Offshore Petroleum Licensing Bill

Lord Sharma Excerpts

Committee of the whole House
Tuesday 20th February 2024 Commons Chamber

[Sir Alok Sharma (Reading West) (Con)]

I beg to move amendment 12, page 1, line 3, at end insert—

“(1ZA) 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.

(1ZB) The Secretary of State must by regulation make such provision so that the OGA is only permitted to invite seaward area production application licences after 2030 once a prohibition is in place on routine flaring and venting for all offshore installations operating in UK waters.

(1ZC) A statutory instrument containing regulations under subsections (1ZA) and (1ZB) is subject to annulment in pursuance of a resolution of either House of Parliament.

(1ZD) In subsection (1ZA) and (1ZB)—

‘flaring’ means the burning of hydrocarbons produced during oil and gas extraction;

‘venting’ means the release of un-combusted hydrocarbons directly into the atmosphere.”

This amendment prevents the invitation of new seaward area production application 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 from 2030 if a wider ban is not in place.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Amendment 15, page 1, line 3, at end insert—

“(1ZA) The OGA must not invite any new seaward area production application licences until the Secretary of State has by regulations brought into effect a requirement that—

(a) all new seaward area production application licences require a specific field commitment of a net zero carbon footprint reached through developing the Carbon Capture Utilisation and Storage network or such other means as deemed appropriate; and

(b) a percentage, to be specified in regulations but not less than 30 per cent, of all new seaward area production application licences specifically align petroleum extraction with the refining of petroleum at the Grangemouth oil refinery.

(1ZB) A statutory instrument containing regulations under subsections (1ZA) is subject to annulment in pursuance of a resolution of either House of Parliament.”

Amendment 7, page 1, line 4, leave out “in each relevant year” and insert “on a case-by-case basis”.

Amendment 2, page 1, line 6, at end insert—

“(aa) the climate test (see section 4ZD)”

This paving amendment, together with amendment 3, sets out the climate test to be applied by the Oil and Gas Authority before inviting applications for seaward new production licences.

Amendment 8, page 1, line 6, at end insert—

“(aa) the energy and job security test (see section 4ZD)”

This paving amendment, together with Amendment 9, introduces a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 10, page 1, line 6, at end insert—

“(aa) the just transition test (see section 4ZD)”

This paving amendment, together with Amendment 11, introduces a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 13, page 1, line 6, at end insert—

“(aa) the just transition plans test (see section 4ZD)”

This paving amendment, together with Amendment 14, introduces a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 17, page 1, line 6, at end insert—

“(aa) the climate change test (see section 4ZD)”

This paving amendment, together with Amendment 18, sets out the climate change test to be applied by the Oil and Gas Authority before inviting applications for seaward new production licences.

Amendment 22, page 1, line 6, at end insert —

“(aa) the home energy efficiency test (see section 4ZD).”

This paving amendment, together with Amendment 24, introduces a home energy efficiency test to be applied by the OGA before inviting applications for seaward area production licences.

Amendment 23, page 1, line 6, at end insert—

“(aa) the Energy Charter test (see section 4ZD).”

This paving amendment, together with Amendment 25, introduces an Energy Charter test to be applied by the OGA before inviting applications for seaward area production licences.

Amendment 19, page 2, line 1, after “of” leave out “liquefied”.

This amendment, together with Amendment 20, would require the carbon intensity of domestic natural gas to be assessed against the carbon intensity of all natural gas imported into the UK.

Amendment 20, page 2, line 7, leave out “liquefied”.

This amendment, together with Amendment 19, would require the carbon intensity of domestic natural gas to be assessed against the carbon intensity of all natural gas imported into the UK.

Amendment 21, page 2, line 24, at end insert—

“(4A) Within six months of the commencement of this Act, the Secretary of State must produce and lay before Parliament a report on the effect of amending the definition of “carbon intensity” as set out in subsection (4) according to section 93 of the Climate Change Act 2008.”

This amendment requires the Secretary of State to report how the carbon intensity test is affected if the definition of carbon intensity were amended to include emissions of gases other than carbon dioxide in line with the carbon dioxide equivalent measure in section 93 of the 2008 Climate Change Act.

