Draft Gas Tariffs Code (Amendment) (EU Exit) regulations 2019

Alan Whitehead Excerpts

Monday 21st October 2019 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Gray. As the Minister set out, the changes being made regarding the applicability of the TAR regulations to the UK are very straightforward: they bring the nomenclature in the regulations into line with UK purposes, rather than the intent of the regulations, which was to include the UK within a wider EU context. The suggested changes are therefore straightforward and pretty uncontroversial. However, I will put one or two points to the Minister for clarification, which I hope will help our deliberations.

I start by asking about the relationship of this statutory instrument to one made earlier this year, the Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019, which set out what at that point was thought to be the entirety of the elements of the TAR regulations that it was necessary to incorporate into UK law, instead of retained EU law, at the original time of exit from the EU. That SI incorporated into UK law chapters VI and VIII of the TAR regulations, which had come into force in October 2017 following the passing of the regulation. It was not thought necessary to incorporate chapters II, III and IV into UK legislation, because they were not, at that time, coming into force until after the EU exit date. Because EU exit day has been pushed on somewhat, it becomes necessary to incorporate those chapters into UK law. That is essentially what this SI does.

When the original SI was introduced, we were told that it was the intention of the Government to pass legislation to deal with what would have been the effect of chapters II, III and IV on a separate occasion after EU exit. I therefore assume that what we see before us is what the Government would have done had Brexit taken place when it was originally going to take place, and that no more legislation relating to the TAR regulations will forthcoming after the SI before us today. Will the Minister confirm that that is the case? If it is, we potentially have a landscape for the applicability of the TAR regulations overall to the future arrangements for UK gas supply.

Assuming that that is the case, what appears to happen concerning the applicability of chapters II, III and IV is quite interesting. Not everything in the TAR regulations is identical. The first SI dealt mainly with the solidarity—the extent to which EU member states would be obliged to supply each other with gas during conditions of difficulty affecting one or more member states. It was indicated at that point that those solidarity conditions would not apply post Brexit. However, chapters II, III and IV do not deal with that; instead, among other things, they deal with the alignment of tariff regulations and the permanent agreements on reserve prices and tariffs between those who trade with each other within the EU and, in this case, an external state and the EU. As the Minister will of course be aware, that is done mainly, but not exclusively, through interconnectors, which implies that we will now have a permanent arrangement of tariff solidarity between the UK and the EU. Personally, I think that is a good idea, but I am not sure that that sits entirely squarely with what has been said previously about the future regime for tariffs. In principle, it appears that, by accepting the TAR regime now in its entirety, that is what we have done. Is that the Minister’s understanding, or does he think there is a different interpretation possible of the acceptance of those TAR regulations?

My final point is about a rather odd addendum to the draft SI, which is the statements that are required to be made relating to an instrument’s compliance with the EU withdrawal Act—in particular, its compliance with admissibility, the assurance that the legislation does not go beyond what is appropriate, and equalities legislation. Those statements are all signed by the right hon. Member for Kingswood (Chris Skidmore), presumably in his role as the stand-in Minister for the then Minister of State for Energy and Clean Growth, the right hon. Member for Devizes (Claire Perry), when she was taking a leave of absence from her duties. Of course, the right hon. Member for Kingswood is no longer the Minister, stand-in or otherwise, for Energy and Clean Growth. Indeed, the Minister here today occupies that post.

What is stated in the EU withdrawal Act 2018 is that all such statements have to be signed and signed off by “the relevant Minister”. It may be the case that there is covering legislation that states that whenever a Minister signs these documents or statements, the assurance is good for any subsequent Minister, but I would have thought that the right thing to have done on this occasion and for this SI would have been for the present Minister to sign off those statements, so that we would be completely clear that the relevant Minister had signed them, in accordance with the EU withdrawal Act. I would be grateful if the Minister commented on that.

[Kwasi Kwarteng]

On the first question, I think the hon. Member for Southampton, Test was trying to get me to say that we will somehow be locked in forever, but the point of this legislation is to ensure that retained EU law is not affected in the event of no deal. I know about this sort of thing, because I an Under-Secretary of State at the Department for Exiting the European Union in charge of the withdrawal Bill. The principle behind that was that we did not want any discontinuity, or as little as possible, between 31 October—or 29 March as was—and the following day. That principle, as the hon. Gentleman suggests, is enshrined in this SI. He is quite right to say that the reason chapters II, III and IV were not covered by the original SI is that they have only been in operation since 31 May, so that is quite in order.

On the hon. Gentleman’s second point, it is a principle of the UK Government that if a Minister signs in his capacity as Minister, which is what my right hon. Friend the Member for Kingswood did, and he is the relevant Minister at the time of the signing, it does not invalidate that if he is then moved on. In fact, he has not really been moved on; he is still a Minister in the Department. At the time of signing, he was technically not the relevant Minister anyway because, as the hon. Gentleman says, the relevant Minister was taking a leave of absence, but he was standing in for her and signed the requisite documents. As I understand it, that does not make any difference.

[Dr Whitehead]

I would be grateful for an indication that the Government do not intend to introduce any further legislation relating to the TAR regulations as they now stand, as was implied in the original statutory instrument, which I think has been superseded by the present one.

[Kwasi Kwarteng]

The Government have no intention to review or change the tariff regime. Obviously, once we have left the EU, future Governments may decide to review that, but the present Government have no intention to change anything in regard to gas tariffs.

Question put and agreed to.

Government Plan for Net Zero Emissions

Alan Whitehead Excerpts

Tuesday 8th October 2019 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I congratulate the hon. Member for Truro and Falmouth (Sarah Newton) on obtaining today’s debate. It is truly important, but should not have been obtained by a Back-Bencher. It should have been scheduled in Government time, on one day, as I called for a few months ago when we passed the Climate Change Act 2008 (2050 Target Amendment) Order 2019, amending the Climate Change Act 2008 to move to net zero. That was a 90-minute debate on an amendment, and this is our next debate on the matter.

In the words of my hon. Friend the Member for Plymouth, Sutton and Devonport (Luke Pollard), it is not good enough. We need urgently to debate this matter properly. An indication of why that is so important is the tremendous turnout of hon. Members today, and the informed and thoughtful contributions from around the Chamber that hon. Members have had to gabble through on a two-minute time limit because there is no opportunity to debate the topic properly, on the Floor of the House, in Government time. The first thing I ask the Minister is whether he is willing to ensure that a debate is obtained at the earliest possible opportunity, to discuss this important series of events properly and do it justice on the Floor of the House.

We might ask ourselves why it is that a debate has not been scheduled. Is it that:

“Overall, actions to date have fallen short of what is needed for the previous targets and well short of those required for the net-zero target”?

Maybe that is why this issue does not seem fit for a debate. Is it because:

“The Government’s own projections demonstrate that its policies and plans are insufficient to meet the fourth or fifth carbon budgets…This policy gap has widened in the last year as an increase in the projection of future emissions outweighed the impact of new policies”?

