Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Lord Haskel) (Lab)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Offshore Petroleum Licensing Bill
Tuesday 23rd April 2024
(7 months ago)
Grand CommitteeRead Full debate Offshore Petroleum Licensing Bill 2023-24 View all Offshore Petroleum Licensing Bill 2023-24 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 49-I Marshalled list for Grand Committee - (19 Apr 2024)
Baroness Hayman
“(A1) The OGA must not invite any new seaward area production application licences until the Secretary of State has by regulations brought into effect a ban on flaring and venting relating to new offshore installations other than that required in an emergency.(A2) From two years after the day on which this Act is passed, the OGA must not invite any new seaward area production application licences until the Secretary of State has by regulations brought into effect a ban on flaring and venting relating to existing offshore installations.(A3) A statutory instrument which contains regulations under subsection (A1) or (A2) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.(A4) In subsections (A1) and (A2)—“flaring” means the burning of hydrocarbons produced during oil and gas extraction;“venting” means the release of un-combusted hydrocarbons directly into the atmosphere.”Member’s explanatory statement
This amendment prevents the invitation of new seaward area production licences until the Secretary of State has introduced a ban on flaring and venting by new offshore installations. It also requires the Secretary of State to prevent licensing rounds if a wider ban is not in place within two years of Royal Assent.
Baroness Hayman (CB)
My Lords, it is a pleasure to open this Committee stage, and I promise to resist the temptation to relitigate any of the issues of principle that we discussed previously. I declare my interests as chair of Peers for the Planet and director of the associated company.
In moving Amendment 1, I will also speak to Amendment 2, but I look forward very much to hearing the argument on Amendments 9 and 10, in the names of the noble Baroness, Lady Willis, and the noble Lord, Lord Randall of Uxbridge. I am grateful for the support of the noble Baroness, Lady Blake of Leeds, the noble Lord, Lord Randall of Uxbridge, and the noble Earl, Lord Russell, on Amendment 1. I would also like to thank those organisations that have supplied briefing, including Uplift, Oceana and the Green Alliance.
In the vein of trying to do what we can to improve a fundamentally flawed Bill, my Amendment 1 seeks to make progress on the important issue of greenhouse gas emissions from venting and flaring and builds on an amendment introduced in debates in the other place by Sir Alok Sharma. The amendment is a simple and pragmatic proposal, which seeks to give statutory force to existing voluntary guidance on this issue and to factor in the recommendations of the Environmental Audit Committee of the other place, made in January 2023, which recommended a ban on venting and flaring by 2025.
The amendment does two things. First, it says that there should be no invitations for new licences until the Secretary of State has introduced a ban on venting and flaring from new installations. Secondly, it would give the Secretary of State a maximum of two years to introduce a ban on venting and flaring from all installations if any further licensing rounds are to take place. The EAC’s report recommended a ban not later than the end of 2025. My amendment recognises that time has moved on since 2023 and amends the timeline appropriately. Adopting this change would help the Government to demonstrate that they are serious about maintaining their global leadership on climate action by turning their stated ambition into delivery.
The practice of venting and flaring is a serious issue. It takes place when extra gas is produced, usually as a by-product of oil extraction that producers need to get rid of, rather than sending back to shore. They do this by venting the natural gas, releasing it directly into the atmosphere as methane, or by flaring—burning the gas—which, as well as releasing methane, releases volumes of other greenhouses gases and pollutants such as black soot and nitrous oxide. Both practices are damaging and polluting, as well as being, in the words of the IEA, an “extraordinary waste of money”.
Methane is a highly potent greenhouse gas. It is the second biggest cause of global heating after CO2 and has a far higher warming effect in the short term. However, its short lifespan in the atmosphere compared with other greenhouse gases means that taking action to cut methane now is one of the fastest and most cost-effective ways to limit global warming in this crucial decade.
It is also a very wasteful practice. Green Alliance research has found that just 18 of the highest polluting oil and gas platforms in the North Sea are losing enough gas through venting and flaring to power 140,000 homes, equivalent to a city the size of Aberdeen. The North Sea transition deal commits the industry to a voluntary cut in emissions of 50% by 2030 on a pathway to net zero by 2050. The Climate Change Committee described those targets as weak and significantly lower than its sixth carbon budget advice—but, even so, the industry is not on track to meet them. Added to that, the North Sea Transition Authority emissions monitoring report of 2023 shows that UK oil is more polluting than average, compared to that of other major producers, including gas imported via pipelines from Norway and other nations operating in the North Sea.
The Government agreed in 2020 to phase out routine venting and flaring by 2030. There is guidance in place from the regulator, the NSTA, which expects the industry to adhere to zero routine venting and flaring by 2030, and where all new developments should be planned on the basis of zero routine flaring and venting.
In response to Sir Alok’s similar amendment in Committee in the Commons, the Minister argued against putting its ambition into legislation. However, this is not groundbreaking: Norway has had a ban in place since 1971 and even the US Bureau of Land Management is now taking action. Voluntary guidance is just not doing what is needed; it is not always followed by industry or the regulator. Just last year, the NSTA granted approval for the , permitting the operators to flare unwanted gas until 2037, in spite of the guidance that new developments should have zero venting and flaring by 2030. Progress to reduce methane emissions in the UK has, according to the Government’s 2022 methane memorandum, been very slow, particularly in the energy sector, where percentage drops year on year have stayed flat.
The CCC, the EAC and the net-zero review have all highlighted that the UK is not going fast enough on methane reduction. There are no technical barriers to ending routine venting and flaring, as the IEA has said. As for cost, industry spending on reducing emissions from venting and flaring is subject to a tax break of £1.09 for every pound spent. As the Government’s 2022 methane memorandum put it,
“Action on methane is … recognised as the ‘last low hanging fruit’ in tackling climate change because measures are readily available and in some cases very cost effective”.
If the Government are serious about their commitments to reduce methane, there really is no excuse for not using this Bill to make faster progress to reduce the emissions from oil and gas production. At Second Reading, the Minister said that he would listen carefully to views on this, so I look forward to his response to the debate that we are about to have.
I move on to Amendment 2, which is also in my name. I am grateful to the noble Lord, Lord Knight, and the right reverend Prelate the Bishop of Norwich for adding their names. At Second Reading, many noble Lords highlighted the need to address the long-term employment prospects of those currently working within the oil and gas sector. My Amendment 2 seeks clarification from the Government on their plans for workers currently employed in our declining North Sea basin to transition to the sustainable jobs of the future. Rather than losing the 30,000 or so direct roles in oil and gas and the valuable skills of those workers, who may be forced to move elsewhere, we need to nurture their transformed skills into the new net-zero roles.
My amendment proposes that there should be no new applications for licences until the Secretary of State has published a green skills retraining plan setting out what support the Government will provide for those in the oil and gas sector who wish to transition to work in green economy jobs. Specifically, it proposes the introduction of a skills passport for workers, which will provide financial and practical support to access training so that those workers can, easily and without additional cost to them, reskill and retrain for the future and be part of the green economy.
The Government recognised in Committee in the Commons that the skills and expertise of the oil and gas industry will be needed to support the net zero transition; however, action to achieve this appears to have stalled. The CCC has pressed for more to be done on net zero skills. It noticed in its 2023 progress report that its earlier cross-cutting policy recommendation for an action plan for net zero skills was “overdue”. It focused on the need for a strategy for those
“workers and communities affected by industries that are expected to experience job losses as a result of the Net Zero transition, including by providing reskilling packages and tailored support to transition to alternative low-carbon sectors”
A recent POST briefing note on green jobs noted that the UK Government’s green jobs delivery group planned to publish a net zero and nature workforce action plan in the first half of 2024. Can the Minister provide an update on when this is likely to be published and any insight into what it is likely to offer? The North Sea transition deal involved commissioning an integrated people and skills plan, which was followed by an Offshore Energies UK 2023 Workforce Insight report that promised to deliver a skills passport so that people can move seamlessly between sectors. Can the Minister provide an update on the skills passport and when this is likely to be produced? Can he confirm that it will provide financial support for workers looking to move into green jobs?
The second part of my amendment probes another recommendation of the Workforce Insight report: the creation of a green skills retraining task force to co-ordinate the retraining provisions that are required across the UK. Will the Government be progressing this recommendation? If not, how will the required skills transition be delivered? I hope the Minister will be able to provide some insight into the Government’s thinking on this important issue and give much needed assurance to workers in the oil and gas sector that their skills are valued and needed, both now and in the future. I beg to move.
Lord Randall of Uxbridge (Con)
My Lords, I shall speak to Amendment 9 in my name and say a little about Amendment 10. I have also put my name to Amendment 1, about which we have just heard from the noble Baroness, Lady Hayman—I thank her for moving that amendment so well—and Amendment 10 in the name of the noble Baroness, Lady Willis.
Amendment 9 is in my name and I am very grateful for the support of the noble Lord, Lord Teverson, and the noble Baronesses, Lady Willis and Lady Young. It would require the Secretary of State to publish a marine spatial prioritisation policy, and a spatial prioritisation test to be passed before future licensing could take place. It would mean that before any more oil and gas licensing is permitted, it would have to fit into what the North Sea of the future looks like, with space set aside for other priorities—the priorities of the future, I suggest: marine health and renewable infrastructure. Specifically, the plan would need to ensure that the targets under both the Climate Change Act and the Environment Act are prioritised and achieved.
For the purposes of this amendment, the test could not be passed unless a marine spatial prioritisation policy was in place. This is something the Government have committed to, but there is a risk that, without this amendment, we could be inviting future licensing rounds which will not take account of, or even be in accordance with, a strategy the Government are currently producing. I believe it is wholly pragmatic in its approach. The NSTA did not run licensing rounds while it waited for the now redundant climate compatibility checkpoint to be published, so there is a precedent here for this approach.
Baroness Willis of Summertown (CB)
My Lords, I thank the noble Lord, Lord Randall, very much. I will speak on the marine amendments in this group—Amendment 10 in my name and Amendment 9 in the name of the noble Lord. I also support the other amendments in this group.
Amendment 10 is really very simple: it would stop licensing in our marine protected areas. As I stated at Second Reading, these areas have been designated for protection and enhancement in order to conserve the critical species, habitats and ecosystems that they contain. Their protection is critical for many reasons, not least because we have signed up to this in both UK and international law. We now have 377 marine protected areas, which account for 38% of our seas.