Amendment 3, page 3, line 23, at end insert—

“4ZD The climate test mentioned in s 4ZA

The climate test is met in relation to a relevant year if the Intergovernmental Panel on Climate Change finds that current global fossil infrastructure will not emit more greenhouse gases than is compatible with limiting global heating to 1.5 degrees Celsius.”

Amendment 9, page 3, line 23, at end insert—

“4ZD The energy and job security test mentioned in s 4ZA

The energy and job security test is met in relation to a relevant year if the OGA assesses that new licences will—

(a) lower energy bills for households;

(b) deliver energy security and reduce reliance on imported fuel sources for domestic consumption;

(c) enhance sustained job security for the oil and gas workforce in areas of the UK economically reliant on the oil and gas sector;

(d) guarantee funding for domestic refineries to increase capacity to process sustainable fuel sources; and

(e) help the oil and gas sector meet commitments set out in the North Sea Transition Deal.”

This amendment sets out a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 11, page 3, line 23, at end insert—

“4ZD The just transition test mentioned in s 4ZA

The just transition test is met in relation to a relevant year if the OGA assesses that—

(a) new licences will support the delivery of the North Sea Transition Deal’s greenhouse gas emission reduction targets of 10% by 2025, 25% by 2027 and 50% by 2030 against a 2018 baseline, to meet the sector’s aim of a net zero basin by 2050; and

(b) the Secretary of State has provided funding to support the development of the renewable energy sector, in areas of the UK economically dependent on the oil and gas sector, equivalent to tax revenues collected from UK oil and gas production.”

This amendment sets out a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 14, page 3, line 23, at end insert—

“4ZD The just transition plans test mentioned in s 4ZA

(1) The just transition plans test is met in relation to a relevant year if the OGA assesses that all existing seaward area production licence holders have published just transition plans for their workforce that are compatible with limiting global heating to 1.5 degrees Celsius.

(2) For the purposes of this section—

“just transition plans” refer to plans agreed through formalised collective agreements with unions in the workplace for consultation on policy;

“workforce” includes workers, directly and indirectly (sub-contracted or agency) employed, or engaged through day-rate or self-employed contract models.”

Amendment 18, page 3, line 23, insert—

“4ZD The climate change test mentioned in 4ZA

The climate change test is met in relation to a relevant year if the latest reports of the Intergovernmental Panel on Climate Change on the mitigation of climate change find that the granting of additional seaward area production licences is consistent with limiting warming to 1.5°C.”

This amendment sets out a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 24, page 3, line 23, at end insert—

“4ZD The home energy efficiency test mentioned in s 4ZA

The home energy efficiency test is met if the median rating in current Energy Performance Certificates in the United Kingdom falls within or above Band B.”

This amendment sets out the home energy efficiency test to be applied by the OGA before inviting applications for seaward area production licences.

Amendment 25, page 3, line 23, at end insert—

“4ZD The Energy Charter test mentioned in s 4ZA

The Energy Charter Treaty test is met if the United Kingdom has made arrangements to withdraw from the Energy Charter Treaty.”

This amendment sets out the Energy Charter test to be applied by the OGA before inviting applications for seaward area production licences.

Clause stand part.

Clause 2 stand part.

New clause 2—Duty to introduce spatial prioritisation policy—

“After section 4 of the Petroleum Act 1998 insert—

‘4ZAA Duty to introduce spatial prioritisation policy

(1) Before the OGA invites applications for seaward area production licences under this Act the Secretary of State must publish a marine spatial prioritisation policy.

(2) The marine spatial prioritisation policy must establish a process for prioritising offshore renewables, marine protection, fishing activities, oil and gas licensing, and the achievement of relevant targets under the Climate Change Act 2008 and the Environment Act 2021 in any relevant decisions relating to the marine environment made by a body undertaking public functions.

(3) The OGA must comply with the marine spatial prioritisation policy set out in subsection (1) when deciding applications relating to new seaward area production licences.’”

This new clause requires the Secretary of State to publish a marine spatial prioritisation policy, taking into account relevant targets under the Climate Change Act 2008 and the Environment Act 2021.

[Sir Alok Sharma]

I refer the House to my entry in the Register of Members’ Financial Interests.

On Second Reading, I said that this Bill was something of a distraction and not necessary on the basis that the North Sea Transition Authority can already grant licences annually or, indeed, whenever it considers it necessary. That will not change with the Bill. I also noted at the time that the two statutory tests in the Bill have been designed in such a way that the computer always says yes to new oil and gas licences, but I also said that I would work with other like-minded colleagues to improve the Bill and bring in further tests that need to be met before any new oil and gas production licences are granted. That is what I and other Members have sought to do.