Is it because the Government:

“has been too slow in developing plans for carbon capture and storage”?

Is it because:

“The ‘Road to Zero’ ambition for a phase-out of petrol and diesel cars by 2040 is too late”?

Is it because:

“Policies are not in place to deliver the Government's ambitions on energy efficiency”?

None of those words are mine; they are all the words of the Committee on Climate Change’s 2019 report to Parliament, which set out a coruscating catalogue of things that should have happened and have not as far as policy development is concerned. That underlines a theme that has been part of our debate this morning. It is not that nothing has been done since 2008, when the Climate Change Act was passed; it is just that nothing much has been done, and that ambitions for doing things next fall woefully short of what is needed, given the climate change emergency that we have declared and that we know is underlined by the people now demonstrating outside Parliament.

It is not that nothing has been done on climate change in particular areas, but, as the Committee on Climate Change itself indicates, the only area where any significant progress in reducing carbon emissions has happened since 2008 is in the power sector—not even the energy sector as a whole, because nothing much has happened on heat. The power sector has been responsible for 75% of emission reductions overall since 2008. Every single other sector has been level or increasing—in transport, housing and industrial sectors, emissions are level or going up. Those are areas where we can go further than saying that nothing much has happened: nothing has happened in those areas over the period.

It is the Government’s responsibility to ensure that those things happen, and they are woefully failing to set policies that can really shift those numbers on climate change, given the 12 years that were set out by the IPCC as the time available to achieve measures that move us toward the zero-carbon economy. We have set ourselves that target, but we have no policies in place to achieve it. We have 12 years to get those policies, not only on paper, but in place in reality on the ground.

[Anna McMorrin (Cardiff North) (Lab)]

Does my hon. Friend agree that we need to look seriously at how we live in the homes we already have and the energy efficiency needed in our homes, not only in Wales, in Cardiff North where I am, but across the whole UK, as well as ensuring that the new homes we are building are built to a very high sustainable standard?

[Dr Whitehead]

My hon. Friend has read my mind, because I was just about to come on to that. She is absolutely right, and it is one element of the difference between the ambition we should have for the extent of the changes we need to make, and what we see before us in terms of the existing clean growth plan, which, as I have emphasised, is not meeting its own targets even on the old emissions levels, and is certainly not addressing what we need to do with our new targets. We need a comprehensive, country-wide, house-by-house energy refit, and it must be done urgently—in stark contrast with the pick-and-mix approach that has been taken so far on energy efficiency management, with the occasional person getting a refit.

There are a whole series of other areas where the numbers that we need to achieve bear no relation to the ambitions currently in Government policy. To achieve our energy ambitions, we urgently need to increase our offshore capacity sevenfold over the next few years. We need to increase solar provision threefold over the next 10 years. As the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) mentioned, we need to really get going on carbon capture and storage, not just with a few projects but comprehensively across industry across the country.

We need trees, as has been mentioned, but we do not need to put a few trees in here and there, important though that is. In order to replace the forest cover lost in this country over the years, which is absolutely central to capturing and maintaining carbon stores, we need to plant 2.4 billion trees over the next 10 to 20 years— 30,000 hectares per annum of new forest cover—to get us anywhere near the sort of levels we need to achieve our ambitions. That is solely lacking in the Government’s actions at the moment.

I will just draw attention to one little thing that came out recently.

[James Gray (in the Chair)]

Very briefly.

[Dr Whitehead]

Very briefly. The 2019 spending review came out with the fabulous figure for decarbonisation of £30 million. To get some scale on that—

[James Gray (in the Chair)]

Let’s not get some scale on that; let’s wind up.

[Dr Whitehead]

Indeed; I am about to wind up, Mr Gray. For scale, “Paddington 2”, the movie, had a budget of £32 million.

[James Gray (in the Chair)]

I am grateful to the hon. Gentleman. It is time for the Minister.

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 16th July 2019 Commons Chamber

[Chris Skidmore]

Boosting local and national content is a key issue, and, taking up the point raised by the hon. Member for Salford and Eccles (Rebecca Long Bailey), the Government are determined to ensure the delivery of local green jobs. The offshore wind sector deal has obviously committed to 60% content by 2025 or 2030. I cannot remember the exact date, but I am happy to come back to the hon. Member for Glasgow North East (Mr Sweeney) on that.

It is important that, as we go forward with the contract for difference proposals, we make sure that we bring local suppliers with us. That is a key part of the Government’s industrial strategy.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

If the Minister had an opportunity to look at today’s report from RenewableUK on onshore wind, he would see that there has been a complete collapse in planning applications for onshore wind, in Scotland and in the UK as a whole, yet the report indicates that customers could have substantially saved on their future energy bills if that collapse had not happened.

Does the Minister agree that the policy of banning onshore wind in England, through planning restrictions, and in the UK as a whole, through discrimination in support, is now completely indefensible? If he does agree, what is he doing to reverse this policy?

[Chris Skidmore]

When it comes to renewables, we now have a record high of 52% of our electricity being generated from low-carbon sources, with 33% from renewables. We have seen with offshore wind that, actually, the reduction in our prices demonstrates that we can move towards effective renewables for the future. As I mentioned, we have 13.8 GW of onshore wind delivering for 7.6 million households. We have the local planning processes in place for the future, which was a commitment in the 2015 Conservative manifesto, but we want to make sure that we take local communities with us. That is also the case with net zero. It has to be a transition on which we have the confidence of the entire population. There is no point trying to impose green technology on local communities if they do not support that technology for the future.

Draft Electricity Capacity (No. 2) Regulations 2019

Alan Whitehead Excerpts

Monday 1st July 2019 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hanson. The regulations are, as their title might suggest and as the Minister mentioned, closely associated with the Electricity Capacity (No. 1) Regulations 2019, which we discussed recently. As I am sure the Minister recalls, even if no one else does—I do not remember who else was on that Committee—we had some debate about the circumstances under which the regulations were drawn up.

As the Minister mentioned, the European Court heard a challenge to the capacity market’s existence and decided that it should be annulled, pending a proper examination of the circumstances under which state aid was first considered by the European Union and whether a proper analysis was undertaken such that it was safe to conclude whether state aid arrangements, not just for now but for the whole period of the capacity market, which has been conducting auctions since 2017, should be considered for annulment. That is the effective judgment reached by the European Court and it is now, as the Minister said, for the Court to review the process that it undertook. The Minister indicated that he thinks—I am afraid that is as far as it goes—that the review by the EU may be out by October 2019, although, as we considered in the last SI, it is quite possible that it will not be. In that SI, we took some precautions by setting a fall-back date by which time payments that had been collected or given out would be disbursed back from whence they had come or to whence they should have gone, and would count as not having been set up at all.

