• A difference of opinion on net zero revisited
  • The energy sector is coming to the fore
  • Tied to a common goal: helping you make money

John Butler and I have had our scrapes.

After all, John, Southbank Investment Research’s investment director, is something of a sceptic when it comes to clean tech and net zero, while you’d be hard-pressed to find a bigger advocate of green energy than myself.

This has led to more than one heated discussion in Southbank’s office, and more than one feisty debate recorded in our in-house studio.

We even recently debated UK government energy policy in these very pages of Fortune & Freedom.

Back in August, you see, I put forward the view that Rishi Sunak, heaven forbid, might just be playing party politics when it comes to energy policy.

At that point, Sunak had just approved 100 new North Sea oil and gas licences, claiming the approvals would “boost domestic gas production” and make energy “cleaner” and “more affordable” for consumers.

Sense – there wasn’t a lot of it.

With the majority of the hydrocarbons in the North Sea belonging to multinational or non-UK state-owned companies and exported to overseas markets, I claimed there just wouldn’t be much gas for the UK to speak of and certainly not enough in total to move the dial on prices set by international markets.

Sunak, I said, was looking to drag energy and net zero to the front lines of the new culture wars, happy to position the Conservative Party as the political wing of fossil fuels rather than make any meaningful effort to reduce energy bills or avert an environmental crisis.

My piece received some pushback, not least from a few readers but notably from John Butler, who wrote an article in the same pages a few days later.

John offered a considered counterpoint that said, effectively, there was little harm – and perhaps much to gain – in at least trying to maximise what we have left out of the North Sea, writing:

As a larger producer… the UK energy industry will generate more revenue, more jobs and more taxes for the government, things that will positively impact the overall economy at every level. This would be as true today as it was in the late-20th century, even if the order of magnitude might not be quite as great.

Net positive, however, is net positive. Allowing an abundant, local natural resource to be sensibly, safely exploited with proven, next-generation technology seems a no-brainer.

Which is all well and good if Sunak had claimed that’s what he was doing or at least clarified or provided any data to back up claims that new North Sea extraction would, all at once, somehow lower bills, decrease imports and help Britain meet its net zero pledges.

In any case, if that was exhibit A in the case that Sunak wasn’t being entirely ingenuous with government energy policy, exhibit B landed in our laps just one month later.

In September, Sunak blocked proposals to tax meat and flights, to force each house to have seven bins for recycling and to let strangers into our homes to rip out our boilers. It would be an absolute scandal for anyone caring about climate change, you might think, if any such proposals actually existed.

As Zac Goldsmith, the Tory former climate minister, tweeted:

This is cynical beyond belief.

The PM is pretending to halt frightening proposals that simply do not exist.

He is doing it to turn the environment into a US-style political wedge issue – something the UK has avoided all my political life.

Sunak is chucking the environment into a political fire purely to score points.

It is reprehensible.

As I wrote in a further piece for Fortune & Freedom, more troubling, of course, was Sunak’s announcement that he was pushing back the dates for banning internal combustion engine (ICE) car and gas boiler sales. Here he took red ink to real policy in areas fundamental to reaching our net zero commitments.

But just like his approval for 100 new North Sea oil and gas licences in the summer, these changes won’t make any real difference to the direction of travel, with the shift to electric vehicles (EVs) long past the point of no return and the move to heat pumps on the same path.

As I wrote, Sunak’s big climate reset is all about getting re-elected.

What was interesting was that, this time, John seemed to agree, at least partially.

The very next day, John wrote another piece that said it “might well be the case” that “Sunak’s North Sea and net zero backtracking are just shameless attempts to shore up the Conservatives’ waning public support”, though he added:

Whether or not Sunak is just electioneering or is genuinely backtracking from wholly unrealistic net zero commitments, I have no idea. His government is hardly the only one to be rethinking such policies.

All across Europe, governments are reassessing their own net zero initiatives, including, most importantly, energy policies. As the war in Ukraine drags on into another winter, Europe’s energy challenges become particularly acute. Europe’s gas is well-stocked for now, but a cold snap could change that in a hurry, and there is only limited capacity to import liquefied natural gas from abroad.

Reading that, this time I found myself nodding along.

Although John and I don’t always see eye to eye on the energy markets, it’s also true to say we do share some middle ground. It’s impossible to argue that energy markets aren’t in a state of flux, with energy security rising above affordability and sustainability atop the so-called “trilemma”.

We certainly both agree there is potentially lots of money to be made in energy right now, and in short order, from opportunities across the spectrum.

You see, right now, to make money in the energy markets, it’s best to put politics and culture wars to one side.

With the energy markets in a state of flux with competing agendas, there are opportunities on the table to profit across the entire energy spectrum, irrespective of whether you’re a green bug or climate change denier.

As an investor, there’s little point cheerleading any particular form of energy over others.

As recent tragic events have shown, the energy sector is coming to the fore.

Of course, the other main takeaway here is that, as I hope you know, there is no party line at Southbank Investment Research and no expectation that our editors agree on anything at all – but we are all tied by a common goal to help our readers make money.

On that, we all agree.

Until next time,

James Allen
Contributing Editor, Fortune & Freedom