In order to be included in the 2030 target—to protect 30% of our oceans by 2030—the Government’s own suggested criteria are that these MPAs need to have long-term protection and/or management in place that works against adverse pressures on biodiversity objectives. However, the interpretation of what constitutes adverse pressure on these MPAs is where there is the most disagreement, even between government departments, a point that is highly relevant to this Bill. Currently, there is nothing in the licensing process to prevent the North Sea Transition Authority from offering up licences in marine protected areas. Indeed, licences are currently being granted in marine protected areas: in the most recent licensing round, 22% of the licences granted were in such areas.
Is oil drilling in an MPA a problem? Well, it makes a huge difference. As I mentioned at Second Reading, the evidence suggests that it can have a large and irreversible impact. However, when asked about this, the Government have said, in various responses to the Parliamentary Questions looking at the impact, that the OPL Bill will not affect the UK’s ability to reach the targets for ensuring that marine protected areas are in a good or recovering state and that the licences will only ever have been awarded once the environmental regulator is satisfied that the activities would not negatively impact protected areas. This was reiterated by the Minister at Second Reading, when he stated:
“We already have a robust regulatory framework in place to ensure that marine protected areas are effectively protected. Licences will be awarded only after ensuring that the environmental regulator OPRED is satisfied that activities will not have negative effects on those important protected areas”.—[Official Report, 26/3/24; col. 657.]
However, that overstates the case. The more I have looked into the processes for assessment of the environmental impact of oil drilling on MPAs, the more convinced I have become that we simply do not have in place a system that is fit for purpose, certainly not to protect these marine protected areas.
This is because the process and the responsibility for environmental regulation currently sits with OPRED, which is part of DESNZ and is advised by the Joint Nature Conservation Committee, but there is a very complicated and convoluted process and path by which the expert advice from the JNCC reaches the Minister. First, as a statutory consultee, the JNCC’s advice must be considered when OPRED produces an environmental assessment, but OPRED is under no duty to follow the JNCC’s advice, which is also not published. Then, in an instance where OPRED advises the Secretary of State not to issue a licence, the Secretary of State can disregard it if they believe that there is an overriding public interest.
A secondary problem is that the assessments do not consider cumulative impacts in a robust way. For example, OPRED will look at a pipeline and say, “Well, a pipeline in the grand area of an MPA is a tiny footprint”, but of course it is not just the pipeline that we are looking at. The cumulative effects of all the different things going on will have, and has been shown to have, a significant impact on the MPA.
The third and final problem is that OPRED assessments often have a tendency to assume that, if there is no scientific evidence, there is no problem, instead of adopting the precautionary principle. In fact, irrespective of what the environmental assessments from the JNCC say, OPRED and the Secretary of State can decide to grant licences to MPAs anyway. Looking at the evidence base, we can see that that is exactly what is happening. For example, in the past three years, the JNCC has objected to 54 development applications in MPAs from the oil and gas industry, yet not a single one of those applications has been turned down. In fact, I did a trawl over the past 17 years—since 2007, when the first MPAs came into place—and could not find a single licence that had been turned down on an environmental basis. That would suggest that the environmental assessment system in this case is not working.
What I find most concerning is that the JNCC has expressed its concerns. For example, in a letter to DESNZ on the recent 33rd oil and gas licensing round, the JNCC wrote a strong letter stating that it was unable to agree with the conclusions that the projects would have no adverse impact on site integrity. The committee strongly advised that no new oil and gas infrastructures should be located anywhere within an MPA. It also pointed out that the Government’s approach to licensing oil and gas activities was inconsistent with the approach taken with other industries—for example, wind farms. Those three statements are extremely concerning. Our Joint Nature Conservancy Committee is making strong statements about these issues and yet, somewhere along the line, this is not being taken into account. Remember that no licences have been turned down, as far as I can see, based on environmental impact.
This process does not seem to be working and will result, and is resulting, in damage to the MPAs, which the Government have heralded. I join them in that, given that we now have marine protected areas in the oceans around the UK. Therefore, the onus is on the Government to show how increased licensing in the MPAs, as part of this OPL Bill, will not cause harm and to publish the evidence base that supports this. They also need to outline in detail exactly how these harms, once they are caused, will be mitigated while still meeting our 2030, now 2040, targets, which we and Defra are very much holding everyone’s feet to the fire on. If the Government cannot do this, the solution surely must be to put this amendment into the Bill.
I also want briefly to turn to the amendment in the name of the noble Lord, Lord Randall of Uxbridge, to which I have happily added my name. We need both these amendments. Without a proper seabed plan and a land use strategy for the sea—I wish that the noble Baroness, Lady Young of Old Scone, were here—MPAs will not live up to their name. We know that we require multiple resources from the oceans around us. However, we need to be able to plan those in tandem, rather than in a somewhat random approach, where one thing is trumping the other—and trumping it sometimes through financial gain without properly considering the other requirements. Until we have a spatial prioritisation plan in place, we should not be granting any licences. We need to know what we want to take from where and how we ensure that the best use is made of the precious resource that we have around us. Until the Government come up with this spatial plan, which, as the noble Lord, Lord Randall, mentioned, they promised a while ago, we should not go forward with any of these licensing rounds.
Lord Berkeley (Lab)
My Lords, I support in particular Amendments 9 and 10, so ably introduced by the noble Lord, Lord Randall, and the noble Baroness, Lady Willis. I have quite a lot of experience of marine protected areas in the south-west and the Isles of Scilly. I recall having a useful discussion with the Environment Agency, English Nature and others about how one applies an MPA to a group of islands and whether one would be allowed to run any type of ship across them. The answer was, “Not really”. I said, “Well, who is going to enforce these regulations?” The answer was the Navy. That was even more interesting, because I asked, “Who is the most likely culprit?” They said that the most likely culprits around Scilly were people in kayaks. If one is trying to merge our latest aircraft carrier with people in kayaks, there is work to be done.
The Lord Bishop of Norwich
My Lords, I rise to support all the amendments in this group but I will focus my comments on Amendment 10 in the name of the noble Baroness, Lady Willis, and Amendment 2 in the name of the noble Baroness, Lady Hayman, to which I have added my name in support. I would also value hearing the rest of this debate.
On Amendment 10, I reiterate the question I asked at Second Reading: what steps are His Majesty’s Government taking to safeguard marine protected areas, and why are they not taking the IUCN’s recommendations seriously by excluding MPAs from extraction in the Bill?
I will not rehearse the valuable arguments that the noble Baroness, Lady Willis, has already made on whether we have a robust regulatory framework on MPAs. From the evidence she has provided, I am greatly concerned about whether that is the case. Certainly, the new Rosebank field overlaps with the Faroe-Shetland MPA—a fragile ecosystem and marine environment. Excluding MPAs from the licensing rounds altogether would ensure their protection and that is why I support Amendment 10.
According to the Government’s own figures, only 44% of protected features in MPAs are currently assessed as being in favourable condition. We have rightly set ambitious and strong targets to protect species and restore natural habitats: 70% of MPAs need to be in good condition by 2042 and 30% of the sea must be protected for nature by 2030. Unamended, the Bill risks making this far more difficult to achieve. Meeting these targets will be ever more challenging, which sends a damaging message to the international community about how we regard our natural environment.
It also goes against what Ministers in other departments are saying. For example, in January 2023, the noble Lord, Lord Benyon, said during the debate on the Environmental Targets (Marine Protected Areas) Regulations 2022 that
“MPAs are one of the most important tools we have for protecting the wide range of precious and sensitive habitats and species in our waters … Establishing this network is an important step in achieving our goal of conserving our protected species and habitats. Now that they have been designated, we need to increase the protections for these valuable marine environments to help them recover, which is why we are setting this target”.—[Official Report, 24/1/23; col. GC 31.]
So, in one part of government MPAs are a valuable tool to achieve our national and international commitments.
There is further evidence. While he did not refer to MPAs directly, when Defra Secretary of State, Steve Barclay, announced the closure of sand-eel fisheries in the North Sea and restrictions on bottom trawling, he commented that:
“Protecting the environment is fundamental to the prosperity of our country and our new commitments will drive forward our mission to create a cleaner and greener country for all”.
Are we really doing what is adequate to protect our marine environment? I do not believe that we are, because we are playing fast and loose with marine protected areas at the moment. We need joined-up government around our commitments in this area. As your Lordships know, there are so many environmental impacts from both surveying and drilling, including habitat loss and damage; the noise from seismic surveys, which was illustrated for us at Second Reading; and oil spills, toxic vapours and the release of toxic chemicals, with a wide range of impacts on flora and fauna, including skeletal deformities. It is so important that we take all this into account in our thinking about the Bill. It is of course separate from the combined impact of further extraction of fossil fuels and the related carbon emissions on this, our single island planet home.
The Bill as it stands puts at risk the marine habitats found around our shores. We have marine protected areas for a reason; the clue is in the word “protected”. I once again ask His Majesty’s Government not to jeopardise their commitments to MPAs and, by supporting this amendment, to exclude them from surveying and extraction in the Bill. I happily support Amendment 10.
Moving on, I also support Amendment 2 in the name of the noble Baroness, Lady Hayman, because a skills passport would facilitate workforce mobility between sectors. One of the key arguments put forward repeatedly at Second Reading was that jobs would be impacted and that, if we did not have this Bill, further job losses would occur. The reality is that the North Sea is a declining basin. New licensing is unlikely to prevent the ongoing decline of jobs in the oil and gas sector. More than 200,000 jobs, both direct jobs and those that support the oil and gas industry, have been lost in the past decade, in spite of around 400 new drilling licences. A skills passport would facilitate that mobility, enabling people to transition from the oil and gas sector into other sectors.
Further, a green skills retraining plan, as proposed by this amendment, would assist those wishing to transition in using the valuable skills they already have so that they can flourish in a new sector—sectors that will be emerging and coming on stream yet far more into the future. Currently, oil and gas companies are not required to provide retraining or support for workers. This measure would be something of such foresight for them to do. A skills passport would help this work- force navigate the transition to net zero so I support Amendment 2.
