Oil drilling platform

Confusion is built into our approach to net zero. We need to be more pragmatic about whether emissions will genuinely be new. 

Oh dear. I fear I may be turning into my namesake, a certain former prime minister. This week I’ve been feeling very much like I want to have my cake and eat it. I’ve also been getting rather frustrated with the judiciary. Very Boris.

I’d better explain.

I am with Rachel Reeves in believing we should expand airport capacity and build a new runway at Heathrow. I also believe in getting to net-zero greenhouse gas emissions by 2050. That feels uncomfortably cakeist. As for the judiciary, I’ve been looking at last week’s judgment by Lord Ericht at the Court of Session in Edinburgh in which he ruled that consent for two new oil and gas fields was granted unlawfully. He was largely following precedent set in the UK Supreme Court, which came to the same conclusion about a proposed expansion of oil production at a site in Surrey. My economist’s mind often struggles to understand the legal mind.

It also has difficulty understanding the politician’s mind. The government is keen to promote Heathrow because of its positive economic impact, and despite potential increases in greenhouse gas emissions. It is not going to allow any further licences for North Sea oil production, despite its negative economic impact, because of potential increases in emissions.

Let’s start with that Heathrow decision. The arguments in favour and against are well rehearsed. Heathrow is full. It is losing out to other hub airports around the world. Expansion would have significant economic benefits not just for London but for the UK as a whole. On the other hand, more capacity means more flights means more emissions, which hardly looks compatible with a net-zero target. Emissions from aviation have doubled since 1990 as total UK emissions have halved.

The answer is not that we will be able to rely on so-called sustainable aviation fuel. One calculation suggested it would take the oil of three million coconuts to fuel one flight between London and Amsterdam. While there is scope for increased efficiency and perhaps a little more “sustainable” fuel, the truth is that aviation is going to be the hardest of all sectors to decarbonise. In this context the “net” in net zero is important. Even without airport expansion aviation is still going to be creating carbon emissions in 2050. That is built into net-zero scenarios envisaged by the Climate Change Committee, which advises the government. More aviation emissions would change the quantum of offsetting needed elsewhere. That would be a change of degree, and would not be easy, but would not be a fundamental change in philosophy.

That said, if we are serious about climate change, we do need to ensure passengers are paying the appropriate price for their flights. With no VAT on tickets and no tax on aviation fuel — ruled out by international treaties — flying is undertaxed relative to other sources of emissions, despite the existence of air passenger duty. Indeed, there is effectively a negative carbon price on many business class flights. A consistent carbon price across different emission sources would mean increasing the tax on most flights. Private owners of airports might want some certainty about that price before committing to spending billions on new runways.

Some fraction of additional flights through Heathrow resulting from additional capacity will be flights that would otherwise have gone via other hub airports: Schiphol, with its six runways, for example. Simply rerouting those flights will not lead to any net addition to global emissions. They might even reduce emissions if it is more efficient to fly via Heathrow. Of course, many flights, and their emissions, will be genuinely additional, but not all. The relative magnitudes matter.

This question of additionality is also important when it comes to new drilling for oil and gas. If we get more oil and gas out of the North Sea, or indeed the Surrey countryside, will that increase the total amount of fossil fuels burnt or will it substitute for fuels extracted elsewhere?

The legal cases around permission to extract oil and gas from these sites centred on a rather specific question: should the environmental impact assessment, on the basis of which original permissions were granted, have taken account of the emissions that will be created by burning the oil and gas that will be extracted, rather than just direct emissions resulting from the process of extraction itself. In the Surrey case the Supreme Court overturned decisions of two lower courts and, by a three to two majority, ruled that it should. Last week’s decision on the Rosebank and Jackdaw oil and gas fields followed that lead.

The legal case centred around, to the outsider, some pretty obscure points of law. What is curious to this observer is that, so far as I can see, these decisions took no account of what strikes me as the key question of additionality. We know that any oil and gas extracted will be burnt, creating emissions. But is that likely to increase total global emissions or will it substitute for other sources of fossil fuels? I don’t know the answer to that question, but I do know that from a climate change point of view I don’t care where the oil and gas comes from if the same amount is burnt in total. Odd then that this question wasn’t front and centre of the legal cases.

Confusion is built into our approach to climate change. We measure and target emissions produced in this country. If we import steel produced in China using coal, or electricity generated by gas in mainland Europe, that doesn’t count against our climate targets. Yet it is us, as consumers, who are ultimately responsible for, and should own, the emissions thus created. We’d like to have our cake and eat it as consumers, but we are in danger of letting others have our cake when it comes to economic growth. 

This article was first published in The Times, and is reproduced with kind permission.

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