Sunak urges finance regulators to adhere to energy strategy

The UK government published its latest energy strategy document on 6 April, which set out plans to expand nuclear and offshore wind power and increase independent generation of supply. 

The strategy reflects growing concerns about energy security in light of Russia’s war with Ukraine.  

Sunak told the FCA that the government was taking a balanced approach by accelerating investment in low- and net-zero carbon technologies, while supporting Britain’s evolving hydrocarbon industry.

"Where practical and relevant, the FCA should have regard to the government’s energy security strategy and the important role that the financial system will play in supporting the UK’s energy security - including through investment in transitional hydrocarbons like gas - as part of the UK’s pathway to net zero," Sunak said.

Sunak also asked 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 financial system. 

The government’s move has caused concern amongst some, as banks in Britain have faced pressure from campaigners and investors to stop bankrolling coal, oil and gas. Most lenders globally have pledged to reach net-zero emissions across their financing by 2050.

Fran Boait, executive director of Positive Money, which campaigns for sustainable economic investments, said: “To reduce our reliance on imported fossil fuels, UK sources of oil and gas have a critical role, both to keep our economy supplied and in supporting the transition to net zero.

"UK financial watchdogs were asked by the finance ministry last year to pay heed to Britain’s net-zero economy targets, and the suggestion that the BoE should facilitate investment in hydrocarbons directly contradicts this”.