Lord Deben (Con)
My Lords, I remind the Committee of my declaration of interests, in particular my being a trustee of the Blue Marine Foundation. I support not only Amendments 1 and 2 but the previous two that we have been talking about.
First, I congratulate the Government on the fact that we have these marine protected areas. The Government have also reached out to what might be called the “confetti of empire”; we have, in fact, created an increasing number of marine protected areas around the world. This is leadership by Britain, which is now being followed by others: the French are keen to do similar things. We really have led the world on this; in fact, it was this Government, under a previous mix, who did it. We have this background.
We then have the marine protected areas rules and suchlike, which have been quoted clearly. The words of my noble friend Lord Benyon are particularly germane to this discussion. However, I must remind the Government that they had to be sued by the Blue Marine Foundation to stop bottom trawling off Dogger Bank, one of the most important areas that we have. It was only the court case that managed to get a change in the Government’s attitude. This matter is not an exact parallel but it suggests that the instinct of government is not to protect, although the legislation of government demands protection.
Therefore, I say to my noble friend the Minister: there is a real issue here for him, not least because there are two different concerns about the Bill. At the moment, we are not concerned with the first, which, I remind the Committee, is mine. It is that, by passing this, we have given up our leadership in the world on the expansion of gas and oil exploration; that is a great sadness and turns its back on some very real progress made by previous Conservative Governments.
Lord Bruce of Bennachie (LD)
My Lords, I rise to speak briefly to this group of amendments. Noble Lords will know that I have spent pretty much all my adult life in the north-east of Scotland and have seen the North Sea oil and gas industry pretty much from its inception right through to where we are today. It is a declining industry, as the right reverend Prelate rightly said, and it will continue to decline whatever we do. The question is: how quickly, and how will it impact the transition?
Turning to Amendment 1, on flaring, as far as I understand it from the transition authority, all new developments that are approved will be zero flaring, so, in a sense, the amendment is already being tested. I do not have a problem with it, but I think that is the case. I accept that the desire to reduce or eliminate flaring on existing fields leaves a tension as to timescale. It would be good if it could be speeded up, and the transition authority should be encouraged to make that happen, but it is not quite as easy as people say, because it has implications for the physical operation of platforms. However, I do not think it is a wrong aspiration.
On Amendment 2, on green skills, we should absolutely be developing them. However, the point I hear every day in the north-east of Scotland is that we are producing oil and gas and it is going to decline, but its revenue, technology and supply chain are all being redeployed to the transition. If we do not have that revenue, our ability to redeploy will be slowed down or stopped, and that is a real factor.
There is huge enthusiasm in the north-east of Scotland for the rapidest transition we can make. Indeed, just this week, one of the largest offshore wind farms in the world has been announced, off Peterhead. This is an investment of £3 billion in 35 turbines and potentially hundreds of jobs; there is huge enthusiasm for that. A lot of that will be going to companies in the oil and gas supply chain. The really important thing here is to get the balance right. If we accelerate it too quickly, that supply chain will disappear. The faster we bring in the investment in offshore, the faster we can make the transition, but it is really important to get the balance right. That is the debate the north-east of Scotland wishes to happen nationally.
That is one of the reasons why I support my noble friend’s amendment to replace “must” with “may”. As I said at Second Reading, the Bill is not necessary because we can issue licences whenever we like, and it has been up to the transition authority to determine whether that may be the case. To those who say that we should not have any more licences, I do not mean to be patronising at all, but some understanding of the North Sea reveals that there are sometimes requirements to bring things on stream in order to facilitate decommissioning, as well extending the life of existing infrastructure. Saying that it is not going to be done at all will probably almost immediately lead to a situation in which the practicalities mean that it makes more sense. So, there should be that discretion. However, the onus should be put on the transition authority to do that only if it believes it is necessary in order to achieve the transition in an orderly and efficient manner. That is essentially why the amendment makes practical sense.
Investing half the profits in renewables is a good idea. I am not sure whether one should be quite as specific as that; however, the reality is that the companies I talk to are investing increasingly in renewable energy because they can see that oil and gas is a declining asset. They know, as the noble Lord, Lord Deben, knows, that every projection for oil and gas through to net zero still has oil and gas in the mix.
So, oil and gas will be around. There is a sensible question to be asked: why should it not be ours, rather than importing it, as long as we can do that in the most efficient and least environmentally damaging way? I accept that it has an impact. In the process, we can ensure that the transition from the oil and gas industry to the renewables industry enables the jobs, the technology and the companies to be smoothly part of it. There is a real flight of investment from the UK in this sector right now, because of a combination of uncertainty—the Labour Party’s policy does not encourage people—and the Government’s confusing people, I have to say to the Minister. On the one hand, we have a Bill that says, let us have an annual licensing round; yet, on the other hand, we are saying that we are going to tax the industry to the nth degree.
Frankly, a lot of the companies are saying that the UK does not seem like a decent investment. For those in this room who are not keen on the North Sea, that may make them all happy but there are consequences. It is a successful major industry and a significant part of our economy. It is one of our high technologies. We are the world-leading experts in subsea technology. About one third of the market is UK-based, driven by what we do in the North Sea. To throw all that away, if we do things too quickly, would be a criminal waste of talent and resource, and would be an economic self-wound. We can do this properly and right, in an orderly fashion, or we can try to reverse it, which is foolish and will not work, or we can accelerate it at a level that would be damaging and destructive.
These amendments set the balance, I hope. We can make sure that if we are going to manage this transition and the decline in the North Sea, it is done in a way that respects the contribution that the people who have developed this industry over the past 40 years have given and can give. It would also allow us to develop the new technologies at a pace that will create a viable industry quickly, without causing a huge dip in economic activity and unemployment, which can be avoided.
Lord Moynihan (Con)
My Lords, my interests are set out in the register. The noble Lord, Lord Bruce, did not quite do himself a service by saying that he was there at the start 50 years ago; I am sure it is little bit less than that. I was very much involved some 35 years ago as Minister for Energy, at the time when this whole question started. There was extensive gas flaring in those days and no value was associated with gas. Therefore, the environmental impact was appalling and we wanted to assess it, especially when it came to the central North Sea. The southern North Sea had yet to be moved forward. The northern North Sea had far less of a problem of associated gas, but the central North Sea fields were very much in the context of what we are discussing.
I echo many of the comments of the noble Lord, Lord Bruce, about these amendments, in particular Amendment 1, which I want to address. The important points he has raised go to the comments of my noble friend Lord Deben. All new developments absolutely should be planned on the basis of zero routine flaring and venting. That is the case, as of today. I hope that the Minister can echo that point, because that is substantively what the amendment seeks to achieve.
My second point is that it is not wise to put equal weight on the environmental impact of venting and flaring. Venting is far worse. Methane is about 30 times more damaging to the environment than CO2, which comes, effectively, from the flaring process. However, both are recognised by everyone who works in the oil and gas sector, particularly the supply and service sector, as practices we should end. There is a clear, unequivocal decision by government and by everyone working in the sector that we should bring these practices to an end by 2030.
The question is one of timing. As I read it—I may be wrong—the amendment is really about whether, two years on from the Bill receiving Royal Assent, we start the process as though it is 2026 rather than 2030. There is merit in considering that in detail, but we should also look at the industry’s capacity to retrofit by that timetable. It may be possible, but my research shows that it is quite difficult, and we would have to move from the current voluntary system. To be fair, that system has worked well. Progress has already been made in reducing flaring. It is down by some 50% since 2018 and we can get the rest of it removed by 2030.
The question is: should that be accelerated? In fairness, I think that is what the noble Baroness, Lady Hayman, is putting to us today—that this amendment, if passed, would not affect the new developments that are already being planned, on the basis that there was zero routine flaring and venting, but would accelerate the timetable for the rest of the platforms. My question to the Minister concerns that timetable and speeding it up. Do he and the Government believe, and can they demonstrate, that the voluntary-based momentum that needs to accelerate —the industry recognises that it must accelerate in order to achieve the 2030 deadline—is better or worse than a slower, compliance-based mechanism, which would require a complete infrastructure from government to achieve the sort of timetable that is set out in this amendment? That is the real question. By the way, the amendment is not precise because it will depend on when the secondary legislation is introduced before Parliament, so it might be implemented quite close to the 2030s or in the late 2020s.
Lord Lilley (Con)
May I just add a few brief comments? I endorse what my noble friend Lord Moynihan and the noble Lord, Lord Bruce, have said.
I speak from a position of considerable ignorance. I used to know quite a lot about this but I know much less now. However, it seems that everyone is agreed that future fields will not be allowed to flare and vent and are not planning to flare and vent. So the first subsection of the proposed new clause to be inserted by Amendment 1 would legislate for something that is going to happen anyway.
However, the second proposed new subsection says that we should not allow any new fields until old fields have been prevented flaring. I do not see the relevance of the connection between the two. If we can stop old fields flaring and venting, we ought to. If we cannot, that is a problem, but what has it got to do with new fields, which will not flare and vent? Unless we have some explanation from the backers of this amendment of why they are linking the two, I cannot see why we should support it.
Earl Russell (LD)
My Lords, I rise to speak in favour of all the amendments in this group.
I start with the first amendment, which is in the names of the noble Baronesses, Lady Hayman and Lady Blake of Leeds, and the noble Lord, Lord Randall of Uxbridge; I have also put my name to it and support it. The amendment comes out of Alok Sharma’s amendment in the Commons; it was the one amendment that the Minister in the other place said the Government were prepared to go away and look at.
I take the points that have been made about what has been achieved under a voluntary mechanism. I also recognise that the new oil fields do not have this, but I would like to hear from the Minister and get a response from the Government as a productive one was not really given in the Commons. This is a real issue that needs looking at, and the Government may have real concerns about bringing this measure in for old fields.
My understanding is that some of this can be done by replacing methane with compressed air, et cetera. If there are concerns, I would like to hear them because, as we have heard, methane is 80 times more potent over 20 years than carbon dioxide. It is a huge greenhouse gas and the Government have signed up to the 2030 commitment to reduce it; indeed, the UK leads the world in some of these respects. So it would be good to see stricter regulations written in.