Amendment 12 seeks to do two things. First, it would stop the invitation of new production application licences until the Secretary of State has introduced a ban on the flaring and venting of methane by new offshore installations. Secondly, it would require the Secretary of State to prevent licensing rounds from 2030 if a wider ban on flaring and venting is not in place. Along with other Members who have signed up to the amendment, I argue that this is an entirely reasonable ask that the Government and all Members should be able to get behind, given that all it modestly seeks to do is put into statute existing guidance on flaring and venting that was issued by the North Sea Transition Authority.

Let me set out the precise wording of the principles that the NSTA expects industry to follow in relation to flaring and venting across all UK continental shelf areas. First,

“flaring and venting and associated emissions should be at the lowest possible levels in the circumstances”.

Secondly, there should be

“zero routine flaring and venting for all by 2030”.

Thirdly,

“all new developments should be planned and developed on the basis of zero routine flaring and venting.”

That is a set of NSTA principles with which amendment 12 in entirely consistent.

[John Redwood (Wokingham) (Con)]

Can my right hon. Friend explain why it would be better to import liquefied natural gas, with four times the amount of CO₂ produced, rather than have our own gas? His regulations would not apply to the foreign-produced gas we import.

[Sir Alok Sharma]

My right hon. Friend makes an important point: LNG has a higher carbon-intensity footprint. But the majority of the gas that we import comes by pipeline from Norway, and the production intensity of Norwegian gas is around half that of the UK’s.

[John Redwood]

Will my right hon. Friend give way?

[Sir Alok Sharma]

If I may, I will continue. In their response last year to the Environmental Audit Committee’s report on accelerating the transition from fossil fuels and securing energy supplies, the Government doubled down on the NSTA position. Responding to the EAC recommendation, which called for the banning of flaring from UK installations, the Government noted that they had already signed up to

“make every effort to ensure that routine flaring from existing oil fields ends as soon as possible, and no later than 2030.”

The Government response went on to highlight the NSTA guidance that new developments are approved on the basis of zero routine flaring and venting.

My right hon. Friend the Member for Wokingham (John Redwood) raised the issue of imported gas. I will just point out to him that, unfortunately, flaring is still a common practice in the UK. By contrast, Norway banned routine flaring in 1971, and the carbon intensity of Norwegian gas production is around half that of UK domestic production.

[John Redwood]

The marginal gas we would import would come from Qatar or the United States of America. There is not an infinite supply of Norwegian gas, so my right hon. Friend is missing the main point.

[Sir Alok Sharma]

With respect, I do not think I am missing the main point. The point that the Government are pursuing is to ensure that we have less use of fossil fuels overall and that we expand our renewable capacity, including nuclear, which I know my right hon. Friend supports. That is where we should be going with this strategy. The ban on flaring in Norway is one of the key reasons that Norway has become a leader in the cleaner production of oil and gas, which this Government have clearly indicated that they also want for UK production.

I am looking forward to hearing the Minister’s response to amendment 12. I hope he will say that, given that it is consistent with Government policy and guidance, the Government will introduce a similar amendment in the other place. If they choose not to do that, I am pretty sure that a similar amendment will be tabled in the other place anyway, and that it is likely to be supported. I would just humbly observe that if the Government whip against this or any similar amendment, either in this House or in the other place, they will put colleagues in the absurd position of effectively having to vote against existing Government policy. I am really looking forward to listening to what the Minister has to say.

[Several hon. Members rose—]

--- Later in debate ---

The Bill provides certainty for industry to keep investing in ever cleaner, though always declining, UK oil and gas production as we transition to reach net zero. Failing to support the Bill could forfeit tens of billions in tax revenues, which the Opposition have no plan to replace any more than they had any idea how to fund their “Here today, gone tomorrow, maybe it is back again” apparently vital £28 billion plan which is no more. It would betray the 200,000 British workers who depend on a healthy oil and gas sector to make a living, and it would mean more reliance on imported LNG with four times higher production emissions than domestically produced gas. I am grateful to hon. Members for the interest they have taken in the Bill and the valuable scrutiny they have brought to it. I hope they are reassured by what I have outlined, and that they feel able to withdraw their amendments. On that basis, I call on all Members to support the Bill.