The circumstances of the T-3 auction that is suggested as a replacement for the T-4 auction, which might not go ahead as a result of the judgment, do not differ from that position at all. It is a provisional auction in the sense that whatever is collected or potentially disbursed will be held until the EU study of its processes for defining adherence to state aid is published. We do not have an absolute fix on when that will be, although, as the Minister said, he hopes it will be October 2019. The circumstances have not changed at all since the discussion that we had on the Electricity Capacity (No. 1) Regulations 2019: we are still waiting on that review.

We still have not, as far as I can see, considered any further the fact that the Court judgment was not just about a matter of process on state aid; it was also about a number of other factors relating to the consideration of demand-side management in the whole capacity auction process, and a number of other issues that were in the judgment and go beyond the mere matter of procedure.

It is not entirely accurate to say that this is just a matter of procedure that could be resolved very shortly, and the capacity market as we know it could continue to operate. However, that is the basis on which this SI has been set out: there will be a provisional T-3 auction that will become a real auction when the report is received, and business as usual will continue. But it is by no means clear that business as usual will continue. It is a matter of some concern to me that the Government do not appear to have made any provision or contingency plans for the fact that there may not be a perfect outcome and it may not be business as usual in the capacity market in future.

My first question for the Minister is: have any plans been made on a contingency basis in case the outcome from the EU is not as felicitous as the Minister thinks it will be? Has he considered whether the process of annulment could spread to capacity payments that have been made already, rather than just those that are held up at the moment or will be held up when the T-3 auction is undertaken? That is an important consideration, because all the capacity market’s eggs are in the basket of business as usual, but there will shortly—possibly as early as the autumn—be a review of the capacity market to reflect on the past five years and suggest pointers for the future. It may be an ideal opportunity to consider whether the capacity market can or should continue in its previous form, in which it fell foul of the European Court judgment.

With respect to the operation of the capacity market, the Minister may also wish to consider the outcome of recent auctions. The T-1 auction that was held in December last year provisionally cleared at 0.4p per kW—a startling outcome, bearing in mind that as late as February 2018, T-4 auctions were clearing at £8.40 per kW, and in February 2017 they were clearing at £22.50 per kW. In our last meeting on the subject, the Minister said that he felt that having an 11% margin on supply as we went into the winter was an indication that the capacity market was working well. However, an alternative interpretation of the margin and the low price at T-1 auction is that the capacity market is not needed because there is ample capacity. People are getting virtually nil in capacity payments for standing by to supply in the future.

Has the Minister any view on what the T-3 auction will bring about? Does he think that the market will reinflate, or does he consider that one factor for review may be that the extremely low price for capacity coming into the market may indicate a more structural change in how the capacity market will work in future? As he will know, T-3 auctions are very important in that respect, because those are the auctions at which long-term capacity can be determined for the future—as opposed to T-1 auctions, which are all about short-term capacity for next year. Has his Department reflected on how the auction itself might turn out, notwithstanding that for the time being we cannot actually pay those who have been successful in it?

The Opposition do not wish to oppose the draft regulations. We believe that it is important that the current chaos in the capacity market be resolved as much as is possible for the time being. The regulations will achieve that to some extent by securing a T-3 auction, albeit a provisional one, to stabilise the market and give some assurance to people who at present have very little idea whether they will get a capacity auction or where the money going in and out will end up. We do not want to oppose this, but, as I have outlined, we have a number of serious questions about the future direction of the capacity market and the research that the EU is doing in response to the Court’s judgement, which, as the Minister said, has been extended by way of judicial review and is still being contested, with some uncertainty as to its outcome.

Finally, I seek the Minister’s clarification on something else that I think is a welcome departure in this SI. Will he clarify how renewables and low-carbon energy in general can become eligible for obtaining some funding under capacity auctions? The Minister mentioned that renewable energy with some subsidies—but not subsidies sufficient to put them out of contention, by which I understand subsidies that have historically come under the terms of the renewables obligation, the feed-in tariffs and the contracts for difference—would continue not to be eligible, if those renewables were in receipt of those subsidies.

However, can the Minister tell me what subsidies would be eligible for those renewable and low-carbon sources of energy that are open for the capacity market? If there are none, does he consider it appropriate to pit completely unsubsidised renewable energy against other forms of energy in a capacity market auction, or should there be sub-auctions, even in unsubsidised circumstances, for renewable and low-carbon energy as against fossil fuel and high-carbon energy?

Climate Change

Alan Whitehead Excerpts

Monday 24th June 2019 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I rise to emphasise just how strongly we support this order. As you have said, Madam Deputy Speaker, we have 90 minutes to debate it, but I for one think that that is miserably insufficient time for what we need to talk about. I hope that the parliamentary authorities will arrange a whole day’s debate as soon as possible on the order and its implications. I of course accept that this is how orders work, but I know that hon. Members across the House are itching to talk about the consequences of this momentous change and to review what it means for how we go about tackling climate change, the measures we will have to take and, indeed, the commitments we will have to make over the next few years to make sure that the order does not fall dead from a legislative press but instead really works in our war on climate change.

The Labour party has long called for that change. My hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) called in the House for net zero as long as a year ago, as indeed did the Leader of the Opposition, my right hon. Friend the Member for Islington North (Jeremy Corbyn). The change has, of course, been widely called for by climate strikers and green activists across the country. This first step in the right direction is for them as much as for the Members debating it today. It is also a tribute to the sagacity and draftsmanship of the original Climate Change Act 2008.

The 2008 Act was taken through this House by my right hon. Friend the Member for Doncaster North (Edward Miliband), who is in his place. The fact is that such a momentous and far reaching change in the UK’s target horizon, on the removal of greenhouse gases in the atmosphere and the move to a permanent net zero carbon economy, can be effected by an order consisting, effectively, of one article and the substitution of one figure in one subsection in the Act. It is possible to do that, because, as the Minister mentioned, section 2 of the Act states that the Secretary of State may, by order, amend the percentage specified in section 1(1)—the current 80% target—if it appears to the Secretary of State that there have been significant developments in scientific knowledge about climate change.

I am sure the Minister agrees that that is precisely what has happened since the passing of the Act. What we thought might be a sustainable emissions reduction target to keep the global temperature rise to below 2°C by 2050 already looks insufficiently robust. The UK’s contribution to a global effort seeking to arrive at a 2°C outcome—a commitment to reduce the UK’s emission load of carbon dioxide by 80% from a baseline of 1990 levels—is no longer sufficient. We need to aim for global temperature rises of no more than 1.5°C by 2050. The Minister mentioned the recent seminal Intergovernmental Panel on Climate Change report, which shows us why the target is so important and why even limiting temperature change to 2° will not get us to a tolerable safe place as far as the effects of global warming on the planet are concerned. That does indeed count as the “developments in scientific knowledge” specified in the Act.

