‘No Carbon' Carney has left us high and dry

Times

22-06-2025

A bit like a sort of unreliable boyfriend. This, rather brilliantly, was the description of the record of the governor of the Bank of England, Mark Carney, by the Labour MP Pat McFadden, then a member of the Treasury select committee. That was in 2014, when the handsome Canadian, hailed as the 'George Clooney of central banking', was just a year into his tenure. McFadden was not talking about Carney's personal life: it was a metaphor for his policy of interest rate 'forward guidance', which was proving no sort of guidance at all. It was all over the place.
In one respect, however, there was complete consistency in Carney's record over seven years as this country's most powerful unelected figure. He determinedly used his position to push Britain's banks into defunding the oil and gas industry, on the grounds that man-made climate change was of primary importance, and that financial institutions should base their investment decisions on the proposition that 80 per cent of the planet's hydrocarbon reserves were 'un-burnable'.
His wise predecessor, Mervyn King, questioned the decision to make fighting climate change part of the Bank of England's remit, arguing that it made 'absolutely no sense' to add 'net zero' to its responsibilities, and that the Bank should stick to its knitting (interest rates and price stability) and leave environmental policies to the politicians.
However, after leaving the Bank in 2020, Carney stuck to his mission. Under the auspices of the UN, he set up the Net Zero Banking Alliance, co-opting a large number of the world's biggest banks, representing $74 trillion in assets, into basing their lending on the mission to achieve 'net zero by 2050'. This, combined with the Labour government's policies under Ed Miliband, has meant that, as one British oil company executive put it to me, 'Not a single UK bank will lend to the North Sea industry'.
The Net Zero Banking Alliance, more recently, has suffered an exodus of its American members, which have fallen in line with Donald Trump's agenda (summarised as 'Drill, baby, drill'). But surely, now that Carney has at last achieved his ambition of becoming Canadian prime minister, he is using all the power of that position to fight the good fight. Er, no.
One reason Carney actually won the recent election was that he pledged to scrap the 'carbon tax' implemented by Justin Trudeau, for which he had previously proselytised. In office Carney has kept that promise — and in recent weeks gone much further in the opposite direction to everything he did when Bank of England governor.
He appointed as energy minister a man who was an executive of an oil exploration and production company in Alberta, the heart of Canada's vast hydrocarbon reserves. These are known as the Alberta oil sands, covering an area the size of England and described some years ago by National Geographic (not a fan) as 'the world's largest industrial project … Especially north of Fort McMurray, where the boreal forest has been razed and bitumen is mined from the ground in immense open pits, the blot on the landscape is incomparable.'
Carney has relaxed the emission restrictions that hampered this development (among others) and declared two weeks ago that he wanted Canada to be 'an energy superpower … in both clean and conventional energies. And, yes, that does mean oil and gas. It means using our oil and gas here in Canada to displace imports wherever possible, particularly from the United States. It makes no sense to be sending that money south of the border or across the ocean, so, yes, it also means more oil and gas exports, without question.'
• The oil-rich Canadian cowboys who want their own Brexit
What accounts for this remarkable transformation? Pure political expediency. Trudeau's policy had been profoundly unpopular, and the Conservative candidate, Pierre Poilievre, constantly referred to 'carbon tax Carney'. So, shamelessly disowning his own previous advocacy, Carney dumped it.
Then there were the idiotic threats from Trump to annex Canada. While that will 'never happen' (to quote Carney), the prospect of Albertan secession was less improbable, as that province had been sorely provoked by the ecologically motivated threats to its hydrocarbon industry.
Canada as a whole could not afford such a secession, and immediately after Carney's election win, the premier of Alberta, Danielle Smith, introduced a bill to make a referendum on the matter much simpler to implement. She simultaneously called on Carney to make various concessions, which 'must include abandoning the unconstitutional oil and gas production cap'. He got the message.
It was no coincidence that, as host of last week's G7 summit, Carney chose to hold it in Alberta. In the final communiqué, the topic of climate change was barely mentioned.
To put it mildly, this has confused those who deeply admired Carney, not least in this country, for his previously passionate campaigning against oil and gas investment. But when I asked someone who worked closely with the man at the Bank of England what had happened to his old boss, he laughed and said: 'I must have told you before that Mark is fundamentally a trader, and therefore prepared to adapt principles to circumstances.' This was partly a reference to the fact that Carney's career before becoming a central banker was at Goldman Sachs.
But what does this mean for the UK, still thoroughly enmeshed by the net zero policies in which Carney played such a central role? As Brendan Long, a Canadian energy analyst, told The Daily Telegraph last week: 'It means that while Canada's oil and gas industry is ramping up production under Carney, the UK remains aligned with the anti-oil and gas ideology he promoted when he was governor of the Bank of England.'
Although Ed Miliband has now indicated a reversal of his opposition to the development of two North Sea fields, known as Rosebank and Jackdaw, the government is keeping its radical policy of banning all new exploration; across the median line, Norway has declared it will be boosting its North Sea exploration and production to the highest level since 2010.
The crazy point, which fits in with the government's target but not the national interest, is that if we buy Norwegian gas, it does not come out of our 'carbon budget', as administered by the Department for Energy Security and Net Zero. Similarly, when we've shut down our entire domestic oil and gas operation and are buying the Canadian hydrocarbons that Carney is now so keen to boost, we will make the (unelected) Climate Change Committee — charged with setting our carbon budgets and invigilating our progress to purity — happy.
Not so much the British voters, I fear, come our own general election in a few years' time.