Progress has been made. The Government have committed to zero venting and flaring by 2030. Already, a near 50% reduction in flaring since 2018 has been achieved, but to put that in perspective, Norway banned venting and flaring in 1971, which is the year I was born. This is not rocket science; it is not difficult to achieve. While I recognise that progress has been made, I am 52 now, so we are 52 years behind Norway. These are powerful greenhouse gases, so we are waiting for this voluntary system to come in, but we need to take action: we need action at speed, at pace, to make sure that these things happen. I want to hear from the Minister whether he has ideas about how that can be done.
I recognise as well that the NSTA guidance currently states that there should be none for new developments and it should be phased out by 2030. However, the problem with this is that the enforcement is patchy and 2030 is still a long way off. It is a long time for us to be letting out these extremely powerful greenhouse gases, so I think something should be done at scale and speed to make that happen.
The Government argued throughout this Bill that they want to give the industry certainty, and that is one of the underlying themes behind the need to put forward these measures. My question to the Minister is why we are not doing that on venting and flaring. If this is about certainty for industry, and this involves industry having to invest to change and adapt, why are we not giving a clear steer—clear guidance, clear timetables—on the intention to do this? That would seem to be the sensible thing to do and the thing that industry would welcome the Government doing, so I call on the Government to do that and I support the amendment. I thank everybody who has spoken to it.
My Amendment 6 is a simple amendment replacing one word with another. It replaces “must” with “may”, but it goes to the very heart of the Bill. The story is that the Bill was cooked up over a boozy lunch as a way of dividing the Opposition. Who knows whether that is true or not but, if our energy crisis and energy security could be resolved by a two-clause Bill, I suspect that somebody might have done it before and that it would not have magically appeared when nobody else had managed to do it.
The Bill actually says that there is a duty to invite applications. I listened to all the debate in the Commons as part of my preparation for the Bill, partly because I am new to this place and am a bit sad, sitting there on the weekends, but I felt that this point was missed in the Commons, which is why I tabled this amendment. Having spoken to colleagues on the Opposition Benches, I kindly ask the Government to look at this probing amendment, because it is important to understand their motivations. They are putting this legislation forward, taking parliamentary time, telling us that it does things that are needed and are important, and I had to ask the House of Lords Library for a special briefing on the Bill because I was frankly astounded that it could be passed and never again would another North Sea oil or gas licence be agreed. How do these two things happen?
The Government are telling me that this is resolving our energy security and providing certainty, yet the Bill can pass and another licence can never be granted. I am confused about what the Bill actually does and have put forward this amendment in the hope that there is substance in the Bill and it is not just an attempt to divide the Opposition and destroy the consensus that existed on climate change. This is so important not just to the way we work here or in the other place but to the message that we send to the people of this country as we transition. We had the chief executive of the CCC on Laura Kuenssberg this weekend and have heard Alok Sharma; the Government have had resignations and this Bill has damaged our international reputation.
It is important that we understand what the Bill does if we are selling our international reputation for it. What does it do? What is the point of it and what does it achieve? My amendment is really an attempt to figure that out. That is why I have included it and I will question the Minister on that.
My Amendment 7 would mean that only companies that have publicly stated that they will invest in the green economy half the profits derived from winning an application can be invited to apply. I point out that 50% is a random figure—we can amend and debate that—but I believe in the green transition and in the need to protect these jobs. I believe in a just transition and that these things are extremely complicated. I also recognise that we will continue to have some dependence on oil and gas as we transition to net zero, not just for our energy needs but for lubrication and other industrial purposes.
I recognise that we will have oil and gas licences, but we must act at scale and speed to disinvest from oil and gas. We must leave as much of this stuff in the ground as we can. Once it is extracted, it may not count towards our net-zero targets, but it will for some other country after it has been sold on the international market, as 80% of it will be. It will be burned. We live on one planet and have one atmosphere. Emissions go somewhere and they will affect us. The idea that the Bill does no harm is not correct; it has consequences. A lot of oil and gas companies do not invest in the green economy in the North Sea, and they should. This amendment is simply an attempt to lay down a marker.
My Amendment 8 would mean that
“the OGA cannot invite nor accept an application for a seaward area production licence from a Russian oil and gas company”.
This point was raised by Richard Foord in the other place. It is my understanding that one Russian oil or gas company has a licence in the North Sea, when we have a war in Ukraine and continued threats to our European security. The Minister spoke quite clearly at Second Reading about the Bill providing for our energy security, but these Benches have questioned that because 80% of our oil goes into the international market.
This is a simple, clear, straightforward amendment that does what it says on the tin. If we are concerned about energy security, why are we allowing Russian oil and gas companies to bid for, win and run licences to extract our oil and gas, put it on the international market and perhaps even sell it back to us? The Government would then have to subsidise bill payers with billions of pounds to pay for it, in a vicious circle that helps no one. This amendment is clear, and I would like it to be agreed to.
Of the other amendments, I strongly support Amendment 9 on a marine spatial strategy. It is extremely important, and it is important that we plan for the future. If we are to have new oil and gas licences, it is important that we do not rule out the ability to have other green energy. I also support Amendment 10 in this group, but I apologise for getting a bit carried away and going over my time.
Baroness Blake of Leeds (Lab)
I start by reflecting on the comprehensive discussion we have had. All noble Lords in the Room are looking forward to the Minister’s comments on the points raised.
Just to reflect on the Second Reading in the Chamber, many of us asked then about the purpose of the Bill, whether this legislation is really necessary and if it will satisfy its stated objectives to boost the economy, deliver energy security and transition to net zero. I do not need to go through those points again; we made them very clearly at Second Reading and could well return to them.
Baroness Blake of Leeds (Lab)
I was just going to strike a more positive note by saying that, although I question why this legislation is before us and how necessary it is, I welcome within the amendments, particularly in this group, an opportunity to seek improvements on a wider particular area, and we have had some good justification today as to why that is.
I am pleased to have been able to sign the first amendment, in the name of the noble Baroness, Lady Hayman, which is also signed by the noble Lord, Lord Randall, and the noble Earl, Lord Russell. I just emphasise that this amendment is looking to prevent the invitation of new seaward area production application licences until the Secretary of State has introduced a ban on the flaring and venting of methane by new offshore installations, and it would further require the Secretary of State to prevent further rounds if a wider ban is not put in place within two years.
We have heard very clearly today that there is a general feeling that the damage caused by methane has been overlooked, and this presents an opportunity to address that, to acknowledge its potency as a greenhouse gas and to bring it up to speed, with the focus that there has been on carbon dioxide. In addition, as the noble Baroness, Lady Hayman, said, the statistics are quite staggering in terms of the sheer waste every year in the burning off of wasted gas. Just think of the powering of the number of homes times the number of years: we are talking into the hundreds of thousands and, really, we should be doing better.
As we know, NSTA guidance states that there should be zero routine flaring and venting from any new developments—that is very clear. That seems to give a sense of security to some noble Lords in the debate. There was also an acknowledgement that routine flaring and venting should be phased out by 2030. However, I emphasise that, although those words are there, the problem remains that enforcement is patchy and measures are found only in non-binding guidance. I believe that this amendment seeks to manage this situation and help us move forward.
The one point on which I would like to press the Minister picks up on the conversations and discussions that we had at Second Reading concerning the amendment put down by the Member of Parliament Alok Sharma and the suggestion from the Minister in the other place that there would be another look at this. I would just like an update on whether those discussions have progressed and, if they have not so far, would the Minister be prepared to meet with us to talk about how we could come to some agreement or consensus—a way of moving forward that would satisfy the serious concerns that have been expressed in different debates?
Referencing Amendment 2, in the name of the noble Baroness, Lady Hayman, also signed by my noble friend Lord Knight, I do not honestly think that we emphasise enough in our discussions around this agenda just what an opportunity is presented. This was the basis of the discussions of the chief executive of the CCC over the weekend. We should be talking about the growth potential and opportunities that should be created, not only in jobs, as we have heard about today, but in attracting investment into this whole area.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
My Lords, first, I thank everybody who contributed to what I think has been a positive debate on a number of important issues.
Amendment 1 in the name of the noble Baroness, Lady Hayman, seeks to prevent the NSTA inviting applications for licences until regulations banning non-emergency flaring and venting on new offshore installations are in force. After two years, it would also prevent the NSTA inviting applications until additional regulations banning all flaring and venting on existing offshore installations are in force.
Flaring and venting are controlled processes to dispose of gas. These activities can take place for emergency or safety purposes, during non-routine operations and on a regular basis, as a result of the design of existing platforms. This latter category is known as routine flaring and venting.
The Government are clear on the importance of having a target for zero routine flaring and venting in the North Sea. This is a key measure for reducing greenhouse gas emissions from production. We are committed to the World Bank’s zero routine flaring initiative, which aims to eliminate the practice globally by 2030; indeed, we are going further with a commitment to ending not just flaring but venting for both oil and gas by 2030.
The North Sea Transition Authority’s current strategy includes enforceable obligations on industry to reduce greenhouse gas emissions from a range of sources, including flaring and venting. As the noble Lord, Lord Bruce, and my noble friends Lord Moynihan and Lord Lilley pointed out, the NSTA’s current guidance to industry also makes it clear that all new developments should be planned on the basis of zero routine flaring and venting. Further, the new OGA plan, published last month, confirms the expectation that there should be zero routine flaring and venting on all platforms from 2030 and requires industry to report in more detail, including on financial planning, to ensure continuous improvements in flaring and venting.
The UK’s proactive approach is already reaping rewards. Based on the latest data, North Sea flaring is down by 50% since 2018. The sector is on track to deliver on the ambitious decarbonisation target in the North Sea transition deal to reduce emissions from operations to 50% of 2018 levels by 2030, ultimately ensuring that the UK continental shelf reaches net zero by 2050. Key to delivering a 50% emissions reduction by 2030 will be eliminating routine flaring and venting in a responsible manner and electrifying platform operations to enable this to happen.
I say in reply to my noble friend Lord Moynihan that it is the Government’s view that our 2030 flaring and venting target is already ambitious. Significant changes to infrastructure, which require appropriate time and planning, need to be made. If we do not carefully manage the ending of routine flaring and venting, it will lead to the early closure of platforms—I suspect that some noble Lords would welcome this—and the potential loss of both the appropriate UK production and the jobs, tax revenue and economic activity that go with it.