The UK’s contribution to the global effort has to ensure that we can achieve net zero emissions by 2050—or, I would hope, before 2050. That has to be our new target and it has to be enshrined in our legislation. I say before 2050, because it may well be that further scientific advances indicate that we need to achieve the target before then. I think that that will be the case and the Act could be amended further, if necessary, to take that into account.

[Mike Amesbury (Weaver Vale) (Lab)]

Does the 2017 manifesto commitment to a revolution in fracking and shale gas extraction not fly in the face of the grand ambitions we are discussing today?

[Dr Whitehead]

If one is trying to get a zero-emissions outcome, trying to get a lot more high carbon fuel out of the ground using some of the most difficult ways possible does not exactly seem to be in line with that target.

[Wera Hobhouse]

Can we encourage the Minister to acknowledge—I wish he would listen—that as the 80% target now needs to be 100% by 2050, now is the perfect time to say we no longer support fracking?

[Dr Whitehead]

That is one of many things we will have to do in the very near future as we address how properly to sort out the new target. As I will come on to say, there is a big list of challenging things we need to do, and that is just one of them. There are many, many new policy guidelines that we need to get into place to get us to that target.

The Committee on Climate Change, established under the Act as the guardian of science in our proceedings on climate change in the UK, reported strongly, as has been outlined, that we need to move to net zero and that we could do it by 2050, within the cost parameters established in the original target, if we put in place the very challenging policies it outlined. We strongly support that small change that means so much.

As the Minister will know, however, that is not the end of the matter. In fact, it is barely the beginning. I therefore want to ask the Minister for some points of clarification and some further information when he comes to respond to this short debate. There are, essentially, four points to consider.

First, the Minister will know all about the carbon budgets, which were admirably and clearly established under the Climate Change Act. They are designed to keep us on track for a steady reduction in emissions and to put in place measures to keep emissions decline on track. It set out three budgets from the 2008 start date, established in total size by the Committee on Climate Change, and required a Government plan to be put into place on how to meet each budget. The Minister will know that while we have done well by international standards in reducing our emissions by 47%—it is much less in consumption emissions, if we look at it that way—that is not a sufficient trajectory for net zero carbon targets. Our current performance, and likely achievements on known policies right now, place us in a disadvantageous position as we seek to adhere to the budgets that will drive emissions down to net zero by 2050.

The carbon budgets are designed—all five of them, to date—to put us on a path for an 80% reduction and 2°, not net zero 1.5°. It is shocking that we are currently failing to get to grips with the later budgets, budgets four and five, even under the circumstances of 2°. We have exceeded our earlier budgets only partially because of policy and partially because of economic circumstances, meeting or exceeding the first two budgets and probably the third.

After that, however, it gets very sketchy. Indeed, the latest updated emissions projections from the Department for Business, Energy and Industrial Strategy show us badly off target: over by 139 megatonnes of carbon dioxide equivalent for the fourth carbon budget, or 7% over on central estimates; and 245 megatonnes of carbon dioxide equivalent, or 13% over the central estimate for the fifth carbon budget. This is at a time when we will need to introduce a radically reduced sixth carbon budget, and subsequent budgets, to meet our new challenges. We are failing even to get to grips with the old targets, which will make our work so much harder when the later budgets come upon us.

What urgent steps are the Minister and the Government taking to get us back on track for the fourth and fifth carbon budgets, on which we are currently failing so badly? I can make an offer to the Minister: if he wants to sit down and sort out a raft of new policies, extended commitments to policy programmes, and extensions of the urgency of existing programmes, we will happily jointly draft those with him, so that there is solid buy-in across the House for that vital initial effort.

Secondly, we received the alarming news recently that the Government seemingly intend to roll over historical surpluses—some 88 megatonnes of carbon dioxide saved from the second carbon budget—to ease the passage of the third carbon budget, thus creating a higher starting point for the fourth and fifth carbon budgets. That move is not completely illegitimate in terms of the construction of the Act, but the Committee on Climate change has always recommended that that should not be done, and that banking and borrowing on future budgets would gravely distort the safe progression downwards of carbon dioxide emissions. Similarly, we should not seek to offset our own account through international emissions allowances, as the Government seem intent on doing.

Will the Minister explain why the Government have moved to set aside emission surpluses from earlier budgets? Will he say now that he will unwind that intention and not use them to inflate future budgets? Will he confirm that international offsets will have no place in future budget setting? We note in the explanatory memorandum to the order that despite the committee’s recommendation in the report that the UK legislate as soon as possible to reach net zero greenhouse gas emissions by 2050, with the target of a 100% reduction in greenhouse gases from 1990 covering all sectors of the economy including aviation and shipping, the Government have, for the time being, merely left headroom in the budgets for international aviation and shipping. Shipping and aviation currently make up 3.2% and 2.1% of global emissions, but this could rise to over 30% if action is not taken alongside other greenhouse gas reductions. What is the Government’s intention with regard to aviation and shipping coming properly and fully into carbon budgets, and why are they continuing to delay what we all know is an essential inclusion if those targets are to be meaningful for the future?

Thirdly, does the Minister recognise, as I am sure he does, that net zero is the practical outcome of the legislation to require a 100% reduction in the UK’s net carbon account? Net zero means that in addition to developing low carbon policies, as we were for the 80% target, we have to develop policies that are essentially carbon negative—that put carbon back into the ground in one way or another to compensate for the remaining positive carbon elements of our overall account. This means that techniques such as BECCS—bio-energy with carbon capture and storage—extended carbon capture and storage, carbon capture from the air and radical afforestation are all important policies for the future target. What plans do the Government have—[Interruption.]

[Madam Deputy Speaker (Dame Eleanor Laing)]

I hesitate to interrupt the hon. Gentleman, but before he comes to his further points I hope he is bearing in mind that there is well under an hour left in this debate and that a great many Members wish to participate.

[Dr Whitehead]

Indeed, Madam Deputy Speaker. I assure you that I have about half a page to go, so I hope that that will keep the timetable intact.

What plans do the Government have to proceed urgently with negative carbon policies? We will be on hand to help them if they want to bring in those policies at an early stage.

Finally, the Minister will no doubt have been copied into the recent letter from the Chancellor concerning legislating for net zero, in which he urged that there should not be legislation until a review of the costs had been carried out by the Treasury. The letter was widely regarded as being somewhat climate economic illiterate, in that it set out only the costs and not the benefits of moving forward in this way. As I said, the Committee on Climate Change indicated that in its opinion the GDP cost of 1% to 2% was unchanged from when the 80% target was set—this was presumably approved by the Treasury. Indeed, as Lord Stern reminded us in his seminal report of 2006, which seems a long time ago, the GDP costs of doing nothing might be several times as much.