[Sir Alok Sharma]

I have listened intently to the Minister and I welcome his willingness to work together on the issue of flaring and venting. What I did not hear from him was the clarity that I wanted on whether Government would look to introducing an amendment similar to amendment 12 in the other place. Perhaps that is something we can discuss before the Bill returns to this House.

[Graham Stuart]

indicated assent.

[Sir Alok Sharma]

I am delighted to see the Minister nodding. I would just point out that even if the Government do not support a similar amendment in the other place, I am fairly confident that a similar amendment will be moved and I expect supported in the other place. This place will then have the opportunity to opine on that particular amendment, so I will not divide the Committee on this occasion. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 10, page 1, line 6, at end insert—

“(aa) the just transition test (see section 4ZD)”.—(Dave Doogan.)

This paving amendment, together with Amendment 11, introduces a new test to be applied by the OGA before inviting applications for seaward new production licences.

Offshore Petroleum Licensing Bill

Lord Sharma Excerpts

2nd reading
Monday 22nd January 2024 Commons Chamber

[Sir Alok Sharma (Reading West) (Con)]

I refer the House to my entry in the Register of Members’ Financial Interests.

I agree with the Secretary of State, who I hold in high regard, that the United Kingdom has been a leader in climate action internationally. We have cut our emissions in half over the past 30 years, faster than any other major economy in recent years. We have set ambitious domestic emission reduction targets, in particular ahead of COP26. Through our COP26 presidency, we managed to get over 90% of the global economy signed up to net zero. Just about every G20 nation signed up to a net zero commitment. We led on climate action domestically and we translated that into leading the world on climate action.

Just a few weeks ago at COP28, the UK, alongside other nations, signed up to transition away from fossil fuels. On his return from COP28, the Minister for Energy Security and Net Zero, my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) welcomed that global agreement from the Dispatch Box. He spoke about the importance of listening to the voices of the most climate-vulnerable island nations, who, as we know, wanted the world to agree to stronger language to phase out fossil fuels. Indeed, my right hon. Friend himself tweeted at COP28:

“There must be a phase-out of unabated fossil fuels to meet our climate goals.”

I commend the work that he and the whole UK team did in Dubai.

But today we have a Bill before the House, the sole purpose of which is to double-down on granting more oil and gas production licences. I do not believe, and it pains me to say this, that the Bill will advance that commitment to transition away from fossil fuels. I also do not believe that those climate-vulnerable nations my right hon. Friend referred to will think the Bill is consistent with the pledge that we, along with every other nation, made in Dubai.

As for the substance of the Bill, I think that, as currently drafted—and it pains me to say this—it is something of a distraction. I do not think it is necessary. The North Sea Transition Authority can already grant licences annually, or, indeed, when it considers it necessary. It has been doing that regularly for the past few years. The Department’s own explanatory notes make that clear by stating:

“ The NSTA will remain free to grant licences outside this new annual duty in the usual way, whether or not the new statutory tests are met.”

As for those two statutory tests, they seem to override the already non-binding climate compatibility checkpoint, and I have to say that I think they have been designed in such a way that the computer will always say yes to new oil and gas licences. Overall, the ability of the NSTA to grant new licences will not change materially as a result of the Bill.

Sadly, however—this is my opinion, and others will have theirs—what the Bill does do is reinforce the unfortunate perception of the UK’s rowing back from climate action, as indeed we saw last autumn with the chopping and changing of some policies, and that does make our international partners question the seriousness with which we take our international commitments. I said “it pains me to say this” because I know that the Government have been coming forward, under this Secretary of State, with commitments to try to tackle climate change and deliver on a clean energy transition.

We have heard that the Bill is about improving domestic energy security, but I think we all understand that the oil and gas extracted from the North sea is owned by private enterprises and the Government do not get to control to whom it is sold. Moreover, I think it is acknowledged that the Bill would not necessarily lower domestic energy bills in the UK, given that the price of oil and gas as a commodity is set internationally. I think that the best way to enhance our energy security, and ultimately bring down bills, is for the Government to continue to deliver on their ambitious plans for expanding home-grown clean energy, to which I know the Secretary of State and her Ministers are absolutely committed. That means more wind power, more solar and more nuclear as part of a diversified clean energy mix, and I back the Secretary of State in the work that she and her team are doing in delivering that clean energy mix.