Of course, as I have pointed out repeatedly, loss of domestic production will also increase our reliance on imports, including liquefied natural gas, which, as we have said repeatedly, has higher production and transportation emissions. My submission is that that would make no sense either economically or from the point of view of emissions. As drafted, this amendment would also prohibit flaring and venting for emergency and non-routine purposes after two years. That would create unacceptable health and safety risks for workers and would likely result in a shutdown in production in those circumstances. Taking on board the suggestion of the noble Baroness, Lady Blake, I am always happy to meet further with the Opposition to discuss this important matter.
Amendment 2 in the name of the noble Baroness, Lady Hayman, would require the Secretary of State to publish a green skills retraining plan for oil and gas workers before the NSTA could invite applications for offshore production licences. I can reassure the Committee that the Government absolutely recognise how important the skills, expertise and resources of the oil and gas industry are for our transition to cleaner technologies. A report by Robert Gordon University found that over 90% of the UK’s oil and gas workforce have medium to high skills transferability to the offshore renewables sector.
It is vital that the transition to cleaner energy is managed carefully and responsibly. We must ensure that oil and gas jobs are not lost before renewables and other clean technologies grow sufficiently to take up those valuable skills and workers. That is why we are taking action, including by introducing this Bill to safeguard those jobs for the future.
To take an example, a key commitment of the landmark North Sea transition deal between the Government and the industry is to ensure that people and skills from the existing oil and gas workforce are transferable across the wider energy sector. This includes the development of a digital skills passport to facilitate this transferability, which is being funded by the Scottish Government and industry. We are interested in this work and keen to take it forward. Indeed, we are working with the Scottish Government, the industry, relevant skills bodies and trade unions to support the delivery of this work, which is led by Offshore Energies UK and Renewables UK.
In addition, the Government are shortly due to launch our green jobs plan in the first half of this year, supported by the green jobs delivery group. This plan will provide the actions needed to ensure that we have the skills and occupations within the UK workforce, at the right time and in the right place, to develop our net-zero, nature and energy security targets.
All in all, the Government’s spending and policy ambitions will support up to 480,000 green jobs by 2030. The additional requirement that this amendment places before further licensing can take place would damage investor confidence and cause confusion for industry, employers and the workforce. It would therefore only undermine the ongoing work across the UK and could be inappropriate, given the responsibilities of the devolved Administrations also in this area.
Amendments 6 to 8 are in the name of the noble Earl, Lord Russell. Amendment 6 would remove requirements on the NSTA to invite applications for production licences when both the net importer and carbon intensity tests have been met. I take this opportunity to remind the Committee of the purpose of the Bill: it is designed to give industry certainty on the future of licensing rounds. By providing industry with this confidence, the Bill will support the required ongoing investment and protect the jobs and skills required to support the energy transition. Amending that duty on the NSTA when the net importer and carbon intensity tests have been met would undermine the purpose of the Bill and the confidence that it is designed to provide, and will put these important benefits at risk.
Amendment 7 would modify the duty that the Bill places on the NSTA, so that only companies that have committed to investing half their profits from activities carried out under licences in the green UK economy would be invited to apply for production licences.
The Government have a tremendous record for attracting investment into green industries. Since 2010, we have seen around £300 billion of public and private investment in the low-carbon sectors. According to BloombergNEF, total public and private investment in UK low-carbon sectors reached £60 billion in 2023—up by 71% in real terms from 2022.
Lord Callanan (Con)
I was just making the point that the licences provided for in the Bill, where granted, will give exclusive rights to explore an area. Additional permissions will be required before any activity can take place, such as the drilling of a well or construction of a development facility. At each stage and ahead of every such permission being granted, an environmental assessment takes place including, where necessary, public consultation and consultation with nature conservation bodies, to ensure that the impact on the environment, including MPAs, is taken into account in the licensing process.
In response to a specific question, I am not aware of my department having received any communications from the Joint Nature Conservation Committee about the Bill, but noble Lords can be assured that the Government remain committed to ensuring that we meet our Environment Act target on MPAs.
The Government’s marine spatial prioritisation programme will ensure that a strategic approach is taken to identifying future marine development sites. The programme is exploring opportunities to optimise the use of the seas and enable marine activities to co-exist.
Similarly, the strategic spatial energy plan, which the Government will commission in spring 2024 from the National Energy System Operator, will assess the most efficient locations and types of energy infrastructure, reducing inefficiency in infrastructure build. The Bill will not undermine our ability and ambition to ensure co-existence between strictly regulated human activities that may be both possible and necessary in an MPA and, of course, the wider marine environment, including fishing, offshore wind construction and offshore oil and gas, to ensure that we continue to strike the right balance between the full range of our different priorities.
I hope that with those assurances and the explanations that I have been able to provide, noble Lords will feel able not to press their amendments.
Baroness Hayman (CB)
My Lords, I am extremely grateful to everyone who took part in this very useful debate. I very much take to heart the comments made by those with long experience in the North Sea about the need to make sure that the scale and pace of change is appropriate. I remain unconvinced that the voluntary system on venting and flaring is going fast and comprehensively enough to meet the targets we need. The Minister said that the 2030 target we have is “ambitious”, and others questioned whether we could get there by 2026 or so, which is the date in my amendment. I will say only that the Environmental Audit Committee in the other place thought that those were attainable targets. So, there is a lot to think about and I hope a lot to talk about with the Minister between now and Report.
Unfortunately, the noble Lord, Lord Lilley, is not in his place. I would have said to him that I take the stricture that using the licensing process to institute a ban on flaring on current installations is not a very elegant way. However, it has one enormous advantage: it is in the scope of this very narrowly drawn Bill. But with that, and hoping that we can have further conversations, I beg leave to withdraw the amendment.
Lord Lennie
“(aa) the climate change test (see section 4ZD);”Member’s explanatory statement
This amendment, together with the other in the name of Lord Lennie, sets out the climate change test to be applied by the Oil and Gas Authority before inviting applications for seaward new production licences.
Lord Lennie (Lab)
My Lords, I will speak to Amendments 3 and 18 in my name. These amendments set out the climate change test to be applied to the Oil and Gas Authority before inviting applications for new seaward production licences. Before detailing what the amendment calls for, I point out, as I said at Second Reading, that this is an unnecessary and damaging Bill. It undermines the independent authority of the NSTA and reinforces the perception around the world that the UK is rowing back from climate change, as described by Sir Alok Sharma MP, the highly respected former president of COP in the other place. So, nothing we can do in Committee or on Report would improve the Bill better than ditching it altogether; no improvements can make fresh fruit out of rotting vegetables.
The tests that the Bill sets are fundamentally flawed, and any tests that we may introduce would still be weaker than Labour’s overall position of no new exploration licences. Labour recognises—this is to reassure those who are concerned—that production will continue in the North Sea for decades to come. Oil and gas will continue to supply our domestic energy market well beyond the lifetime of most of us in the Room.
The Bill could or should have set a strategic direction or plan for how we deal with North Sea workers transitioning to new jobs in renewables, as set out by the noble Baroness, Lady Hayman. However, how we manage our North Sea assets for the long term and maximise the low carbon potential of the North Sea are also missing from the Bill. It does not do any of this; it just sets these tests that cannot be failed and demands that the NSTA carries out annual licensing of new oil and gas fields.
These tests are, first, that the carbon intensity of domestic natural gas is lower than the carbon intensity of liquefied natural gas imported into the United Kingdom. It is, and it always will be. The second test is that the UK is projected to remain a net importer of oil and gas. It is, and it always will be. The amendment that replaced these tests states the following:
“The climate change test is met in relation to a relevant year if the Intergovernmental Panel on Climate Change on the mitigation of climate change publish a report following the passing of this Act which makes a finding that the granting of additional seaward area production licences is consistent with limiting warming to 1.5 degrees centigrade”.
It is the Government’s policy to achieve 1.5 degrees centigrade. It was agreed at the Paris Agreement that 1.5 degrees centigrade is what we should achieve. This test is very straightforward and consistent with government advice of achieving 1.5 degrees of global warming. The IPCC has previously said that the Bill as it stands is not compatible with our climate change goals. However, unlike the Government’s tests, this test is not set up so that we cannot fail. If the evidence base was updated to suggest that this action was compatible with our climate goals because the climate science had changed, or because the technology around oil and gas extraction developed, the Labour test could be passed.
If we are to take our responsibilities seriously as a prime mover in the fight against climate change, we should adopt the strategy that carefully manages our North Sea oil and gas production, while maximising the low carbon potential of the North Sea. The government tests just simply do not achieve this. We need proper policy developed in the round for this to happen. The Bill as drafted does not allow for this. It is concerned only with the unnecessary mandatory licensing rounds, and as such is a nakedly political proposal, as has been suggested by others.
Does the Bill even attempt to approach the fact that demand for gas will undoubtedly decline as we decarbonise our power sector and electrify more? Can the Minister say what the Government’s strategic thinking is in this area? Instead of doing the hard work and producing holistic plans, they have played politics with the UK’s reputation and workers’ futures. We can and should do better than this.
As for the other amendments in the group, I highlight those in the name of the noble Earl, Lord Russell. They remind us that the Secretary of State for Energy Security and Net Zero confirmed that the Bill would not reduce energy bills, and that that is not its purpose. With the cost of living crisis hurting everyone, reducing energy bills should be a priority for the Government, and the Bill should reflect that—but it does not. I beg to move.
Baroness Jones of Moulsecoomb (GP)
My Lords, I shall speak to the two amendments in my name, Amendments 4 and 19, but I also want to say that I very much enjoyed the introduction to the amendments from the noble Lord, Lord Lennie. He said that this is a very damaging Bill, and that is absolutely true—but what offends me so deeply is that it is so old fashioned and out of date. It does not take into account any of the science that has happened over the past 10 years. But luckily, these amendments expose the falsehoods that have been told by the Government in attempting to justify new fossil fuel extraction in the midst of a climate crisis.
First, the Government are deluded in saying that new oil and gas licences can in any way be compatible with delivering our climate targets. That is impossible. Secondly, they are deluded in thinking that propping up the oil and gas industry can possibly be in the interests of workers—and doing that rather than genuinely engaging with the need for a just transition and the practicalities of how that can be delivered. Thirdly, they are deluded in thinking that new oil and gas extraction will do anything to reduce domestic energy costs rather than be exported on the world market to the highest bidder.
