UK's Sunak tells BOE to help oil, gas projects in energy push

[LONDON] UK Chancellor of the Exchequer Rishi Sunak asked the Bank of England (BOE) to support the government's new energy strategy, including investment in North Sea oil and gas projects.

In a letter to BOE governor Andrew Bailey, Sunak said the bank's Financial Policy Committee (FPC) should "have regard" to the strategy and its plans for "investment in transitional hydrocarbons like gas" as it manages risks in the UK financial system. Similar letters were sent to 2 financial regulators: the BOE's Prudential Regulation Authority and the Financial Conduct Authority.

The new energy supply strategy and the instruction to regulators reflect growing concerns about energy security in light of Russia's war with Ukraine. But the changed remit also appears to contradict instructions given by Sunak to the authorities a year ago to support the government's goals to tackle climate change and achieve net-zero by 2050, essentially eliminating the carbon emissions associated with fossil fuels.

"The suggestion that the Bank of England should facilitate investment in hydrocarbons like gas directly contradicts the Bank's 'green mandate', which the Chancellor updated only a year ago," said Fran Boait, executive director of Positive Money, a campaign group. "In order for the UK to meet both our net zero target and ensure energy security, the Bank of England must move urgently to stop the City of London pouring billions into fossil fuels."

Sunak said that the new instructions on Thursday (Apr 7) "are intended to supplement rather than replace the recommendations made in the 2021 letter", and that the FPC should still "support the government's ambition of a greener industry, using innovation and finance to protect our environment and tackle climate change." BLOOMBERG