By David Turver
Both the Rosebank and Jackdaw oil and gas fields have had a chequered history. Both were discovered in the mid-2000s and were initially approved for development in 2023 and 2022, respectively. But the approvals were overturned in 2025 because the Government had not taken into account the Scope 3 emissions arising from burning the hydrocarbons once they had been extracted.
Previous Energy Secretary Ed Miliband has described the decision to issue a development licence to Rosebank as “climate vandalism.” But now new Prime Minister Andy Burnham and new Energy Secretary Miatta Fahnbulleh have vowed to take a more “pragmatic” approach to the North Sea. The decision to approve both fields has allegedly been pushed back to this month because of the “optics” of approving new oil and gas licences during a heatwave. Stop press: the decision might now be postponed beyond the Holborn and St Pancras by-election because of pressure from the Greens.
Sensing weakness in the Government, the green industrial complex has ramped up the rhetoric with the Guardian claiming a new analysis calculated that £119 billion to £336 billion of economic damage would be caused by burning the hydrocarbons produced by Rosebank and Jackdaw, or £170–483 billion under a high production scenario. This article looks at the source of those claims and tests their veracity.
Source of Jackdaw and Rosebank damage claims
The Guardian made reference to a research article produced by Luke Hatton under the auspices of the Grantham Institute at Imperial College London. The reason the alleged damages are so high is they use a social cost of carbon of $754/t to $1,538/t or £572/t to £1,167/t at a GBP:USD exchange rate of 1.381. These are simply astronomical numbers and compare to the current UK carbon price of about £60/t. To make the damage numbers even bigger, they then escalate the cost of carbon by 2% for each year of the life of the field.
The research article claims that the total emissions from burning the production of both fields may reach almost 300 million tonnes under a high production scenario and the maximum damages reach £483 billion. This equates to £1,610/t, or almost 27 times the current cost of carbon. These alleged damages are compared to the estimated economic benefits of the projects of £28.7 billion. The article claims the damages from Jackdaw and Rosebank are up to 16.8 times higher than the economic benefits.
The paper concludes by contrasting Miliband’s “climate vandalism” quote and the latest “pragmatic” noises from Burnham and Fahnbulleh. Hatton says his article aims to inform the policy choice by quantifying the economic trade-offs and climate damages.
Flaws in the Jackdaw and Rosebank article
There are several problems with Hatton’s Jackdaw and Rosebank article. First, it assumes that extracting and burning oil and gas from Jackdaw and Rosebank will create an additional pulse of carbon dioxide into the atmosphere – in effect, greater supply will lead to greater demand. It is more likely that Jackdaw and Rosebank will displace supply that is marginally more expensive and make no difference to global demand. Moreover, the gas from Jackdaw will likely displace expensive LNG with higher emissions than using domestically produced gas. Strike one against the article.
Second, Hatton compares the alleged global climate damages with UK-only benefits, which is not a like-for-like test. The relevant comparison would be to compare the global costs to the global benefits. There is global value in the energy those hydrocarbons provide such as heat, transport and feedstock. Hatton misses out these benefits and uses only the receipts booked in Aberdeen and Whitehall. On any such basis the £28.7 billion is a lower bound on benefits, not the full credit side. Strike two against the article.
Third, Hatton writes that holding damages fixed in 2025 pounds “does not account for the non-linear relationship between emissions and warming,” and therefore raises the social cost of carbon by 2% a year. However, the relationship between temperature changes and increased carbon dioxide concentration is logarithmic in nature:
This means that each extra molecule has less impact on temperature. The non-linearity that would justify a rising cost of carbon is not in the physics of forcing. However, the alleged damage function that does have a non-linear relationship in the way Hatton means – in the Burke paper he references – is a hypothesis, not a hard physical relationship. Readers should also note how fragile these damage functions are, since the Kotz paper was withdrawn late last year, calling into question the damage functions used by a consortium of central banks worldwide. Strike three against Hatton’s article.
Fourth, the scale of the claimed “damages” is nothing short of extraordinary. If these claims are scaled up to the global level, the figures frankly look ridiculous. According to Our World in Data, in 2024 the world emitted 38.6 billion tonnes of carbon dioxide from burning hydrocarbons. If the average £1,610/t social cost of carbon used in the Hatton article is applied to these emissions, we get a value for the alleged climate damage from these emissions of £62.1 trillion (or $85.8 trillion at a 1.381 exchange rate). According to the World Bank, global GDP in 2024 was $111.67 trillion. This means the alleged climate damages from fossil fuels, using Hatton’s sky-high carbon costs, amount to about 76.8% of global GDP – clearly a risible conclusion. Strike four.
Finally, the implication of Hatton’s research article is that the damages from Jackdaw and Rosebank must be avoided by refusing to grant development licences. We have seen the claimed damages from using an astronomical cost of carbon are absurd. But we should also consider the counterfactual of the economic harm if we applied the same logic of such high carbon costs globally and stopped burning coal, oil and gas to avoid the alleged climate damages. According to Our World in Data, the world consumed 175,605TWh of primary energy with coal, oil and gas providing 142,532TWh or 81.2% of the total, see Figure 1.
What would happen if we stopped using this coal, oil and gas (the Just Stop Oil mantra)? It is not only hydrocarbon energy sources that would suffer. Coal is used to make steel and oil is used as a lubricant, so no more wind turbines or solar arrays could be built and no more nuclear or hydro power plants either. It is clear the impact on global energy is likely higher than the raw figures would suggest, but we can ignore that for now.
Our World in Data also shows us that in 2024 the world consumed 20,154kWh per person and GDP was $21,393 per capita. It is important to note there are no rich countries with low energy use, as shown in Figure 2:
Removing 81.2% of this energy would bring per capita energy consumption down to about 3,789kWh per person. This is around the level of countries like Congo (3,858kWh/person), Mauritania (3,807) and Nicaragua (3,823). The GDP per capita of these countries in 2024 was $6,153, $6,483 and $7,661 respectively – much lower than the world average and far below that of developed countries.
If we scale up Hatton’s article to a global level and consider the impact on the global economy of removing hydrocarbons to avoid the alleged $85.8 trillion of climate damages, then the global economy would collapse. Is Hatton really suggesting Britain and the rest of the world should stop burning hydrocarbons so they regress to poverty-stricken agrarian economies? This level of economic and social damage is far higher than his risible “social cost of carbon.” Hydrocarbons bring untold social and economic benefits. In addition, about half the world’s population is dependent for food on nitrogen fertiliser made from natural gas. Stopping this would lead to half the world going hungry and starving to death. Is this really a better outcome than burning coal, oil and gas? Is Hatton really suggesting that Britain’s “climate leadership” will persuade China and the United States to give up coal, oil and gas? Strike five.
Conclusion
This “research article” is clearly propaganda designed to derail the approval of Jackdaw and Rosebank. Hatton uses astronomical estimates of the social cost of carbon that do not hold up to even cursory scrutiny. The flaws in the report have not stopped the Guardian drawing attention to it. The green industrial complex is clearly rattled that the fields may be approved and thus to some extent break the Net Zero spell, so it has resorted to disinformation to pressure the Government. It would be a travesty if Burnham and Fahnbulleh use this flimsy report as a pretext to refuse approval of these oil and gas fields.
David Turver writes the Eigen Values Substack page, where this article first appeared.
