If it really wants to cut carbon, why is the coalition issuing licences to drill?
Pledges to curb reliance on fossil fuels are hard to square with prospecting for more oil and gas and pushing dirty coal plants

Rejoice, the boom is back! After a drought of investment, last week BP announced that it was spending £3bn to redevelop fields in the deep waters to the west of Shetland. The government was delighted: this shows, it says, that its policies are working. It promised to "continue to work alongside oil and gas companies to support growth and jobs in the UK".

Great. But hold on a minute, didn't the government tell us, just two days before, that its priority is to decarbonise the economy? Well it depends who you're talking to, and at which point in the cycle of crashing contradictions you catch them.

Let me give you a few examples of joined-up government. In January, Chris Huhne, the secretary of state for energy and climate change, reminded us that "a shift towards non-fossil fuels is in our long-term national interest, as well as the interests of the planet". The following month his deputy, Charles Hendry, travelled to the International Energy Forum in Riyadh to beg Saudi Arabia to increase the supply of oil.

At the end of June Huhne told us that "the coalition is determined to reduce our reliance on fossil fuels". Five days later, the Treasury expanded the tax breaks for companies prospecting for new oil and gas reserves. With Brent crude at a mere $118 a barrel, the poor dears need all the help they can get. Last week, in its white paper on electricity planning, the government called for steep reductions in energy demand. In the same document it proposed "maximising the economic recovery of our remaining indigenous resources of oil and gas by launching a new offshore licensing round in 2012".

What we don't understand, the government tells us, is that new oil and gas extraction is a "transitional investment". As Hendry explained in October, "whilst in the long term we want to decarbonise our energy system, we have moved swiftly to offer these licences" for new oil and gas. This investment is transitional in the sense that switching from 20 cigarettes a day to 40 is a step towards giving up.

Labour also encouraged companies to extract as much fossil fuel as possible while imploring us not to use it. In fact, with the exceptions of Saudi Arabia and Ecuador, all the governments sitting on reserves are seeking to maximise production while most also claim to be minimising consumption.

So you could be forgiven for believing that governments aren't serious about climate change. There would be no clearer statement of an intent to prevent climate breakdown than declaring part of our fossil fuel reserve off-limits in perpetuity: a kind of underground national park. There is no clearer statement of an intent to fiddle while the world burns than to keep pushing up supply while trying to reduce demand.

We now have a clearer idea of how big the underground park would have to be. A new report by the Carbon Tracker Initiative seeks to discover how much of the global fossil fuel reserve could be burned without committing us to 2C of global warming. Before discussing the figures, let me remind you of the difference between reserves and resources. A resource is the total quantity of a mineral found in the earth's crust. A reserve is the fraction of the resource which has been identified, quantified and is cost-effective to exploit.

Researchers at the Potsdam Institute in Germany estimate that, to keep the chances of exceeding 2C to 20% or less, between 2000 and 2050 the world can afford to release no more than 886bn tonnes of carbon dioxide. As we produced 321bn tonnes between 2000 and 2010, that leaves only 565bn for the next 40 years.

But if current fossil fuel reserves were all extracted and burned they would produce some 2,795bn tonnes: five times as much. (These figures, being averages, suggest a precision that no one intends.) About 40% of the CO2 produced this century will remain in the atmosphere until at least the year 3000. This means that current reserves contain roughly twice as much carbon as we can afford to burn in the millennium. In a world that took climate change seriously, most fossil fuel reserves would be worthless.

The government claims it can resolve this contradiction through carbon capture and storage (CCS): trapping CO2 produced by burning fossil fuels and piping it into underground stores. But much of the fuel that companies intend to extract will be burned in cars, planes or domestic boilers, from which the emissions cannot be captured. Even the promise of CCS in power stations relies on technologies which have not yet been proven in combination, at scale. To pin so great a hope on so uncertain a prospect suggests we have learned nothing from the magical thinking that caused the financial crisis.

In fact, reading last week's white paper, it looks as if the primary purpose of CCS is not to prevent climate change but to permit the construction of a new generation of coal plants. The paper proposes an emissions performance standard for new electricity plants, which means a limit to the amount of carbon dioxide they can release per unit of power they produce. The limit it sets is a ridiculous 450 grams per kilowatt hour: ridiculous because this is slightly higher than the current average, which is bumped up by the creaky old coal plants built in the 1970s and 1980s.

Even so, most new coal would be hard to build to this standard as coal produces more carbon per kilowatt hour than other fossil fuels. But there's a get-out clause: if your new coal burner is a "CCS demonstration plant", it's exempted from the emissions standard. This seems, at first, incomprehensible: surely the power stations with CCS should have the lowest emissions? The purpose of the exemption, the government tells me, is "to ensure we have the flexibility to select the most appropriate demonstration projects". This elucidates precisely nothing.

But there's a likely explanation. The demonstration plants need to capture only part of their output of carbon dioxide: the gas arising from just 300 megawatts of what could be a 4,000-megawatt power station. The CCS exemption resembles nothing so much as a means of keeping polluting coal-burners in business.

All this reminds us that Rupert Murdoch's corporation is not the only one whose power subverts the purpose and priorities of government. Corporate lobbying poisons all democratic politics. The threat of climate change has so far done little to disrupt the fossil fuel companies' business plans, or their grip on policy. The assault on Murdoch's empire is just the beginning of the necessary challenge to corporate power.

(By George Monbiot, The Guardian, 18/07/2011)