Why Rishi Sunak's North Sea oil drilling plans won’t cut household energy bills

UK government's approach to climate change labelled a 'gimmick'.

Britain's Prime Minister Rishi Sunak speaks as he addresses a forest and climate leaders' event, during a bilateral meeting, at the COP27 summit, in Sharm el-Sheikh, Egypt, Monday, Nov. 7, 2022. Nearly 50 heads of states or governments on Monday will take the stage in the first day of “high-level” international climate talks in Egypt with more to come in the following days. (Stefan Rousseau/Pool Photo via AP)
Rishi Sunak wants to introduce an annual system to award new North Sea oil and gas licences. (PA)

Rishi Sunak’s plan to issue new oil and gas licences in the North Sea has come under fire, with experts and politicians arguing that it won't bolster energy security or reduce consumer energy bills.

The Offshore Petroleum Licensing Bill, which was included in today's King's Speech as part of the government’s legislative agenda for the coming year, will mandate licences for oil and gas projects in the North Sea to be awarded annually.

Sunak claims it will boost the UK's energy security and reduce dependence on global energy markets and foreign governments.

It's a top priority for the Tories, especially as the policy is significantly different to that of Labour, which has vowed to honour existing licences but not grant new ones if it wins the next general election.

Unfortunately for Sunak, the North Sea Transition Authority (NSTA) - which oversees these licences - has acknowledged that issuing new licences won't reduce the UK's reliance on imports or substantially affect oil and gas prices.

Yahoo News runs down the reactions to today’s announcement.

Read more: Funding for climate change adaptation is far from enough, UN warns (RFI 1min read)

Will oil and gas licences boost UK energy security?

The government says the new re-drilling plan is aimed at reducing the UK’s reliance on imports from “hostile foreign regimes such as Russia.”

However, some critics have said this is unrealistic and accused Sunak of using climate action as an election tool while also prioritising immediate oil and gas corporate interests over climate action in the UK.

UK: fossil fuel dependence 2021. (Credit: Statista)
UK: fossil fuel dependence 2021. (Credit: Statista)

Matthew Paterson, a Professor of International Politics at The University of Manchester, told Yahoo News that the claims about these investments aiding the transition to net zero emissions by 2050 are misleading, as they will prolong high greenhouse gas emissions beyond 2050.

The notion that these investments will benefit households with lower energy bills is unconvincing, he says, as the oil and gas will be sold internationally and won't impact domestic prices, taking several years to come into effect.

“The arguments about these investments ‘helping the country to transition to net zero by 2050’ are Orwellian double-speak; this will lock-in high levels of greenhouse gas emissions for decades, indeed beyond 2050,” he said.

Green MP Caroline Lucas said: “Giving the green light to dozens of new fossil fuel licences is nothing short of a climate crime.

Former Labour leader Ed Miliband (2nd left), Green Party leader Caroline Lucas (right), and Swedish climate activist Greta Thunberg (2nd right) at the House of Commons in Westminster, London, to discuss the need for cross-party action to address the climate crisis.
(From left) Layla Moran, Ed Miliband, Greta Thunberg and Caroline Lucas. (PA)

“Since much of the oil and gas will be sold on global markets, it won’t improve the UK’s energy security and it won’t cut household energy bills either.

“When climate scientists have stated clearly that we can have no new oil and gas if we are to keep below the critical 1.5C temperature limit, this Government is flying in the face of those warnings and jeopardising a liveable planet for future generations.”

“New oil and gas licences will do nothing for our energy security. They will be sold on the global market to the highest bidder,” Zach Polanski, Deputy Leader of the Green Party, told Yahoo News.

Isabella O’Dowd, WWF’s head of climate policy, said granting 27 more North Sea licences will “compound the climate crisis and increase the likelihood of severe weather events like Storm Babet that flooded homes and ruined crops across the country”.

Will the new oil and gas plans cut energy bills?

In the 2019 general election the Conservatives pledged they would “lower energy bills by investing £9.2bn in the energy efficiency of homes, schools and hospitals”.

And, a year after taking office as PM, Sunak claimed that investing in oil and gas licensing in the North Sea would help “British homes and businesses will have access to cleaner and cheaper energy”.

The government has since been forced to acknowledge that the proposals may not have any impact on those struggling with current energy costs.

Campaigners fighting to reduce fuel poverty have responded with concerns that the bill will do nothing to cut UK households' energy bills.

Simon Francis, the coordinator of the End Fuel Poverty Coalition, said that the King's Speech didn't provide solutions for keeping people warm this winter.

“The Government's plan to award more oil and gas licences is not the answer, what we need is much more investment in insulation and homegrown renewables. In fact, the past 13 years and hundreds of North Sea licences have yielded just 16 days worth of gas coming onto the grid, not enough to keep people warm every winter,” said Francis.

"More oil and gas WON’T lower our energy bills. It WILL condemn communities to more extreme weather like #StormCiaran in future," added Greenpeace UK.

“The Energy Secretary admitted that this policy will do nothing to cut energy bills,” Lord Richard Newby, Leader of the Liberal Democrats in the House of Lords, told Yahoo UK News “And it will of course do nothing to help the switch to renewable energy, insulate our homes or help the most vulnerable pay their bills whilst prices remain high.”

Yahoo UK News has contacted the Department of Energy Security and Net Zero for comment on this article. In a previous statement, the department said: "We are reducing our vulnerability to imports from hostile states, leaving us less exposed to unpredictable international forces. This will ensure we have a more secure and diverse energy system and as we make progress on renewables and new nuclear, our more robust energy mix will help to lower household bills in the long-term.

Watch: Energy secretary admits Sunak's North Sea oil expansion plans 'won't bring bills down'