Amendments 3 and 8 would establish a climate test, which is very necessary. The UN Production Gap Report has warned that the worlds’ Governments already plan to produce more than double the amount of fossil fuels in 2030 than would be consistent with limiting heating to 1.5 degrees centigrade. The IPC’s sixth assessment report was clear that
“projected CO2 emissions from existing fossil fuel infrastructure without additional abatement would exceed the remaining carbon budget for 1.5 degrees centigrade”.
Closer to home, the Climate Change Committee observed in its latest progress report that
“expansion of fossil fuel production is not in line with net zero”.
Regardless of the claims from some people, possibly on the opposite Benches, that the UK will continue to need some oil and gas up to 2050, again to use the words of the Climate Change Committee,
“this does not in itself justify the development of new North Sea fields”.
The issuance of new fossil fuel extraction licences will directly contribute towards global heating. The Government will not accept a climate test in this Bill, because they know that new oil and gas is incompatible with a safe climate. If the Minister would like to hear more about this, I would be very happy to meet him and explain it as simply as I possibly can.
My Amendments 4 and 19 set out the just transition test. It is ironic that this Government try so hard to invoke the destruction of working-class communities by the Thatcher Government when they attempt to use oil and gas workers as an excuse to continue pumping new oil and gas, which will further inflame the climate emergency and actually make life harder and harder for people. The choice that we are facing is between a managed and fair worker-led transition now, or chaos later, when the reality of the planet crisis bites even more fiercely. Without serious plans for a just transition, communities will once again be left behind and hollowed out as a result of Conservative policy.
This proposal would require just transition plans for the North Sea workforce that are compatible with limiting global heating to 1.5 degrees centigrade. It specifies that these plans must be agreed through formalised collective agreements with unions and that they apply to all workers, whether they are directly or indirectly employed, or even self-employed—which is vital, given the heavy casualisation in the oil and gas workforce. This amendment will be a step towards delivering a just transition that would see workers at the centre of transition planning, with a clear and accessible pathway out of high-carbon jobs. We have to do this—we absolutely must, if we care about people and their work.
So, rather than propping up jobs that we know will not exist in the future, the Government should be actively supporting workers to transition out of the oil and gas sectors while also addressing their very real concerns—such as around the cost of retraining, which is often borne by workers themselves. The failure to deliver a just transition is not inevitable; it is a political choice. If the Government were serious about listening to workers and protecting jobs, they should have no problem supporting this amendment, which puts job security at the heart of the transition to a green future.
Earl Russell (LD)
My Lords, I will speak to my Amendments 5 and 17, which would introduce a cost of living and consumer energy price test that the OGA must conduct before inviting applications for seaward area production licences. The cost of living and consumer energy price test is met in relation to a relevant year if the production of domestic natural gas will clearly, first, lower energy prices and, secondly, reduce the cost of living.
Originally, as was alluded to, the Minister in the other place claimed that this Bill would reduce energy prices but very quickly had to retract that statement from the public domain. My question is: why are we passing this Bill if it will not have any impact at all on reducing the cost of energy bills for consumers? Some 80% of all the natural oil and gas here will be exported. As we have heard, the Bill will do little, if anything, to help our energy security, protect jobs, transition and help the green economy, which is the energy of the future. Instead, we are investing in the energies of the past, and that investment seems to bear few benefits for people or the planet.
We are already seeing individuals with record debt for their energy prices. We have seen the war in Ukraine and the spike in energy prices. As long as we as a country continue not to invest in energy efficiency or renewables and continue to be dependent on the international energy markets, we will continue to suffer as those markets fluctuate. The Government themselves have had to invest £7 billion in subsidising energy bills—in effect, a continued and added subsidy to the oil and gas companies on top of the tax breaks that they already have. We have the most expensive energy prices in Europe so this amendment simply seeks to put in a test where the cost of energy to consumers should be considered.
On the other amendments in this group, Amendments 3 and 18 in the name of the noble Lord, Lord Lennie, would apply a climate change test. I fully support applying a climate change test. The question I would put to the noble Lord, in relation to these specific amendments, concerns asking the Intergovernmental Panel on Climate Change whether it is set up and in the best position to conduct that particular test for us as an individual country. I suggest that, if we want a climate change test, it might be better for the UK’s own Climate Change Committee to pass a judgment on whether that test could be met.
Finally, on to the amendment in the name of the noble Baroness, Lady Jones, of course, although we on this side recognise that we will continue to have some oil and gas as part of our energy mix—even under net zero—we want to see a move to a just transition. I welcome this amendment as an attempt to do that.
However, the amendment is slightly ill defined. I would rather see that transition come about through the profits from the extraction of this energy being directly allocated to the green economy. So, while I welcome the amendment and we do not oppose it, my personal view is that that is a more efficient way of doing it.
Lord Bruce of Bennachie (LD)
I share the frustration of many people that we produce our own oil and gas but base it on world market prices, and there is no immediate direct benefit to the consumer. I understand the reasoning behind it, but the public feel very frustrated: if we are oil and gas producers, there should be a direct economic benefit. Can the Government be a bit more creative and imaginative? They would argue that during the height of the crisis, they effectively used excess taxes to cut consumer bills, but is there a way in which to build in a formula that might have a more long-term connection that would be of some benefit?
It is also fair to say that I reject the argument that because we export a lot of the oil and gas, we do not really need it and therefore should not produce it. Of course, balance of payments do matter. The reality is that we have always exported a very substantial amount of our oil production and we import it back in refined products—more so than we did, because we no longer have the capacity to refine. Nevertheless, one pays for the other, but that is not immediately apparent. It is equally true that if we are producing our own oil and gas, and it is profitable, there is tax accruing to the Government which presumably funds public services or other tax cuts that could be directly connected to the consumer if the Government were prepared to be creative.
It is a perfectly reasonable proposition to ask why, if we are maintaining our oil and gas production, we cannot give a direct benefit to the consumer from that. I acknowledge that there are real benefits. Those who suggest that because we go for the world economic price there is no benefit ignore the balance of payment effect and the taxation effect. I am sorry that the noble Lord, Lord Deben, is not in his place because in a Committee exchange I asked him why, if oil and gas is part of the mix, right to and through net zero, we would not maintain some of our own production, if we can do it sensibly, efficiently and rationally while we are accelerating the transition? His reply was that we should set an example to the world, that plenty of other people produce oil and gas and we can import it. I found that extraordinary and irresponsible. If we are going to use it anyway—there is a further group of amendments that relate to the carbon base of our gas, for example—we know perfectly well that domestic gas has a much lower carbon footprint than imported gas, certainly liquid gas.
It is naive to suggest that there are no real benefits from producing oil and gas. There is a real economic benefit, but I tease the Government to say that it might be interesting if they could find a way of making a direct connection that people could feel in their cost of living, specifically in their fuel bills. People would find that an extra justification for maintaining what we are trying to do.
Lord Kerr of Kinlochard (CB)
I intervene briefly to express a little scepticism about Amendments 5 and 17. I declare an interest because I used to be deputy chairman of Shell for a time. I think the answer to the very fair question of the noble Lord, Lord Bruce, is that we cannot, unless we nationalise the companies or direct their sales, because they will sell at the market price. I do not think that the condition that Amendments 5 and 17 would impose will ever be met. We will never be able clearly to demonstrate that prices and the cost of living would be lower X many years out. First, one cannot be clear. It takes five, seven or eight years for a project to come into production and guessing prices and the cost of living that far ahead, as I saw at Shell, is not an exact science. It is difficult to do “clearly”—the wording in the amendment.
Secondly, I am not clear whether this third test is a cumulative condition, like the carbon intensity test and the net importer test. If it is cumulative, then no licenses will be issued at all, because that will never be able to be proved.
I am afraid that, for the same reasons, my scepticism also extends to the net importer test. I do not understand the Bill. We are setting out a perfectly reasonable set of propositions for a nationalised industry, but if you want the North Sea to be developed as it is now, or for the development to continue as it is now, run by commercial companies, then the commercial companies will sell at the world price. They will not allocate a little bit to you at a better price so that you can satisfy your tests; in particular, a cost of living test. It does not work like that. I am making everybody in the room angry, because I do not really agree with Amendments 5 and 17, and I do not actually agree with the Bill when it comes to the net importer test.
Lord Moynihan (Con)
My Lords, I recognise the expertise of the noble Lord who has just spoken, but I think that the two tests in the Bill—which is the subject of this group of amendments, because we are looking to see whether it is feasible and appropriate to add to those tests—are important tests.
On the net importer test, it is fundamentally important as a country to have security of supply. Security of supply comes through diversity of supply, and that security of supply has been shown to be exceptionally important recently, not least with the Russian invasion of Ukraine and the impact that had on western Europe’s gas, being at the end of the pipeline from Russia. It was important to bring home the reality that we need to develop our own energy sources efficiently and economically, in the most benign, sustainable way that we can possibly do with modern technology. The net importer test is important, and I am pleased that it is in the Bill. It absolutely underpins the concept of security of supply, which has always been the basis for our energy system in the United Kingdom.
The carbon intensity test is also relevant, in this day and age of developing reserves internationally and bringing them here with LNG, then transferring that LNG, through a process, to natural gas for power generation in the United Kingdom. If the LNG had a lesser carbon footprint than what we produce in the North Sea, then there would be a very real argument for not having further licensing rounds in the North Sea, because the environmental impact of what we do in this industry is vital, and that is shared on both sides of the Committee.
It is important to question whether we should move towards a position whereby we go to a global test, which the noble Lord, Lord Lennie, suggested, through what was probably a probing amendment rather than one that he would like to see in the Bill. We have an important but minimal impact on whether that 1.5 degree average surface warming above pre-industrial temperatures under the Paris Agreement is achieved. We should be looking to make sure that, as far as possible, everything we do in the North Sea is as sustainable as possible, with the lowest possible carbon footprint. As far as I am concerned, sustainability is one of the four pillars for the consideration of our energy sector. We must address sustainability concerns; we must address GHG emissions; and we must ensure the protection and stewardship of our environment. As I have mentioned, at the same time, we need to have security and reliability. That is the second pillar. We must ensure that current and future energy demand is supplied reliably and responsibly, and, as I said earlier, is able to robustly withstand system shocks.
