Oilfield approval reignites debate over UK’s green transition

Receive free Global Economy updates

We’ll send you a myFT Daily Digest email rounding up the latest Global Economy news every morning.

Today’s top stories

For up-to-the-minute news updates, visit our live blog

---

Good evening.

A vital move for Britain’s energy security or “carte blanche to fossil fuel companies to ruin the climate”?

Regulators this morning approved plans for Norway’s Equinor and its partner Ithaca Energy to develop Rosebank, a vast new oilfield in the North Sea which should be able to produce 300mn barrels of oil over its lifetime (equivalent to about three days of global demand).

The government argues that fossil fuels will still be needed in the medium term despite the country’s attempts to decarbonise, and that domestic production has a lower carbon footprint than importing fossil fuels. It also points to the independent Climate Change Committee’s assertion that in 2050, the target date for net zero emissions, the UK would still need oil and gas for a quarter of its energy. 

Critics argue the move is reckless, locking Britain into producing more oil and gas instead of phasing them out and that most of the oil would be exported, rather than contributing to domestic energy security. The opposition Labour party has said it would oppose any new exploration licenses but honour commitments to existing projects.

The announcement follows a warning from the International Energy Agency yesterday that fossil fuel demand had to fall by a quarter by 2030 if global warming was to be limited to an increase of 1.5C since the pre-industrial period. The IEA’s projections also come amid rising tensions with oil producers ahead of UN climate talks in the UAE in 10 weeks’ time.

Back in the UK, prime minister Rishi Sunak is still facing the heat over last week’s retreat on green policies, including delaying a ban on petrol cars until 2035 and making a fifth of households exempt from having to switch from fossil fuels for home heating.

Manufacturing groups in a letter to the Financial Times argued his decisions sent “entirely the wrong signal” and suggested that “we are simply going backwards”.

Developing alternative energy sources is still proving a challenge. The government suffered a big setback earlier this month when it failed to attract any bids from offshore wind developers for its latest round of contracts for new projects. The head of RWE, one of the world’s biggest renewable energy companies, said the failure was a “wake-up call” for the UK.  

Onshore wind is also facing problems: one of Britain’s largest developers said yesterday it was halting work on its biggest project to date, a new wind farm in southern Scotland, due to rising costs and last year’s windfall tax on low-carbon electricity generators.

Need to know: UK and Europe economy

The owners of Birmingham City football club warned that truncating the planned HS2 rail line would damage investor confidence in Britain. Greater Manchester mayor Andy Burnham proposed a compromise, delaying construction of the northern leg if the government commits to building an east-west route.

The Bank of England could move to a similar forecasting process to the US Federal Reserve under a review led by former Fed chief Ben Bernanke. Sterling is on track for its worst month since last year’s “mini”-Budget as fears grow that high interest rates will lead to recession.

The UK government is coming under fire over its post-Brexit farming subsidy scheme, as delays mean farmers’ payments under the EU’s Common Agricultural Policy have started to be phased out before it was ready. The tensions are part of a broader disagreement over the future of farming and land use.

The EU is getting increasingly alarmed at the implications of a possible lurch to the right in next month’s Polish elections. Brussels had pinned its hopes on a victory for opposition leader Donald Tusk, the country’s former prime minister and ex-president of the European Council.

Need to know: Global economy

As the use of electric vehicles grows, oil demand in China is set to fall off, affecting everything from the country’s energy mix to the production of petrochemicals — and the global future of oil as a commodity.

Economic slowdown is hitting China’s efforts to raise financing for its chip fund, which has been key in fuelling the industry’s growth since it was launched in 2014.

Brazil’s energy minister Alexandre Silveira told the FT there was “no contradiction” between stepping up oil and gas exploration and the country’s aspiration to lead the world’s transition to green energy.

Sri Lanka and the IMF failed to reach agreement to release the next tranche of funds under a $3bn programme to help the country recover after it had defaulted on its foreign debt and suffered a dramatic economic collapse.

Need to know: business

US regulators and states are suing online retailer Amazon in the biggest challenge yet to its use of monopoly power to hurt consumers, rivals and sellers on its marketplace.

France’s Ubisoft, which has struck a cloud-gaming deal with Microsoft, said streaming would transform video games just as Netflix changed TV.

Water companies in England and Wales were told to cut £114mn off bills next year after the regulator criticised their record on leakage, sewage spills and other matters.

Chinese battery groups are investing in Morocco as a bridge to the US and Europe. As well as offering quick building permits, Morocco’s role as a free trade partner of the US allows its raw materials to count towards sourcing targets required for electric vehicles to receive subsidies under President Joe Biden’s Inflation Reduction Act.

The UK aviation regulator said common global rules were needed for flying taxis. Certifications are likely to begin next year, with Germany’s Volocopter aiming to be the first to fly commercially in Europe, in time for the Paris Olympics.

“You will not get to control Elon, you have to roll with the punches and channel him. If he says the sky is bright pink, you have to say you’re excited the sky is pink.” That’s how one person describes the challenge of dealing with Elon Musk in our interview with Linda Yaccarino after her first 100 days as CEO at X, formerly known as Twitter.

The World of Work

A new Big Read looks at the battle within Dyson over working from home. The engineering company took a hard approach at its UK headquarters as lockdowns lifted, leading to clashes with staff who balked at ever-stricter measures to get them to attend in person.

Another sign of the impact of working from home and its impact on cities from San Francisco to Dublin: Meta has paid £149mn to break its London office lease as part of plans to reassess its “entire global real estate footprint”.

Since the start of the pandemic, tens of thousands of people in the UK have retrained as psychotherapists or counsellors. The Working It podcast discusses what the trend tells us about working habits.

“When I think climate, I think jobs,” says US president Joe Biden. Columnist Sarah O’Connor is not so sure, pointing to the difficult trade-offs policymakers tend not to dwell on.

Some good news

“Amsterdam shows that it is possible to stop HIV and Aids.” That’s the message from the Dutch Aids fund, which says new cases of HIV in the city have dropped to almost zero thanks to broad access to the prevention drug PrEP as well as widespread availability of testing and information about the disease.