We have heard that the Bill will secure 200,000 jobs. Of course people’s jobs and livelihoods matter, and we must ensure that we secure those jobs, but we must recognise that we are in the process of an energy transition. I support an orderly transition; for me, this is not about turning off the taps overnight on oil and gas. We must also acknowledge that more than 200,000 jobs, supported by the oil and gas industry, have been lost over the past decade, despite hundreds of new drilling licences being issued. We know that many of the skills used in the oil and gas sector are transferable to clean energy—to offshore wind and geothermal. If we want to truly turbocharge a clean energy transition, we need to help, support and retrain the workers who are making the transition, over time, from the fossil fuel sector into the many tens of thousands of jobs that are being created in clean energy as a result of the work that the Secretary of State and her team are doing.

[Matt Western (Warwick and Leamington) (Lab)]

The right hon. Gentleman is making some powerful points, and I have huge respect for him when it comes to this topic. Does he agree that we are in real danger of turning off the interest and the investment appetite among many other nations, such as Korea and Japan, which see the UK as having vast expertise in offshore wind development sites, and that legislation of this kind will undermine that market?

[Sir Alok Sharma]

There was some commentary expressing concern about investment appetite following some of the statements that were made in the autumn, but I think we must acknowledge that, over the last few months, the Government have managed to secure billions of pounds of extra investment committed within clean energy to the UK.

Turning to the carbon intensity test for granting new licences, I have to say again that I am not sure that the Government recognise the whole picture of where we get our imports from. The majority of the gas that the UK imports comes via a pipeline from Norway. It is not imported LNG. The carbon intensity of Norwegian gas production is around half that of UK domestic gas. If that is the test that the Government want to apply in deciding whether to issue new licences, I think they should take into account the average carbon intensity of all imported gas, not just LNG. Given that around 70% of remaining North sea reserves are oil, perhaps the tests should also include the carbon intensity of UK-produced oil, which is higher than the global average.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

I put that very point to the Secretary of State in our Select Committee, and her response was that because almost all our oil is exported out of the UK for processing, we do not know what its full carbon intensity is. Is that not a great example of why our oil is not used in Britain and why this will not help British people?

[Sir Alok Sharma]

The Secretary of State has set out her position very clearly and eloquently. I am trying to set out my position on the Bill.

The Government said that the independent Climate Change Committee’s own data showed that we were going to need new oil and gas in the decade ahead, but I respectfully say that that is not the same as saying that new licences should be granted. The weekend before this Bill was originally due to have its Second Reading, the interim chair of the committee put out a tweet to reconfirm the CCC’s position. He wrote that

“@theCCCuk evidence is that continued expansion of new oil and gas reserves is inconsistent with our climate commitments, especially more so in light of the recent Global Stocktake COP agreement we just signed.”

For the reasons that I have outlined, I will not vote for this Bill today, but assuming that it proceeds beyond its Second Reading, I hope that it will be possible to work with like- minded colleagues—and indeed the Government, the Secretary of State and her Ministers—to amend and improve the tests that are required to be met before any new oil and gas production licences are granted in the future.

In conclusion, delivering on the UK’s clean energy transition matters on many levels: for jobs, for inward investment, for lower bills, for real energy security and of course for the environment. We see the impacts of the changing climate around us daily: 2023 was the hottest year on record globally, and in recent weeks many people have faced flooding again in our country, including in my own constituency. We really should not need any more wake-up calls to put aside the distractions and act with the urgency that the situation demands.

COP28

Lord Sharma Excerpts

Thursday 14th December 2023 Commons Chamber

[Graham Stuart]

I thank the right hon. Gentleman for his questions. I welcome what he said about the overall COP result and the need to celebrate it and build on it, and the fact that we need to ensure actions match words in this critical decade. That was one of the things we were wrestling with most, because new NDCs for 2035 are being worked on now for announcement ahead of the Belém COP in the Amazon in 2025, but it is in this decade that we need to bend the curve further. It is absolutely right that we do so.

