough to invest at these levels of tax, Labour proposes to tax the sector even more to help fund its plans for Great British Energy, a publicly owned clean energy company to “harness Britain’s sun, wind and wave” power.

Will the last roughneck to leave the country please turn the lights out.

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