The third pillar is accessibility and affordability. We must enable energy provision to consumers while minimising cost, and we must support social and economic development. That is one of the reasons we have diversification of supply in the country and the free market to ensure that that is the case.
That free market point is important because we need economic viability of investment. Investment in, and the adoption of, energy solutions characterised by a sustainable return on investment is the fourth and most fundamental pillar. I would just question whether we need to go further than the two tests in the Bill.
I have never, either at Second Reading or in Committee, thought that this Bill was top of the agenda in terms of importance to any Government. I am not sure that it is. I agree with the noble Lord, Lord Bruce, that we can have annual licensing rounds if we want them. In any event, if it is important that they are annual as opposed to biennial, to me, is debateable. The important thing is that all the licences that are awarded must be awarded against a set of criteria; increasingly important in the set of criteria is the environmental footprint around every single aspect of offshore oil and gas production.
We need firm, reliable energy in the United Kingdom to underpin a growth in renewables, but that firm power must be uninterrupted. At a time when we are not moving towards new nuclear as fast as we should be, gas is that basic firm power that will fuel the whole electrification of our system. The other side of this coin is that we are looking for far greater electrification of our rail and wider transport system. Well, for that, you need firm power.
How renewables are at the moment, as well as the lack of good battery storage power—it is interesting to note that the existing battery storage power in the UK covered approximately only eight minutes of average UK electricity demand for the whole of 2023—this lack of battery technology and breakthrough on renewables, without firm power, shows just how much further we have to go. We must have improved and enhanced battery technology. We need firm energy as our lifeblood in this country, not sporadic energy, although moving towards a greater reliance on renewables is, to me, critical. That needs to be underpinned by maximising our gas reserves in the United Kingdom.
Given the limitations of this Bill, those two tests seem reasonable and appropriate to me. I am not sure that the additional tests that are being recommended in the amendments are necessary or helpful in achieving the four pillars that I set out in response to the noble Lord’s very good introduction, if I may say so, of his amendment.
Lord Callanan (Con)
I thank all those who contributed. I start with Amendments 3 and 18 in the name of the noble Lord, Lord Lennie, which seek to impose a new climate change test as part of this Bill.
I say at the outset, in response to the challenge presented by the noble Baroness, Lady Jones, that this Bill is entirely consistent with the Government’s target to reach net zero by 2050. Even with continued exploration and development, UK oil and gas production is expected to decline by 7% a year. This decline is faster than the average annual global decline needed to align with the IPCC’s 1.5 degrees Celsius pathway. The noble Baroness might not like those facts but they are facts nevertheless.
As net importers, we produce less than we need—a point made ably by the noble Lord, Lord Bruce. This is projected to remain the case even as our demand for oil and gas shrinks as we achieve net zero. There are already a number of climate checks to ensure that offshore oil and gas activities remain consistent with our climate goals: the climate compatibility checkpoint ensures that the compatibility of future licensing with the UK’s climate objectives has been evaluated before a new licensing round opens; and the North Sea Transition Authority has a specific obligation to assist the Secretary of State in meeting the net-zero target. The recently published OGA plan makes clear that, for production to continue in the North Sea, it must continue to become cleaner. Adding a new test to this Bill is, in our view, therefore unnecessary.
Lord Lennie (Lab)
My Lords, at Second Reading, I quoted Alan Whitehead MP saying that this Bill was cooked up over a long lunch and should have been buried before the effects of that long lunch had worn off. Unfortunately, it has not been, so we have to try to deal with it. The Minister appears to be not complacent but content that we are making the progress we need to make. The Government believe that we are on track to hit 1.5 degrees Celsius by 2050 but the test would introduce an independence to the measurement of that, through the IPCC—the global body and the right body to do the test. It is not a body in this country but a global body that can measure, compare, contrast and make judgments about whether our plans do indeed meet the intended targets.
The cost of living issue is a probing one but it reminds us what the Secretary of State said in response to a question about it—the Minister has repeated it—which is that it is not the purpose of this Bill to reduce energy costs. Surely the question of how we make sure that we reduce energy costs must be fundamental to all our considerations of energy policy in this country. There has been a reduction since the massive inflationary pressures of the post-Covid years, but they are not low and we can do more to reduce those costs to customers.
On that note, I beg leave to withdraw the amendment at this stage.
Member’s explanatory statement
This amendment would mean that the carbon intensity test applies to gas, oil, and any other petroleum products on an equal basis, and probes why the government has chosen to only apply the test to natural gas.
Baroness Jones of Moulsecoomb (GP)
All the amendments I have tabled here reveal the scam that is absolutely built into this Bill—it is really offensive to the general public—because this carbon intensity test has been deliberately drafted so that UK oil and gas are always deemed to be low carbon, as compared to international comparisons. So there will never be any limit to the number of oil and gas licences issued. My Amendment 11 probes why the Government have chosen to apply the carbon intensity test only to natural gas. It is our first example of how the Government are fudging the numbers with egregious greenwashing.
Why is the carbon intensity of crude oil being ignored in the Government’s test? The answer is obvious: oil is more carbon intensive than gas and the North Sea produces far more oil than gas, making North Sea production more carbon intensive than most of the countries we import oil and gas from. So the Government fiddle the numbers by ignoring oil altogether, thereby making North Sea extraction look like it is somehow tackling climate change rather than pumping even more carbon into the atmosphere and making it ever harder to reach net zero.
The second part of the scam is that the Government do not compare like with like. Despite the fact that most of our imported gas comes via pipeline from Norway, which has less than half the carbon intensity of UK oil and gas, the Bill compares the UK’s gas with liquefied natural gas. LNG is almost four times as carbon intensive as a UK gas and almost 10 times as carbon intensive as gas from Norway because of the processing necessary to liquify, import and regasify the LNG. By comparing UK production with imported LNG instead of all natural gas imports, the Government have added another layer to this dubious test that will green-light new oil and gas licences for decades to come.
The Government have drafted this Bill at an extremely well liquified dinner—if my guess is right—to exclude the bulk of UK oil from the equation, despite oil being the most carbon-intensive component of North Sea production. It is an absolutely outrageous piece of draftsmanship, and yet another example of this Government legislating against reality to create whatever legal conditions are required to force through government policy.
Taken together, my amendments will ensure that the carbon intensity test compares like for like. The amended carbon intensity test will compare all UK oil and gas production with their equivalent imports and include all relevant processes for the extraction, transportation and delivery of oil and gas in usable form to its final customer. I hope that all noble Lords will agree that, if a carbon intensity test is to be used, it must properly assess the carbon intensity of North Sea oil and gas relative to their imported equivalents. It is essential to amend with the Bill along the lines that I propose. I beg to move.
Earl Russell (LD)
I speak in favour of the amendments in this group. They all relate to the two tests in the Bill, as the noble Baroness, Lady Jones, has said. The LPG and the UK net importer test are both one-way gates, where the answer is always yes. That is not good enough. There needs to be a proper test that counts the carbon cost of doing these things.
My slight issue with this is that a lot of the amendments in this group are not in scope in this very short, almost Private Member’s Bill-type of legislation. Inevitably, the amendments were gathered around the little bits that are in scope in the Bill to be amended. From our side’s point of view, there are lots of amendments seeking to change these tests. I am not minded to say which is the best amendment to take forward. From our side of the Room, some thought should be given to coalescing around one of those tests. I am happy to support that, but we need to go away and do some thinking to get a unified position.
On the proposal of the noble Baroness, Lady Jones, to remove Clause 1, if that were to be pushed to a vote, I would be prepared to support it. The Minister makes a lot of grand claims for this Bill. In his summing up, he keeps saying that the granting of licences do X, Y and Z. That may well be true, but nothing in the Bill commits to anyone granting any licences. The only thing that the legislation does is to say that there should be tenders. The joined-up logic that the Minister is giving us for the Bill does not, in point of fact, bear relevance, because it could be passed but no licences ever granted again. Equally, we could continue to have licences every year without this Bill.
The Bill does little other than to drive a wedge between us and our commitments to protect the environment, and serves as a way in which to politicise this issue in the run-up to the election. That is all I have to say.
Baroness Blake of Leeds (Lab)
I acknowledge the comments from the noble Baroness, Lady Jones, and the noble Earl, Lord Russell. To repeat the concerns as outlined at Second Reading, our belief is that the tests identified in the Bill will be impossible to fail and are thereby fundamentally flawed, as my noble friend Lord Lennie has previously outlined.
Amendments 12 and 15 in my name are straight- forward. The intention is to be as simple as possible, leaving out “liquified” from the Bill to include all natural gas imported into the UK. We need to achieve clarity, which is not present in the current wording. If the Government want to keep it in, they should be open about the consequences. Liquified natural gas will always be more greenhouse gas intensive in production than UK natural gas. The North Sea field will not meet our total demand for oil and gas, as we know. We need to replace these tests with ones that produce a proper judgment about whether a licence should be issued. The main consideration should be whether issuing a licence is in line with our climate change goals.
Another disappointment with this Bill, as we have discussed, is that there is no reference to previously introduced climate change compatibility tests into production generally—quite an omission. Including only LNG presents a serious problem. We acknowledge that substantial amounts of natural gas come into the UK from Norway via the pipeline. The production of that gas is substantially cleaner than that of UK natural gas. Indeed, we need to be sure that managing the decline in demand for gas is at the heart of a successful net-zero transition. The best and fairer test would be to consider gas imports in the round.
We are trying to amend a Bill that is deeply flawed, as I have previously recognised. I recognise the opposition of the noble Baroness, Lady Jones, to the Bill as a whole. I believe that this a simple way in which we could make some improvements; I look forward to the Minister’s comments with interest.
Lord Callanan (Con)
The noble Baroness, Lady Jones, tabled notice of her intention to oppose Clause 1 standing part of the Bill so let me begin my remarks by briefly outlining the purpose of that clause. Under the Petroleum Act 1998, offshore oil and gas licences are administered by the Oil and Gas Authority, which is operating as the North Sea Transition Authority. A seaward production licence grants exclusive rights to the licensee to explore, bore for and produce oil and gas from the geological formations that lie beneath the UK’s offshore waters, within an area defined by the licence. Additional permissions are required before any activity can take place.