The right hon. Gentleman has focused on performance, and I am pleased to say that this Government have met every single carbon budget to date. The only major targets set on climate change in this country that have been failed were—let me think—the target of 10% renewables by 2010, set by the Government of which the right hon. Gentleman was a member. The target of a 20% reduction in emissions by 2010, again set by the Government in which the right hon. Gentleman served, was also failed. Every single carbon budget for which this Government have been responsible since my then party leader became the first leader to call for the Climate Change Act 2008 has been met. Our record is without parallel, and I will not have it trash-talked down by the right hon. Gentleman, whose record in government is so at odds with the words he uses.

On oil and gas, we are a net importer. We are transitioning; as I have set out, we are reducing our emissions faster than any other major economy on this planet. None the less, according to the Climate Change Committee, about 25% of our power will come from oil and gas even in 2050. We will be using mitigation technologies to offset that, but the idea that we should replace domestically produced gas with imported gas with four times the embedded emissions, when it will make no difference to our consumption, is environmental nonsense. That is why we are standing up for the 200,000 people who work in our oil and gas industry as it transitions; it is why we support the £50 billion in taxes that comes from that industry; and it is why we must retain the expertise of people in the sector going forward. The Labour party puts at risk our net zero transition—a transition that it did not set out on properly when it was in government, and that this Government are delivering on. As I said, we have met all our carbon budgets to date.

I welcome the right hon. Gentleman’s point about loss and damage. I assure him and the House that we will meet our target of £11.6 billion in climate finance on the original timetable set out by the Prime Minister. The Prime Minister came to COP, personally committed and passionate about ensuring that nature and forests—on which we have been a leader—were championed at that COP. Hopefully, I will be able to give more detail about that when answering other questions. As we move into the coming year ahead of the Baku COP, we will focus on a new, collective, quantified financial goal. The Prime Minister, with his focus and expertise, will ensure that the UK is an absolute leader in getting that right, amplifying the billions we have today into the trillions we need tomorrow.

[Sir Alok Sharma (Reading West) (Con)]

I agree that we saw significant progress at COP28, particularly the agreement on transitioning away from fossil fuels in the energy system. However, that agreement and all previous agreements are literally just words on a page; they will come to fruition only if all countries follow through in their domestic policies.

The Minister talked about raising the torch to inspire others. Once again, will he please review the plan to issue these annual oil and gas licences, and consider whether they are consistent with the international commitments we have made? Secondly, will he ask our right hon. Friend the Chancellor to urgently review the tax regime that gives significant subsidies to new oil and gas projects? This is a matter of trust. The Minister talked about the voices of the most climate vulnerable; they will be listening and watching, and they want to see action, not just from the UK Government but from every Government.

Energy Bill [Lords]

Lord Sharma Excerpts

Report stage
Tuesday 5th September 2023 Commons Chamber

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. As Members can see, there are many people who wish to take part in this debate. I know that Alok Sharma will show self-restraint, but we will be imposing a time limit to ensure that we get in as many people as we can. The debate is very time limited. The multiple votes will come at 6 o’clock, so I ask people to show restraint even on the time limit that I impose.

[Sir Alok Sharma (Reading West) (Con)]

Thank you, Mr Deputy Speaker.

I do support the overall aim of the Bill, but, in the interests of brevity, I will limit my comments to new clause 43 on onshore wind. I thank all colleagues who have co-signed this new clause, which of course builds on the excellent work that my right hon. Friend the Member for Middlesbrough South and East Cleveland (Sir Simon Clarke) led last year when trying to put in place a more permissive planning regime for onshore wind.

Onshore wind is one of the cheapest sources of energy available. It is also one of the quickest to deploy. Getting more home-grown clean energy deployed is about enhancing our energy security, our climate security and our national security, all of which are totally interlinked. It is also ultimately about bringing down bills. That is why onshore wind needs to be a meaningful part of a diversified energy mix.

We currently have 14 GW of installed onshore wind capacity across the UK with the ability to power around 12 million homes. However, as we all know, due to planning rule changes, since 2015 we have had a de facto ban on onshore wind. Just one objection is able to defeat a planning application. Frankly, that is not a sensible way for a planning process to operate. As a result, in England planning permissions have been granted for just 15 wind turbines over the past five years. It is also worth pointing out that, had onshore wind annual build-out rates stayed at the average pre-ban level, an extra 1.7 GW would have been added by last winter. That is the equivalent of powering 1.5 million homes for the entire winter, and it would have avoided between 2% and 3% of the UK’s annual net gas imports being burned in our power stations.

