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If Fossil Fuel Reserves Rise Carbon Should Be Left
Where It Belongs: In The Ground

By George Monbiot

26 February, 2010

When forecasts of fossil fuel reserves improve, how should we respond? A new report (pdf) by the trade body Oil & Gas UK says that 11bn barrels of oil and gas could now be extracted from the UK continental shelf. This would mean a rough doubling of current reserves, but it depends on high energy prices and much greater investments than companies have so far been prepared to make to turn possible or probable reserves into real ones. If the extra reserves materialised, the body says, the UK could still produce up to half its own supplies in 2020: a lower rate of decline than previously forecast.

We should be cautious about projections made by trade associations: they have an interest in talking up their industry's prospects, and the report could be read as just another plea for even more generous tax breaks. But if it's true that reserves could double, is this good news or bad news? It depends on which stories you want to hear.

In terms of its impact on the UK's energy security, it's obviously good news. Every so often – this January was an example – there's a panic about energy supplies here. Sometimes it's justified; sometimes it isn't; but the UK's low gas storage capacity and the length of the supply lines from other countries means that the decline of North Sea reserves has left us vulnerable to shortfalls. The more gas this country can produce on its own territory, the less likely it is to suffer from the effects of pipeline closures by the Russian government, or price-fixing by German utility companies.

In terms of total global supply, the trade body's projections don't make much difference. Annoyingly, it doesn't publish seperate figures for oil and gas production, but its graphs (figure 8 in the report) suggest that the possible extra reserves are split roughly equally. This would mean an extra 2.9bn barrels of oil, which equates to around one month of global consumption.

Some people see the prospect of peak oil as good news for the environment, as it might be the only threat which could prompt governments to reduce our dependence on fossil fuels. But it is also likely to encourage them to stimulate investments in even dirtier sources of energy: tar sands, oil shales and turning coal into synthetic petroleum.

But whether we burn filthy unconventional fuels or slightly less filthy oil and gas, beyond a certain point they will tip us beyond a critical level of global warming. Most governments identify this as 2C. Several game-changing papers published in Nature last year suggest that even if we were to burn no unconventional fossil fuels, we can afford to use only 60% of current reserves of oil, gas and coal if we're to prevent the global average temperature from rising by more than 2C.

In other words, if governments are serious about climate change, then far from encouraging the expansion of supplies, they should be deciding which 40% or more of current reserves they are going to leave in the ground. Current policy suggests that they are not serious about climate change.

In the UK, responsibility for the problem rests with the Department of Energy and Climate Change (Decc). The way it operates suggests that the two halves of the department must hate each other. The energy section seems to be in a state of perpetual war with the climate change section. Every morning Ed Miliband, the secretary of state, must beat himself up like Edward Norton in Fight Club.

At the end of January, for example, the department announced a:

Record acreage … in latest Licensing Round for offshore oil and gas exploration...areas of the Continental Shelf not as yet explored, and will provide a new boost to activity in the basin. … Estimates suggest there are still around 20 billion barrels of oil equivalent, or possibly more, to be produced, and this latest licensing round will help ensure we realise this potential.

In other words, far from cutting our extractable reserves by 40%, the government wants to boost them by 300%.

In reality, no fight is taking place within the department, because no one there, as far as I can tell, is prepared to acknowledge the contradiction. When I challenged Ed Miliband about this last year, he responded as if he had never been exposed to the problem before. Decc happily pursues its two policies, apparently unaware that one negates the other.

Is this ever going to change, or are the government's elaborate measures encouraging us to reduce our consumption of fossil fuels nothing more than a public relations stunt, designed to create a semblance of action as ever carbon more is dragged out of the ground to be burnt?