Prime Minister Rishi Sunak this week unexpectedly decided to grant hundreds of new licenses for oil and gas production in the North Sea. His intention is to open up new fossil fuel energy sources, but he has also ignited a huge political furor about the UK’s net-zero commitments. Turning the conventional wisdom on its head, the prime minister said on Monday that the new oil and gas drilling licenses for the North Sea would help the UK achieve net-zero carbon emissions and that the plan would strengthen the UK’s energy independence, reducing its reliance on hostile states such as Russia. He also claimed that, even if the UK hits net zero, the nation would have to import much oil and gas. But if it does so using domestic oil and gas, it will be much better for the environment. Sunak’s assertions have been disputed even by some key backbench MPs within his own Conservative Party. Chris Skidmore, who led a review of the UK’s climate goals earlier this year, asserted that the prime minister is on the wrong side of history and called for an emergency debate in Parliament as soon as MPs return from their summer recess. As significant as the internal Conservative opposition may be to Sunak’s policy, there may well be many more MPs in his party who feel that the government needs to dilute its net-zero commitments. For instance, more than 40 Conservative MPs and Lords wrote to Sunak recently calling for the UK’s 2030 deadline on banning the sale of new petrol and diesel cars to be pushed back. The prime minister’s fossil fuel commitment could further undercut the UK’s green economy leadership credentials Andrew Hammond So, the bigger issue is that a clear political dividing line is opening up in UK politics. This is because Labour leader Keir Starmer asserted in June that any future government led by him would end new North Sea oil and gas exploration, while helping communities profit from clean power projects. He said it would be a “historic mistake” to wait until North Sea oil and gas runs out and to let the opportunities “pass us by.” The context for Sunak’s decision is the criticism that recent Conservative governments have received about the lack of long-term energy focus over the last decade and a half. While Monday’s announcement has been depicted as an attempt to reset UK policy, it was probably, in large part, a political move that attempts to create a wedge issue ahead of the general election that is expected next year. In the last quarter of a century, the quantity of fossil fuels extracted from the North Sea has fallen significantly. In 2000, North Sea oil and gas production was nearly 250 million tons of oil equivalent. In 2022, it was less than 80. It is forecast to continue declining because North Sea fossil fuel supplies are falling, with extra costs involved in extracting new sources. One reason why Sunak appears to be trying to make this a wedge issue is the result of last month’s Uxbridge and South Ruislip by-election in London. The Conservatives’ slim victory there has been attributed to a plan by Labour Mayor Sadiq Khan to extend the capital’s Ultra Low Emission Zone. That scheme aims to boost air quality via a daily £12.50 ($15.87) charge for driving in London if a vehicle does not meet certain emission standards. The interpretation Sunak appears to have gleaned from that ballot is that a fast, messy transition from fossil fuels to renewables could be a significant vote-loser. In proposals outlined on Monday, Sunak sought to take the edge off the fossil fuel controversy by announcing plans to also fund carbon capture and storage schemes. However, welcome as this announcement is to many environmentalists, there is a danger that the core fossil fuel commitment could further undercut the UK’s green economy leadership credentials. The Conservatives’ promised vision is now under threat unless Sunak and his team can step up to the plate Andrew Hammond The UK’s independent Climate Change Committee has said that the best way to lower bills during the cost-of-living crisis, while boosting energy security, would be to cut fossil fuel use and invest in renewables. However, this requires significant investment, meaning investors must be willing to bet on the UK in the global green investment race, even though much larger subsidies can be secured from other powers, including the US via its Inflation Reduction Act. Lord Harrington, who is currently conducting a review into the UK’s foreign direct investment regime on behalf of the government, has already warned that the country faces a “big threat” from such subsidies. It has been reported that he will soon recommend a sizable shift in the way the UK attracts inward investment. There are fears that the nation could miss out on a rising tide of green investment, as the world economy grows from about $90 trillion today to a forecast $190 trillion by mid-century, when the world may hit net-zero emissions. In this scenario, the government risks failing badly on its strategy to provide high-skilled jobs, transition from fossil fuels, secure the UK’s energy supply and use green technology to drive economic growth. For instance, the government’s strategy hopes to create up to 440,000 jobs by 2030, leveraging up to £90 billion of private investment. It is this promised vision that is now under threat unless Sunak and his team can step up to the plate. With UN Secretary-General Antonio Guterres warning last week that we are now entering the age of “global boiling,” the UK government needs to raise its game. If it fails, it will not just be letting the UK public down, but also much of the wider world, for which UK leadership could help encourage it to undertake this transition faster. Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.