Will the Minister provide assurance on that point? Indeed, I take it from the fact that we have this legislation, and that it has not been put off to some time in the future, that the Treasury’s rather insidious advice has not been taken on board. Might it not be a good idea to set out in the round and well in advance what the overall costs and benefits of moving to this target will be? I look forward to the jobs in the low-carbon industries that we will set to work replacing our infrastructure, so that it works for a green future; the immense improvements in the quality of our environment that the measure will bring; and the assurance that we will leave a world fit for our children and grandchildren to live in. That surely does not have a price, but, if it does, it is well worth paying.

[Several hon. Members rose—]

Mineworkers’ Pension Scheme

Alan Whitehead Excerpts

Monday 10th June 2019 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

We have had a tremendous debate, which has combined passion, eloquence and reasonableness. Most importantly, not a single Member has put forward an iota of defence for the situation in which we currently find ourselves; indeed, support for the idea that that there must be justice has come from some of the most unlikely sources in the House. However, the subject of the debate saddens me considerably.

I congratulate my hon. Friend the Member for Easington (Grahame Morris) on securing the debate. No doubt, he shares my sadness about the fact that—as we heard from my hon. Friend the Member for Bishop Auckland (Helen Goodman)—the Government have taken £4,438,000,000 out of the miners’ pension fund since 1994, while miners and their wives and families are receiving an average of just £84 a week. The juxtaposition of those two figures takes the breath away. It simply cannot be right.

As we were reminded by my hon. Friend the Member for Bolsover (Mr Skinner), the pension fund did not come about until fairly late in the day. For many years, miners had no pensions. A scheme was set up to give them some reward, albeit not an enormous reward, for their life of service. As we heard from my hon. Friend the Member for Easington, they worked throughout their lives in the dark so that we could have light, and sacrificed their health and their futures to keep this country going through the worst of times so that we could all continue to have light, health and wellbeing—and this is their reward for their life of service to this country: to have pensions as small as those. I cannot imagine the hurt that must be caused to the miners who see their meagre pensions coming in while the Government walk away, for nothing, with huge sums year after year.

My hon. Friend the Member for Ashfield (Gloria De Piero) spoke of a bonanza and a cash cow. I would add the word “plunder”. The Government are simply plundering the money that should be there for the miners and their families in the future. As my right hon. Friend the Member for Doncaster North (Edward Miliband) said in his eloquent contribution, there was no actuarial basis for the original split, and there was an arbitrary change in the split that was there before the fund was closed and came into being as it is today. It turned out that the Government had not contributed any money to the fund up to the time of privatisation, and they have continued not to contribute any money to this day.

The Government say, “The pensions are better than they might have been had the fund not worked well.” However, the only changes that have come about are bonuses as a result of the 50% on the miners’ side, not the 50% coming to the Government. The Government have sat back and taken the money year after year, and continue to do so. That plunder goes on. The investment reserve that was set up at the same time as the fund obtaining the 50-50 from the surplus has paid out £475 million in the last year alone, again on the basis of no risk. We should ask ourselves whether this should continue. Because of an original risk that was said to have been taken in relation to a guarantee in 1994, regardless of circumstances that arose subsequently, the plunder continues unabated. That is an injustice, and it needs to be dealt with urgently, because, as my hon. Friend the Member for Easington said and my hon. Friend the Member for Blaenau Gwent (Nick Smith) reminded us, the membership of this fund is declining rapidly year by year: 280,000 members in 2008, but 158,000 members now, with 138,000 being paid and a small number having deferred.

As my hon. Friend the Member for Blaenau Gwent pointed out, 6,500 miners passed away last year, and it is estimated that over the next 10 years that fund will be down by another 50,000 members. That means hundreds of thousands of miners will have lived their lives with pensions grossly inadequate for the service they provided, watching the plunder go on before their eyes and passing away before anything can be done about it. We in this House surely cannot accept that we are going to stand by and allow another 50,000—another 80,000, another 100,000—miners and their families see that injustice continue. It is imperative that we do something urgently.

In response to a written parliamentary question, the Minister for Energy and Clean Growth stated in July 2018 that she had

“asked BEIS officials to work with the Trustees to explore options for revising the scheme to”,

as the hon. Member for Kilmarnock and Loudoun (Alan Brown) pointed out,

“the benefit of all parties.”

I cannot conceive what further benefit it would be possibly justifiable to give to the Government after all this money has gone out over these years.

[Andrew Bridgen]

I have done a quick calculation: if it is correct that there are currently 158,000 beneficiaries and the surplus taken of the Government share of the fund is about £4.45 billion, that is over £28,000 for every surviving beneficiary that the Government have already taken from that fund.

[Dr Whitehead]

The hon. Gentleman makes a powerful point—possibly with the aid of his calculator—that I had not put forward this evening, and it shows the scale of this injustice. He is right to state that on the Floor of the House for us all to hear.

The Minister for Energy and Clean Growth stated that she had

“asked BEIS officials to work with the Trustees to explore options for revising the scheme to the benefit of all parties.”

I think not; it needs to be to the benefit of one particular party to the scheme. If she was correct in stating that she had asked BEIS officials to work with trustees to explore options for revising the scheme, where are the changes? What has happened? My understanding is that nothing has happened—there have been no talks and there has been no action—and that all this is actually a few warm, or lukewarm, words about possible changes to the scheme when nothing is under way.

My expectation this evening is that the Minister will stand up and tell us two things. First, I want him to say that talks are going on to revise the scheme for the benefit not of all parties but of the mineworkers and that in fact I am wrong in saying that nothing has happened. I want him to say that something is happening. Secondly, I want him to agree that there should be not only talks to revise the scheme but a promise this evening that fundamental action will be taken now to change the amount of split that there is in the scheme and an acknowledgement that the risk to the Government is effectively nil and that they have effectively ridden freely on the backs of the miners for many years. I want the Minister to say, “This has to stop now and we are committed to making sure there will be justice for the miners in the future.”

I am confident, on the basis of this evening’s contribution, that that is what the Minister will say now, even if he was not thinking of saying it before, but I do hope that he had that in his mind before the debate began, because, given the eloquence, passion and support from all in the House this evening, that is the least he should do at the end of this debate.

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 30th April 2019 Commons Chamber

[Chris Skidmore]

The Government are firmly committed to the renewables industry, and Scotland has benefited proportionately more than the rest of the United Kingdom under existing policies. It will continue to benefit from future investment. Fifteen Scottish projects have been awarded contracts for difference with a total capacity of 2.57 GW, and the Government and numerous other public sector organisations have provided £15 million to fund the European Marine Energy Centre in Orkney, which is one of the world’s leading wave and tidal demonstration centres.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The truth of the matter right now is that, far from expanding the source of renewables, the Government have narrowed the use of renewable energy in recent years. Of course we should strongly support the development of offshore wind, but the Minister must acknowledge that marine and tidal power has been almost strangled at birth by the Government’s indifference and even active hostility, and that onshore wind and solar PV have been severely hampered by adverse Government decisions on support and planning. On lack of support, will the Minister answer a specific question? Why is he sanctioning a VAT rate rise to 20% on solar power while at the same time maintaining a rate of just 5% on coal and fuel oil?

