Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Katie White)
It is a pleasure to serve under your chairmanship, Mr Western. I have really enjoyed the debate, which has been full of passion and emotion. I heard the anger, including in what my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman) said, but I also heard that there is a lot of commonality in some of our values and on the transition that we are trying to achieve together. I have genuinely enjoyed listening and I have noted lots of points. There were a lot of questions; I will endeavour to get through them, but if I do not, we may need to follow up in writing to hon. Members.
I thank the hon. Member for Brigg and Immingham (Martin Vickers) for securing this important debate, and I am grateful to all hon. Members for their contributions. This is a timely opportunity to discuss a matter of strategic significance for our nation’s energy security: the future of the UK refining sector. The industry has helped to underpin our economy and our resilience for decades, and its future deserves our full attention. The Minister for Energy is in Grangemouth today, and I will say more about that later.
Our refineries play a crucial role in ensuring a stable supply of the essential fuels that keep our transport networks running, our industries operating and consumers supplied with the energy they rely on every day. The sector is more than just a fuel; it drives growth in key sectors, supports thousands of skilled jobs in communities and sustains supply chains for chemicals, plastics and manufacturing. Refineries also play a critical role in the wider downstream oil sector. The Humber refinery in the constituency of the hon. Member for Brigg and Immingham is the UK’s only source of anode-grade petroleum coke, which is essential for electrical vehicle production. The Fawley refinery contributed to the global covid-19 response by supplying the specialist halobutyl rubber used to seal vaccine vials.
Importantly, UK refineries are also investing in their own future through decarbonisation and diversification by deploying carbon capture or producing low-carbon fuels to support our transition to net zero. Demand for refined products will continue, even beyond 2050, and the UK’s refineries will remain essential for hard-to-abate sectors such as heavy industry, aviation and maritime. That is why, as my hon. Friend the Minister for Energy made clear in June, the Government are absolutely committed to securing the long-term viability of the UK’s refining sector, and, as set out in the autumn Budget, we are reviewing critical policies to address the challenges that the sector faces.
Those challenges are real. In the 1970s, the UK operated 18 refineries; today, as has been said many times during the debate, only four remain. Falling demand for traditional fuels, global competition from mega-refineries in the middle east, India and Africa, changing trade dynamics and ageing assets all put pressure on UK operations. But with challenge comes opportunity, and the Government are determined to seize the opportunities by driving innovation, supporting investment and ensuring that the refining sector continues to play a vital role in our economy and for our energy security for decades to come.
The Government have already taken significant steps to support the refining sector and the wider fuel sector, and we are committed to do more. We have driven the shift to low-carbon fuels through the renewable transport fuel obligation, and this year we went further with the sustainable aviation fuel mandate, backing cleaner fuels for aviation. The Humber refinery already produces SAF at commercial scale, while Fawley and Stanlow are among the projects backed by our advanced fuels fund, which provides grants to accelerate the next generation of transport fuels. Refineries are playing a key role in driving the UK SAF industry forward, strengthening energy security with a home-grown supply. We are also de-risking investment in SAF production through the revenue certainty mechanism. We are working with industry to cut emissions through carbon capture and low-carbon hydrogen at major clusters such as Viking and HyNet. We will set out a clear plan for industrial decarbonisation to keep the UK competitive.
Sir Edward Leigh
The hon. Lady is giving a paean of praise for refineries, so why are the Government taxing them out of existence?
Katie White
I am glad that the right hon. Gentleman intervened, as I was going to come on to his points—in particular, his interesting point about the national interest. I say to him gently that I feel we are working in the national interest, but the national interest includes energy security as well as respecting the science of climate change, which is happening. As he is the Father of the House, I genuinely listened to his points, but I was a little disappointed—[Interruption.] He can laugh all he likes, but I listened to his points. He talked about the UK being responsible for less than 1% of emissions. That is the case in terms of nation states, but I think the UK’s impact in the world is so much larger, whether through people following our policy decisions, the impact of our banking sector or our consumption of goods, which has also come up a lot.
We are looking at how we manage the transition, and we want to do it in a way that respects the science, but I am also competitive about where Britain can take advantage of these industries. We want to make sure that we have these industries, including the wind turbines that the right hon. Gentleman mentioned, but we also want to look at how we can make the transition justly and fairly. I will come on to that later in my speech.
Last month, the UK ETS Authority confirmed that current benchmarks will stay in place for the 2027 scheme. That decision gives refineries and other energy-intensive industries the certainty that they need. By maintaining those benchmarks, we are providing stability and breathing space, helping businesses plan, manage costs and prepare for future changes to the scheme.
We are also reviewing compensation for energy-intensive industries. We announced in the autumn Budget that we are assessing the feasibility of including refined products in the carbon border adjustment mechanism, so that imported goods face an equivalent carbon price and the sector’s efforts to decarbonise will not be undermined by carbon leakage. This is the refining sector’s top priority, which the Government are committed to exploring as one of several levers to support the sector’s long-term future. These measures demonstrate our commitment to supporting investment, driving innovation and ensuring that the refining sector remains competitive and resilient as we transition to a low-carbon economy.
Looking ahead, the Government are taking further steps to secure the long-term future of the UK refining sector and to ensure a just transition. The Department for Energy Security and Net Zero has established a dedicated team to work across Whitehall and with industry. A number of Members asked about working across Whitehall; we will continue to do that, to ensure that we maximise the impact. This will guide how we manage the transition, protect energy security and support jobs and local communities.
We will continue to engage closely with the fuel industry to identify practical measures that can strengthen the sector. That is why, in June, we convened the first ministerial—[Interruption.]
Matt Western (in the Chair)
Order. Can I have a certain decorum from other Members while the Minister is speaking?
Katie White
Thank you, Mr Western.
That is why, in June, we convened the first ministerial roundtable with the refining industry in more than a decade, providing a clear signal of our commitment to partnership and dialogue. As announced in the autumn Budget, we will shortly launch a call for evidence to inform the UK’s long-term strategy for the downstream oil sector. That will seek industry views on the opportunities and barriers to transition, the risks facing the sector and the types of support needed to deliver and manage a competitive transition. These actions underline our determination to work hand in hand with industry. I thank the Scottish Affairs Committee for its recent report, and my hon. Friend the Member for West Dunbartonshire (Douglas McAllister) for sharing it.
The refining sector has faced long-standing challenges, and recent closures underline the scale of change. Petroineos’s decision to end refining at Grangemouth was disappointing. As my hon. Friend said, while the difficulties there were well known, there was no Government plan in place before we took office. Within weeks of doing so, we worked with the Scottish Government to put together a £100 million package to support the community and invest in the local workforce, along with tailored support to secure good alternative jobs. When we came into government, there was no overall plan for Grangemouth from either the SNP or the Tories. We have put one in place.
We are committed to securing Grangemouth’s long-term industrial future. We are working closely with the Scottish Government, the Office for Investment and Scottish Enterprise to attract future investment and transform the area into a clean energy and sustainable technology hub. This effort is already delivering results. We have received over 100 inquiries to date, and the investment pipeline is supported by the £14.5 million in funding announced at the Budget, alongside the National Wealth Fund’s £200 million for co-investment opportunities at Grangemouth.
Today, I can confirm that, along with the Scottish Government, we have made £3 million available for MiAlgae, an innovative biotechnology company that produces sustainable omega-3 rich products, which will create over 130 direct jobs at the site and 310 jobs across Scotland over five years. These steps demonstrate our commitment to a managed transition by supporting communities, attracting investment and ensuring that sites like Grangemouth—