Periodically, the NSTA launches licensing rounds inviting companies to apply for such licences. During this process, interested companies submit bids and licences are awarded to bids that promise to ensure the economic recovery of the UK’s oil and gas resources, while of course supporting the drive to net zero by 2050. This existing arrangement means that industry does not have certainty as to when—or, indeed, if—the NSTA will launch a new licensing round. This clause provides that certainty by amending the Petroleum Act 1998 to place a duty on the NSTA to invite applications for seaward production licences in each annual period, which runs from October to September each year. This is subject to two tests being passed: that the average carbon intensity of domestic UK gas is lower than the average carbon intensity of imported liquified natural gas; and that the UK remains a net importer of both oil and gas.
Together, these tests, which will be conducted by the NSTA, will ensure that the annual duty on the NSTA applies only where this supports our wider energy security and energy transition objectives. If the annual duty is triggered, the NSTA proceeds with the current licensing process. It will remain a matter for the NSTA as an independent regulator to decide how many and which blocks or part-blocks to offer for applications—with a minimum of one block—and to ensure and apply the appropriate criteria for determining those applications. It will remain the responsibility of the NSTA to decide whether to offer and grant any licences at the conclusion of that process and whom to offer them to; the NSTA will retain the discretion to grant licences outside of this new annual process in the usual way where needed.
I assure noble Lords that the offering and granting of licences under the new annual process will remain subject to the existing rigorous environmental regulatory requirements. These include the obligation written into the NSTA’s strategy to assist the Secretary of State in meeting the target of net zero by 2050. Indeed, I want to be clear that nothing in this clause contradicts our steadfast and, of course, legally binding commitment to achieving net zero by 2050. We do not need to choose between either delivering net zero or supporting our domestic oil and gas sector; the two things are not mutually incompatible.
Amendments 11, 13, 14 and 16 in the name of the noble Baroness, Lady Jones, and Amendments 12 and 15 in the name of the noble Baroness, Lady Blake, seek to amend the carbon intensity test. This test looks at historical carbon dioxide emissions from the production and supply of natural gas during an assessment period spanning the preceding three years. The test is passed if, during that timeframe, per unit of energy, the carbon emissions of producing gas domestically were lower than the average carbon emissions from the production and delivery of liquefied natural gas from all geographic locations.
The amendment put forward by the noble Baroness, Lady Jones, seeks to change the test to include in the comparison all imported and produced petroleum products, including crude oil, and all forms of natural gas. The amendments put forward by the noble Baroness, Lady Blake, seek to include an assessment of the carbon intensity of all imported natural gas.
It is important to recognise that the markets for oil and gas work very differently; it is not possible to make the same comparisons for oil as it is for gas. In the case of gas, we have a choice either to maximise domestic production or to import more. The more gas we produce domestically, the less we need to import; that seems obvious to me. For oil, we do not have that same choice because oil has to be refined before it is used. For historical reasons, UK oil is generally processed abroad—predominantly in Europe, where our production supports the energy security of our European allies. So a comparison of the carbon intensity of imported oil versus domestically produced oil would be the wrong one to make.
Turning to the test for gas, LNG has been chosen as the relevant comparator as it is a critical marginal source of energy, providing an essential buffer source—especially in winter, when gas demand is higher. Over the past decade, LNG has become an increasingly important method of moving natural gas to market. This will only intensify in the coming years because UK natural gas production peaked in 2000 and the UK has been a net importer since 2004 in order to meet domestic demand.
It is fortunate that some of the UK’s gas imports, in particular pipeline imports from Norway, have relatively low production emissions. However, it is a fact that Norwegian production, like our own, is declining. We will still need gas in the coming years as we transition to net zero. With both UK and Norwegian production declining, it is likely that LNG will play an increasingly important role. During periods of high demand in winter, LNG is a key, flexible source of supply; this role will only increase over time as UK and Norwegian production declines. Producing less domestically means importing more carbon-intensive LNG, which is why a comparison with LNG is the right one to make, in our view, and why we have included it in the Bill.
With the explanation I have been able to provide, I hope that it is clear why the test focuses on LNG and not comparators with oil, which is completely different, or other forms of gas. I therefore ask the noble Baroness to withdraw her amendment.
Baroness Jones of Moulsecoomb (GP)
It is hard to summon up the energy to rebut anything. What the Government proved to us yesterday with the Rwanda Bill is that they are prepared to deny reality. So I beg leave to withdraw my amendment.
The Deputy Chairman of Committees (Viscount Stansgate) (Lab)
My Lords, we are reliably informed that there will be a Division in the Chamber in about half an hour—hint, hint.
Clause 2: Extent, commencement and short title
Amendment 20
Earl Russell
Member’s explanatory statement
This amendment would mean the Act does not extend to Scotland.
Earl Russell (LD)
My Lords, I shall be brief, as these amendments are pretty straightforward. I recognise that the amendment would have an impact on the Bill but against that, it must be said that Scotland has provided the UK with lots of North Sea oil and gas and very little is coming back to Scotland. There is no allocation of money for the green transition and no commitment to the green transition—nothing flows back to Scotland. There is no protection for the workers; not a single penny that is generated from this extra extraction of North Sea gas and oil is in any way directly allocated to come back to the people of Scotland or to their industry.
The other amendment in my name would delay the implementation of the Act until 1 September 2025. To my mind, the Bill is not really properly put together; it is not properly worked out or part of a full and coherent energy strategy. Everyone on this side of the Room has recognised that we will continue to be dependent on oil and gas, even under net zero—but there is no coherent, conjoined or constructive strategy for providing energy security or lots of the things that are claimed in the Bill. For that reason, there are good and sound reasons for arguing for the implementation of the Bill to be delayed. I beg to move.
Baroness Jones of Moulsecoomb (GP)
I will speak to my Amendments 22 and 23. I see the Bill as completely pointless and, as I said before, out of date—just not in touch with reality. My two amendments are to corral it slightly so that it does not spill over in any direction.
Amendment 22 would ensure that the provisions of the Bill are not brought in before 1 September 2025 and are brought into effect only by regulation, so that this stuff has to come to the House again. Amendment 23 would sunset the Act after 10 years, which is plenty of time to waste on this, unless a Minister of the Crown intervened, and it would give Ministers the power to disapply Clause 1 in any year, after consultation.
The Duke of Montrose (Con)
I apologise for the fact that I did not participate at Second Reading. I declare an interest as a Scottish income tax payer to the noble Earl, Lord Russell, who is concerned with what comes back to Scotland. I am horrified at his idea that Scotland should be left out of the Bill.
As far as my memory serves me, in July 1998, in discussing Schedule 5, all energy was reserved to Westminster and, at a later date, renewable energy was devolved to Scotland. So if Scotland does not appear in this Bill and there is no continuing power to develop things in Scotland, this amendment would mean the end of any exploration for petroleum products in the Scottish area, in the surrounding oceans or on land.
Lord Lennie (Lab)
My Lords, I thank everyone who has spoken in the debate so far. I thank the noble Earl, Lord Russell, for his proposal about omitting Scotland from the Bill, and the noble Duke, the Duke of Montrose, for his horrified response to the proposal to omit Scotland from the Bill. I am not sure about the debate on Scotland, to be honest, but on balance I think I would keep Scotland in the Bill. I say to the noble Baroness, Lady Jones, that I can see why these amendments would delay the Bill coming into effect, which would not be a bad thing. It would be better if the Bill were not here at all, but, hey, we cannot have everything we want.
The Government have admitted that the Bill will not take a penny off energy bills and will do nothing for energy security, because oil and gas are sold on the international market. The Bill will send precisely the wrong signals to investors about the UK’s commitment to the green transition: Amanda Blanc, chief executive officer of Aviva said that new oil and gas drilling
“puts at … risk the jobs, growth and the additional investment the UK requires to become more climate ready”.
The Bill has been slammed from many quarters, including some surprising ones, such as Theresa May, former Prime Minister. The noble Lord, Lord Browne, former chief executive officer of BP, said it
“is not going to make any difference”
to Britain’s energy security.
Annual licencing rounds will not boost the UK’s economy, as North Sea oil and gas is already in decline, as the Minister confirmed, and over the next decade, in Scotland and England, there will be 25 new jobs in clean energy for every job that is lost in oil and gas. That is what we have to secure: the transition of workers from oil and gas to the new green, clean energy. More extraction in the North Sea will not improve any security or lower energy bills. Remaining reserves are mostly oil, not gas, and 78% of that oil is exported, as it is not in the right form for use in the United Kingdom. The UK is already feeling the devastating impact of climate change, and granting licences simply amplifies the effects. Campaign groups have indicated that the current licences will send “a wrecking ball” through the UK’s climate commitments.
Lord Callanan (Con)
First, I thank noble Lords for their brevity on this group.
Amendment 20 seeks to amend the Bill to exclude Scotland. Of course, the vast majority of offshore oil and gas activity takes place off the coast of Scotland to the benefit of all citizens across the United Kingdom. Excluding Scotland from the scope of the Bill, which I understand is the intention of the amendment, would significantly undermine the benefits that the Bill is intended to create. It would risk causing unnecessary confusion for industry and create considerable complexity for the independent regulator. This is particularly true as we transition towards a low-carbon economy and workforce.
As I have already mentioned in previous groups, a report by Robert Gordon University found that over 90% of the UK’s oil and gas workforce have medium to high skills transferability to the offshore renewables sector. Many of those, of course, are in Scotland, where OEUK estimates that over 90,000 jobs are supported by the oil and gas industry. If we rush the transition, or create additional uncertainty in the investment environment, we risk losing the jobs and skills that we will need as we scale up the clean technologies needed to realise that crucial net zero target.
Earl Russell (LD)
I thank the Minister for his response and thank all noble Lords who have taken part in this short debate. Of course I recognise what the Minister has said to me, but my understanding is that all the Bill does is require an annual tendering for licences to take place. While I recognise a lot of the sentiment and the answers that the Minister has given me, I do not feel that the consequences flow just from not having an annual tender for licences for Scotland. We could still have licences granted every year if the Bill was not in place.
I thank the noble Duke, the Duke of Montrose, for his contribution. Again, I do not see how it was my intention to remove in any way the whole of Scotland from the renewables debate, and I am not aware that this is a consequence of my amendment, but I will of course go away and have a look at that. I beg leave to withdraw my amendment.