[Chris Skidmore]

The industry has invested more than £92 billion in clean energy since 2010. As I have stated, renewables now generate 33% of our electricity, and 52.8% comes from low-carbon sources. As for the VAT issue, we are working with organisations and companies to ensure that we can get the best possible deal when it comes to renewables. I am sure that my right hon. Friend the Minister for Energy and Clean Growth will be happy to discuss the matter with the hon. Gentleman in further detail, but we are committed to ensuring that we have a wide range of renewables, including marine energy and offshore and onshore wind, to make sure that we can continue to drive up our renewable capacity.

Draft Electricity Capacity (No. 1) Regulations 2019

Alan Whitehead Excerpts

Tuesday 2nd April 2019 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Robertson.

The Opposition really do not want to vote against the draft regulations, because we consider some form of administrative procedure necessary to sort out the chaos with capacity market payments. As the Minister indicated, capacity payments cannot be collected and capacity money cannot be awarded to organisations with contracts arising from capacity auctions, because the capacity market itself has effectively been nullified by the European Court of Justice judgment. Companies, therefore, do not know what will happen. Indeed, companies that might otherwise have been liable for payments may well not be putting money into a pot for payments—or even into their own pot for payments—and may be doing other things with that money. Companies that had planned to undertake activity—investments, possibly—as a result of obtaining capacity market money for arrangements they had come about in good faith as a result of capacity market auctions, are not in a position to get that money on to their balance sheets and undertake that activity.

We have a difficult situation concerning how the capacity market affects those who pay into the fund for capacity market auction agreements and those who get money out of it. We accept that something needs to be done to stabilise that chaotic situation, but whether the proposals before us do that job properly is another question. Whether the proposals address themselves to the full gravity of the ECJ judgment and whether they are a rather simplistic response to it, regarding what needs to be done, are other issues to be considered. I want to concentrate on the two latter issues briefly this afternoon, because they are germane to how the procedure of stabilising the payments and outputs from the current capacity market can be progressed, and what that capacity market will look like when the payments and rewards are restored.

In order to concentrate on those two points, like the Minister, I will briefly refer back to the circumstances under which we reached our present chaotic state of affairs. The capacity market, which was formed in 2014, was originally intended to be a market to procure underwriting for long-term investment in plant capacity. The assumption at that time was that those arrangements would normally be for 15 years. Plant such as new combined cycle gas plant would be underwritten for investment purposes by the capacity market, which would create better and more stable long-term capacity into the market.

As the Minister said, that is not an issue right now, because we have an 11% capacity margin in the capacity market. It is unlikely that there will be any capacity problems over the winter. However, as the Minister will also know, with the recent cancellation of nuclear plant programmes, and a number of other issues, there may well be a much longer-term capacity problem as far as that percentage difference is concerned, but not necessarily this winter or next.

A capacity market which did that 15-year job of bringing long-term capacity into the frame might make some long-term sense. The problem with the capacity market as it stands is that it has signally failed to do that job. Instead, almost all the contracts are one-year contracts for immediate capacity for companies not to produce, but to stand by to produce, if required, in the event of a capacity shortfall in a particular period, in this case, next winter.

That is a very long way from the original intention of the capacity market. Not only are contracts being given out to coal-fired generators, which increases the amount of energy they produce when they are supposed to be reducing it until their disappearance in 2025, but capacity payments are being given to old nuclear power producers in order for them to stand by and produce power when, in fact, a nuclear power station cannot be turned off. It is therefore quite impossible for that nuclear power station not to provide power and yet capacity payments are going to those organisations. It is not a good system as it stands.

That may have had a bearing on the ECJ judgment when it had before it a case that the Commission had not given proper consideration to the question of state aid acceptability of the original capacity market proposal. As hon. Members know, when a proposal that is known to be state aid comes before the Commission, it will consider whether there are circumstances which would give a wayleave to that state aid consideration. In this instance, that wayleave was given, on the grounds that the capacity market would do various things relating to the UK’s ability to deal with any capacity gaps—indeed, on the basis that I described a little while ago.

The case before the ECJ stated that, not only had the Commission not considered properly that state aid case—indeed, the Commission quite palpably relied on UK submissions and did not do a separate investigation into state aid before pronouncing that state aid was okay as far as the capacity market was concerned—it did not consider concerns about the accessibility of the capacity market to newer forms of energy, such as demand-side management. Because of the construction of the capacity market, demand-side management was particularly disadvantaged in terms of access and therefore was being discriminated against in how it was able to get capacity payments in the way that might have been intended, compared with more traditional forms of energy production.

What particularly concerns me is that the whole basis of the proposal in this draft regulation is that the judgment by the ECJ to annul the capacity market as it stands is merely a procedural issue. The explanatory memorandum states that the

“Court of Justice of the European Union…annulled the State aid approval for the scheme on procedural grounds concerning the European Commission’s procedure for investigating the UK’s notified scheme.”

That is palpably not so. The ECJ judgment did not simply decide on procedural grounds that it would annul capacity market payments for the time being. If it was concluded that the ECJ had simply decided on procedural grounds to annul the payments, one might expect—as, indeed, this document does—that within a short time the Commission would set right its procedure and put right the capacity market payments as they previously stood—and all would be well.

Essentially, that is what this statutory instrument assumes: that the capacity market is at present annulled and there should be various arrangements to secure payments in and hold payments out. As the Minister said, there is a cut-off date in 2020, whereby if a decision has not been reached about capacity payments, those payments will become null and void. The Government clearly consider that holding a contingent auction in autumn this year is perfectly okay, because fairly soon afterwards payments will come forward and the auction payments will be able to be paid up.

I am not sure whether those are sound propositions on which to base the whole of this statutory instrument. The Government are not only setting a long-stop about decision-making, but stating in the explanatory memorandum that they expect a decision to be received ahead of the 2019-20 delivery year, on 1 October 2019. That is the reason why the statutory instrument proposes that a delayed T-1 auction be held: on the basis that there will be a very short period while money must be held before money can be released as a result of that auction.

I am not sure that that is correct, however, because the judgment did not just refer to procedural issues; it also raised serious doubts about differences in treatment and about the compatibility of the measure on non-discrimination grounds with respect to demand-side response. Those issues should have merited opening a formal investigation procedure. Because the Commission did not carry one out, not only was its procedure not correct, but it had not correctly applied itself in matters of substance relating to the capacity market.

Consequently, the ECJ ruling nullified the capacity market, essentially on two grounds: first, that the Commission had not satisfactorily carried out its own procedures, but secondly because of the real concerns that I have outlined about the structure of the capacity market with respect to access for demand-side response and other modern energy arrangements. Those concerns could have given rise to further concerns about state aid that were not considered.

