George Osborne oversees biggest fossil fuel boom since North Sea oil discovery

http://www.theguardian.com/environment/2014/dec/06/george-osborne-fossil-fuel-energy-environment

Version 0 of 1.

George Osborne has sparked the biggest boom in UK fossil fuel investment since the North Sea oil and gas industry was founded in the 1970s. Analysis of new Treasury data also shows investment in clean energy has plummeted this year and is now exceeded by fossil fuels, while road and airport building is soaring.

After years of coalition infighting over green energy, the stark shift marks a major victory for the chancellor. But it conflicts with David Cameron’s recent statement that climate change is “a threat to our national security and to economic prosperity” and his 2010 pledge to the lead the “greenest government ever”. UK ministers are currently at UN climate talks in Peru arguing for strong action against global warming.

In Wednesday’s autumn statement, Osborne added £430m to the billions in tax breaks he has granted the fossil fuel sector since 2012. Taxpayers will also now fund seismic exploration to help companies find more oil and gas and will pay £31m for shale gas research drilling plus another £5m to “ensure the public is better engaged” with fracking.

Osborne said the North Sea tax breaks “demonstrate our commitment to the tens of thousands of jobs that depend on this great British industry”.

Joan Walley MP, who heads parliament’s environmental audit committee, said: “Taxpayers should not be propping up the fossil fuel industry in the 21st century. Tax breaks should be used to support firms that come up with innovative clean energy solutions, not to keep us drilling for the fossil energy fuelling climate change.”

Matthew Spencer, the director of the thinktank Green Alliance, whose experts performed the new analysis, accused Osborne of political manoeuvring before the general election.

“A series of short-term tactical decisions have reversed what was a very encouraging picture for UK infrastructure. These stark figures show that you can’t focus on oil extraction and road building and expect to deliver a cleaner, leaner economy.”

Green Alliance, praised in November as an “immensely important” thinktank by Osborne’s cabinet colleague Oliver Letwin, scrutinised the data in the Treasury’s infrastructure pipeline, which collates all public and private investments over £50m.

The analysis revealed that, compared with the 2012 pipeline data, expected investment in fossil fuels rocketed from 8% to 61% of all energy investment in 2014-15, reaching £15.2bn. The Treasury claims that half of this is the result of Osborne’s tax breaks.

Investment in low-carbon energy tumbled from an expected £25bn in 2014-15 to £10bn, the analysis found. This is despite the National Infrastructure Plan having the stated goal of reducing “carbon emissions in order to mitigate climate change and meet the UK’s legally binding targets”. For the period 2015-20, the expected share devoted to fossil fuels has more than tripled to 33%, although low-carbon energy including nuclear power will receive more.

The share of expected transport infrastructure spending also moved away from cleaner public transport to roads and airports, which together rose from 8% to 36% of the total in 2015-20. Road spending ballooned more than 20 times to £32.7bn for 2015-20.

“We are working hard on the transition to a low-carbon economy and turning around a legacy of underinvestment in our energy sector,” said a spokesman for the Department of Energy and Climate Change. “The move away from fossil fuels will not happen overnight, and oil and gas are forecast to remain a key element of the UK’s energy mix for some years to come. This is consistent with a least-cost approach to the UK’s binding 2050 emissions reduction target.”

Spencer said the oil and gas investment boom would lock in greater fossil fuel dependency and cut the UK’s options for reducing future emissions. A Treasury spokesman highlighted the increased electrification of railways and support for electric cars.

“What does Osborne know that China, Germany and the USA don’t?” said Louise Hutchins, the head of Greenpeace UK’s energy campaign. “At the moment when the big industrial powers are starting to realise the future is low-carbon, Osborne seems intent on dragging Britain back to depression-era technologies to match his depression-era economics with new subsidies for old coal plants and declining North Sea oil and gas.”

Caroline Flint, Labour’s shadow energy and climate change secretary, said Conservative antipathy to renewable energy would cost the UK “the high-skilled, high-wage jobs we need for the future”, echoing recent comments by Ed Davey, the Lib Dem energy secretary.

Flint said: “The smart money is on the low-carbon economy. The UK can be a world leader in green technology and services, but under the Tories our competitive edge is being eroded.”

In 2009, six months before becoming chancellor, Osborne also praised the green economy. “The global market for green goods and technologies is worth trillions of dollars a year, but with less than a 5% share of that market Britain is failing to take advantage. This has got to change,” he said. “I want a Conservative Treasury to lead the development of the low carbon economy.”

However, most Conservative MPs remain sceptical about global warming and Ukip, which has attracted two Tory defectors, also decries climate action as expensive and unnecessary.