Ahead of next month’s elections, the Conservatives and Reform see the conflict-driven fuel crisis as an opportunity to convince Britons carbon cuts cost too much. Meanwhile, fossil fuel firms prepare for a major monetary windfall.
Axe the Carbon Tax is the latest slogan to come from a battered, bruised but definitely not all-out Tory camp. Their policy — to remove all emissions-related charges faced by UK industry — was announced last week as the war in Iran passed its one month mark. This timing may have been a coincidence, or canny planning. Either way, it’s all about May’s local elections.
As of this morning, a ceasefire between the powers in Washington D.C., Jerusalem, and Tehran is in place, and the Strait of Hormuz will soon reopen to shipping. For weeks now, this vital trade route, through which around 20% of the world’s oil supply passes and even more liquified natural gas (LNG), has been subject to extreme restrictions and threats of freighters being targeted in a conflict which has largely taken aim at infrastructure and fossil fuel assets in particular.
Yesterday, BBC Radio 4 reported that around 50 ships per day were being allowed to pass, compared with 100-plus during peacetime. Meanwhile, there has also been widespread rumours of behind-closed-doors talks between Iran and European Union leaders about the prospect of getting oil through the narrow seaway in exchange for switching the default trading currency away from US dollars. Most likely to the Chinese Yuan or Euro.
Both these points may already be historical, but accentuate just how serious the economic repercussions of the US and Israel’s military strikes on Iran, and the response, are likely to be. A fundamental change in how oil and gas are bought, and with what, could send the American economy spiralling into hyperinflation as the country’s debt costs mount. Meanwhile, the sharp decline in fossil fuel shipments coming via Hormuz is only just beginning to be felt in our everyday lives. Even if business as usual returns now and continues unabated, the coming months and perhaps even years are likely to be defined by significant cost increases across all commodities that require transportation.
Back in Britain, the Conservatives were the architects of our current net zero roadmap, but have long-since abandoned any shred of environmental credibility in a bid to match Reform’s strong polling with ‘climate sceptics’. And as party leader Kemi Badenoch green-lit campaigning to rip up carbon reduction targets, Reform’s main man Nigel Farage and his pseudo-Shadow Chancellor Robert Jenrick threw their weight behind doing away with even more. Like Air Passenger Duty, which is added to UK plane tickets to offset the impact of aviation, and green levies like the Carbon Price Support and Renewables Obligation. A reduction in domestic fuel VAT has also been tabled.
Suffice to say, none of economics behind these suggestions have been shared and so far nothing has been costed. But the flurry of activity around policies like net zero and — perhaps worse still — longstanding environmental taxes introduced, without controversy, long before carbon targets were even a thing, points to the UK’s two biggest right wing parties doubling down on selling the petrochemical past as a way to fix the future. Sadly while apparently ignoring all evidence that suggests such changes would actually wind up costing far more than the bill for reducing emissions to net zero by 2050.
Partisan politics aside, there is some credence to objecting carbon taxation in the UK right now. For one thing, the current balance of power is tipped heavily in favour of overseas companies, who do not face the same fiscal regimes and as such are able to undercut British companies, even within the domestic market. However, our biggest trading partner, the EU, has been rapidly rolling out punitive monetary measures to force firms to reduce their footprint. And, as of January 2027, Downing Street’s carbon border adjustment mechanism (CBAM) comes into effect, a framework which is designed to re-level the playing field by slapping a carbon levy on imports.
It’s also true the UK’s green industry and renewable energy sectors are amongst the fastest growing in the economy. At a time of climbing unemployment, one of the greatest challenges in these areas is a workforce shortfall. So, at a time when unemployment is climbing and living standards are falling, it seems contradictory to begin targeting a sector that seems to be offering a way out from under the looming shadow of recession and widespread joblessness. All of which is before we even consider our responsibility to try and get climate change under some degree of control and stabilise the world’s ecosystems so we — and other species — can live to tell the tale.
Of course, there are vested interests at play behind the scenes. Last month DeSmog reported on Badenoch’s February family getaway, worth £7,500, paid for by the chair of Net Zero Watch — arguably the UK’s most vocal and influential climate science denial group. And according to an analysis by the New York Times, Reform raised £4.75 million in 2024 alone via donors who had ‘openly questioned climate change or have investments in fossil fuel or other climate polluting industries’. Another assessment, again by DeSmog, suggests the party bagged £2.3 million from oil and gas benefactors, and their allies, in the preceding five years. This amounts to 92% of overall donations at the time.
Perhaps what makes the increasingly close ties between some Westminster factions and the fossil fuel industries so alarming is the backdrop. Rocketing prices at petrol pumps and, very soon, heating and electricity bills, impact everyday people. The most audible noise lays blame, at least in the majority, at the foot of expensive energy transition ‘at a time when the country can’t afford it’. Yet in reality, the only way to ensure future fuel shocks do not have the same repercussions is by accelerating our economic shift away from reliance on oil and gas markets.
For proof of the imbalance between big polluters and the public, in terms of financial repercussions and benefits, American oil companies enjoyed a cash flow increase of around $5 billion in March as a result of surging wholesale prices for their product. And there have been widespread reports of longer-term predictions that could see a $60 billion windfall as a result of the conflict’s impact on fossil fuel markets by the end of 2026. But flip the script, and many households are genuinely worried about their ability to absorb the impact of all this on their own comparatively meagre budgets. So committing to many more years of subservience to this most unstable and reactionary industry by slowing, stalling or stopping energy transition does not seem to be in anyone’s best interests — CEOs and the politicians in their pockets aside.
Image: Javad Esmaeili / Unsplash
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