The draft regulations try to bring some order to the current chaos, but they do so on the basis of some frankly fairly wobbly assumptions about what the judgment was about, how long it is likely to be in the hands of the Commission for further determination, and what the Commission is likely to decide on the capacity market question.

If the Commission comes out with a judgment that reflects some of the more complex matters, it is distinctly possible that it will state that the capacity market has never been lawful and that all the money paid out in the eight capacity auctions that have taken place so far should be recovered one way or another. That could come to many billions of pounds. On receipt of such a judgment, it would be necessary to undertake such a procedure and—if it was felt that a capacity market was required—to start the process completely anew with a fresh application for state aid, on the basis that the previous arrangements were all completely unlawful.

It might therefore be more prudent to declare that the arrangements that have hitherto been undertaken were historical; that the capacity market for those circumstances has come to an end; and that, rather than having an interim auction to join the new capacity market with the old one, we should put a new capacity market in place when a judgment comes out. That, at least, would probably protect the UK Government from having to try to recover some £8 billion or £9 billion in payments from capacity auctions since 2014.

I apologise that I have had to go on at some length, but I hope it is clear that the Opposition have severe concerns about the substance, rather than the procedure, of the draft regulations. We do not oppose them on procedural grounds, but we would like to see a much better analysis of what the Commission might come out with, following the ECJ judgment, and of what the UK Government’s options would be.

The best thing to do is to ask this Minister, who is ably filling in for the Minister of State for Energy and Clean Growth, to facilitate a meeting between me and the Minister of State so that we can go through the concerns and see whether the UK Government have anticipated them or whether other things ought to be done to ensure that, as we come out of a period of nullification, we are properly protected when it comes to what happens subsequently. At the moment, I am not sure that we are or that we have taken as seriously as we should the substance of the ECJ ruling, as well as the procedure.

My concern, obviously, is to keep the payments flowing, to bring order to the market. The opportunity that there is now for a review of the capacity market next year, which is in the statute, might be a chance to get a number of these issues sorted out as far as the capacity market in the future is concerned. If the Minister can give an undertaking that such a meeting will be facilitated and that we can look at those wider issues in the not-too-distant future, I will be most grateful. In those circumstances, I would not seek to press this SI to a vote.

--- Later in debate ---

[Chris Skidmore]

I thank the hon. Members for Southampton, Test and for Kilmarnock and Loudoun for their considered contributions today. It is evident that they have spent a lot of time thinking about the policy perspectives when it comes to the capacity market.

The Government continue to believe that the capacity market is the right mechanism for delivering security of supply at the lowest cost to consumers. My Department is working closely with the European Commission to ensure that state aid approval in the capacity market can be reinstated swiftly. Meanwhile, the judgment of the General Court prevents the UK Government from making capacity payments unless and until state aid approval is obtained.

However, we do not consider that the judgment prevents other aspects of the capacity market from continuing to operate during that standstill period. The delivery body and the assessment body continue to operate aspects of the capacity market during the standstill period, facilitating ongoing compliance with the scheme and helping to limit that uncertainty following that General Court judgment, to which the hon. Member for Southampton, Test referred. It also ensures capacity in a way that promotes security of electricity supply and demonstrates that a provider should be entitled to back payments. It enables the scheme to restart full operations as quickly as possible after state aid approval.

The T-1 auction, referred to by the hon. Member for Southampton, Test, will ensure that successful bidders in replacement T-1 auctions will be eligible to receive capacity payments covering the entire delivery year if state aid approval is obtained before October 2020. We believe that this enables bidders to have confidence in the revenue they can expect to receive through the auction if it is approved by the European Commission, providing better value for bill payers and reducing the risk premium that might otherwise inflate auction bids.

The Government do not consider that holding this T-1 auction, or awarding additional capacity agreements in that auction, amounts to state aid. Conditional capacity agreements convert into capacity agreements only if there is state aid approval to make payments, meaning that any aid under the agreement awarded is entirely conditional on state aid.

I turn to the judgment of the General Court. We are clear that it was based on the procedure followed by the European Commission. The General Court gave examples of where the Commission should have had doubts and investigated them, but did not rule that the design was wrong. We are confident that the design of the capacity market is now compatible with the state aid requirement. We have carefully considered each of the issues raised through the Court judgment.

We cannot pre-empt the outcome of the Commission’s investigation, but we remain confident that the scheme will be approved by the Commission following investigation —not least because it has approved six other capacity markets since 2014.

The Commission has also appealed the judgment of the General Court to the European Court of Justice. The Commission might require policy changes to the design of the capacity market scheme when granting state aid approval, in which case the Government would seek to respond swiftly to consider and bring forward the required changes. My Department has been in regular discussion with the Commission since the judgment to better understand the process they are following to ensure that we can support the investigation in the most effective and timely way possible. It is for the Commission to establish its own timetable, but we expect it to make the final decision later in the year.

I turn to the general points made on the necessity of the capacity market. The Government continue to believe that the capacity market is the right mechanism for delivering security of supply at the lowest cost to consumers. This view was supported by the majority of stakeholders that responded to our call for evidence in September 2018 as part of the proposed five-year review.

The capacity markets have a direct and indirect impact on new-build capacity. Around 4GW of new resources were cleared in the most recent 2018 T-4 auction, leading to the point made by the hon. Member for Kilmarnock and Loudoun: when it comes to the transfer away from fossil fuels towards renewable and nuclear fuels, the capacity market provides a cost-effective mechanism for bringing forward new capacity as and when needed. Recent auctions have supported a wide range of new-build resources, and the capacities of the market have had an impact on new builds.

[Dr Whitehead]

On the particular point of the capacity market providing new build, will the Minister agree that the only combined cycle gas plant supported by the capacity market is one 400MW plant during the entire period of the auctions? The capacity that has been procured more recently has either been open cycle gas plants, which are more polluting than combined cycle gas plants, or diesel set generators, which are more polluting than coal. Does the Minister consider that that is a good method of procuring capacity for the future through the capacity market arrangements?

[Chris Skidmore]

I would also point to the fact that we have seen 150 MW of battery storage through the recent T-4 auction; 1.1GW of DSR and 2GW of new interconnectors. There is obviously a variation. When it comes to the capacity market, this technology is based on delivering the most cost-effective mechanism, but we have demonstrated the need to introduce new capacity as and when needed.

When it comes to the Government’s record on switching away from coal, I should say that we have invested £92 billion in clean energy and quadrupled the renewable electricity capacity since 2010: the share of electricity from low-carbon sources is now 56%. In quarter 3 of 2018, 33% was from renewables, an increase from 6.9% in 2010.

If the Minister of State for Energy and Clean Growth were here, I am sure she would expound on the recent offshore wind sector deal, which was published two weeks ago. We now have the ability in offshore wind to exceed 30GW of installed operational capacity—more than we expected. We have already met the 2020 renewable targets. That is the same for solar capacity: in 2013, we estimated it would reach between 10GW and 12GW by 2020. The latest figures indicate it has reached 30GW, enough to power more than 3 million homes.

Important progress has been made. In terms of the five-year review of the capacity market that the hon. Gentleman mentioned, in line with the requirements set out in the Energy Act, we intend to publish a report that summarises our five-year review of electricity market reform this summer. One chapter of that will cover the five-year review of the capacity market.

On the hon. Gentleman’s specific point about meeting the Minister for Energy and Clean Growth, I should say that she will be delighted to discuss the opportunities for reform of the capacity market and to look at how we can deliver the best capacity market in the future.

When we look at the issue of agreements, the hon. Gentleman is right that the majority of capacity types can only access one-year agreements. An exception is obviously made for new and refurbished plants because investors require more certainty when investing in large capital projects; those agreements are for up to four years. However, we believe that longer-term agreements, where not needed, risk needlessly locking consumers into paying a long-term price, while there are challenges to encouraging business to engage in demand-side response. The same capital costs do not apply there. No clear evidence suggests that longer-term agreements are necessary to ensure demand-side response can compete effectively.

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 19th March 2019 Commons Chamber

[Greg Clark]

I will indeed meet my hon. Friend, and I am sure that my right hon. Friend the Minister for Energy and Clean Growth will join that conversation. We have a good record in bringing on a range of new technologies and I am very happy to make sure there are no barriers to that.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

There will now be a 9 GW cut in future installed capacity by 2030 as a result of Toshiba and Hitachi ending their plans to build three new nuclear power stations. The Secretary of State has also cancelled plans to build tidal lagoons possibly providing about that amount of additional capacity, has banned onshore wind and has run down new solar installations. He has severely limited the auction for new offshore wind to only £60 million of a possible £557 million. Does the Secretary of State agree that on present policies it looks like there will be a substantial capacity gap in power production against likely 2030 demand? Does he have any plan to deal with that? Does he have any plans to revive the lost nuclear power proposals? Does he share the Opposition’s view that, among other things, we will need at least 50 GW of installed offshore wind to help close the gap and meet our climate change commitments?

[Greg Clark]

Quite the opposite is true. One of the reasons why it has proved impossible to finance privately some of these nuclear power stations is that the cost of renewables was falling and the availability was increasing so rapidly that they are being muscled out of the system. The forecast electricity margin for this year is now over 11%, the highest for five years. To put this into context for the hon. Gentleman, the contribution that the Wylfa nuclear power station—3 GW—would have made was procured in a single contract for difference auction for offshore wind. That shows the abundance that we have, rather than the shortage.

Future of the Oil and Gas Industry

Alan Whitehead Excerpts

Thursday 14th March 2019 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I congratulate the authors of the Select Committee’s excellent and wide-ranging report, and everyone who took part in the Committee’s proceedings. The report goes well beyond some previous considerations of the future of the North sea by putting it in the context of a number of other issues relating to where we stand on the exploitation of North sea oil and gas and what the future looks like.

As the report states, the North sea is a very mature basin. Hon. Members mentioned that its exploited resources total some 43 billion barrels, and estimates of what is left vary from about 8 billion to 10 billion barrels. Some of the discoveries to the west of Shetland notwithstanding, it is extremely likely that there will be no more Brents and that we will see the exploitation of smaller pools, which are more difficult to exploit. Clearly, there will be great emphasis on the efficiency of exploitation. The report emphasises the extent to which the oil and gas industry has increased its efficiency; it needs to continue to do so for that exploitation to be effective.

The report also goes into considerable detail about not just the future alternative paths, but what we might call the future imperative paths for the North sea as a mature basin. My hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney) mentioned that the oil industry has come through a challenging period—it is in a better position than it has been in for quite a while, given its efficiency achievements and what is happening with the exploitation of future fields—but he drew attention to the need to look at a future industry for decommissioning in the context of the climate change imperative. I was pleased to see that the report did not duck climate change; quite a few of its passages actually centred on the challenges that the fight to get us to a low-carbon economy will present for the oil and gas industry, and on how the industry can take part in that process rather than opposing it.

The hon. Member for Aberdeen South (Ross Thomson) is right about the need to consider how decommissioning can be turned from a liability into an opportunity and, indeed, become a substantial part of the industry. We need only reflect on what is at stake: 250 fixed installations, 250 subsea platforms, 10,000 km of pipeline and 5,000 oil wells need to be decommissioned. The potential decommissioning industry is huge, not just in its own right but in terms of the expertise that already exists, which could be added to. The UK could be a world leader in decommissioning, exporting its expertise and methods. I commend the report’s attention to the detail of decommissioning and how it can be undertaken to the advantage of jobs, skills and exports for UK plc.

We must recognise that the imperative of climate change will cause us to take a considerable number of decisions about the oil and gas industry. Indeed, the report identifies a number of those decisions, one of which is the question of what we do about carbon capture, use and storage. That is not just a possible extension of activity and industry for the North sea as fields are depleted—indeed, those fields are enormous potential repositories for carbon dioxide—but can be used to the benefit of the North sea fields in their own right.

I would link that to the decommissioning efforts that are under way, because the next phase will be about exploiting smaller fields. That needs to be done on the back of existing infrastructure, which arguably should not be decommissioned but rather kept in place, so that those fields can be exploited without the infrastructure having to be completely replaced. If we decommissioned all that infrastructure when a lot of it could be used as the carrying capacity for carbon capture and storage, we may well live to regret it.

We need an understanding about future roles for the North sea. We should not only think about potentially depleted fields that could be repositories for carbon capture and storage, but look at practical considerations in respect of how the capture, transport and sequestration chain can be completed, possibly by using installations that are already there. The same applies to the future North sea wind industry. As the hon. Member for Waveney (Peter Aldous) said, there is a close link between the skills and practical measures involved in developing offshore wind energy and maintaining the structure and infrastructure of the North sea oil and gas industry. Those two industries should work in tandem, rather than separately. As is mentioned in the report, that is important for satisfactory developments in the North sea and for the transfer of skills to the new industries. The skills, facilities and techniques that are already there in the North sea can greatly aid us in creating world-beating offshore wind energy installations and similar technologies, and ensure that the North sea plays its part in the transition to the attainment of a low-carbon energy economy.

In conclusion, the report marks an important milestone. It shows where we need to go next with the North sea oil and gas industry, and its recommendations and suggestions will stand the test of time. In the immediate future, I commend the report’s suggestion that we need to get on with a sector deal for the oil and gas industry. I do not need to say more about that, because I am sure the Minister will update us about it in his response. I emphasise my support for the need to get that deal over the line. In addition to milestones for the future, we have ambitions for the immediate time ahead to ensure that the oil and gas industry continues to be in a better position than it was in before and that it has the wherewithal to make its mark over the decades to come.

[Mr Charles Walker (in the Chair)]

Minister, please could you leave two minutes at the end for Mr Wishart to wrap up?