[John Redwood]

Does my right hon. Friend accept, on the cost argument, that we also need to build a new gas turbine station as back-up for when the wind does not blow?

[Sir Alok Sharma]

We do need a diversified energy system, and I think the Minister set out all the work that is going on on nuclear, for example. However, as we drive forward for greater energy security, we need to change the planning rules to allow more onshore wind. The objectives of new clause 43 are to ensure a more permissive planning regime. The new clause seeks to lift the current planning restriction that in effect means that a single objection can block a development. It also seeks to ensure that local communities willing to take onshore wind developments will receive direct community benefits.

The Government have today responded to new clause 43 by bringing forward a written ministerial statement on onshore wind. I thank the Government for the constructive dialogue we have had over the past days on this issue. I acknowledge that that written ministerial statement, and indeed the accompanying changes to the national planning policy framework, move things forward and will help to deliver a more permissive planning regime for onshore wind.

The de facto ban is lifted. The statement clarifies that the policy intent is not to allow very limited objections or even a single objection to ban a planning application, and it is explicit that local communities willing to host onshore wind farms should directly benefit, including potentially through energy discounts. That is positive, but we do need to see the Government’s formal response to their consultation on this issue to understand the detail of the precise mechanism by which the benefits regime will work.

I also welcome the fact that local plans will not be the only route to delivering more onshore wind, with more agile and targeted routes available. Of course it is now a requirement for local planning authorities to support community-led initiatives for renewable and low-carbon energy. Vitally, those policy changes are effective today.

[Angus Brendan MacNeil]

The right hon. Gentleman talks about bill payers, but for the previous wind that was built under renewables obligation certificates, there were big profits because the prices were denominated in gas. Under the CfDs, money is not going to the bill payers, but to the Government—it was creamed off the top. The mechanism has to change; I applaud what he is trying to say and do, but there is a missing link on how the bill payer will see a benefit, as they should.

[Sir Alok Sharma]

The hon. Gentleman will know that onshore wind has been back as part of the CfD process in the last couple of years. I am very happy at a future date to have a detailed discussion on that but, in the interest of time, I will move on.

I understand that some people would like the planning regime for onshore wind to be even more permissive and for onshore wind to be treated like any other infrastructure. I get that, but we also have to recognise that it has been a contentious issue in the past, and it is important that we take communities with us on this journey. That is why the community benefits mechanism will be so vital. Frankly, people respond better to a carrot than to a stick.

[Dame Maria Miller (Basingstoke) (Con)]

My right hon. Friend talks about the importance of taking people with us. More wind power will need more energy storage so that we can smooth out for the times when the wind is not blowing. Does he agree that the sort of lithium ion battery storage plants that are proliferating in our country are in need of proper permitting? My new clause 37, which I have been discussing with my hon. Friend the Minister, will help to bring in that sort of permitting and ensure that lithium ion battery storage facilities are sited in the right places.

[Sir Alok Sharma]

I certainly agree with my right hon. Friend that we need more battery storage. That is being rolled out and I am pleased that she has had a discussion with the Minister.

In conclusion, I welcome the written ministerial statement because it moves us forward. It is for that reason that we will not seek to press new clause 43 to a Division.

[Dave Doogan (Angus) (SNP)]

I start by paying tribute to my predecessor in this role, my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown), whose work on energy, particularly on access to clean and affordable energy, was exceptional. I base my ambitions in this role on his record. I also note the Minister’s kind remarks about my hon. Friend and thank him for them.

I want to highlight the abject abandonment of community-owned energy projects in this Bill. It is patently obvious that any just transition to net zero is simply not possible if local communities cannot sell the energy they produce to local customers. Local energy trading provides manifold improvements, including lower prices, protections against price shocks, enhanced energy security, network redundancy and a return on investment back to communities.

The UK Government kicking this can down the road is a hammer blow to efforts to achieve a just transition, and they are doing so without even trying to disguise the fact. Worse still, they have instead provided a paltry £10 million over two years—the Minister left out the “over two years” bit—to fund feasibility studies in England. That is not seedcorn funding; it is chicken feed served up with extra disdain for Scotland and Wales, as the UK Government have steadfastly refused to apply Barnett consequential to this admittedly pitiful sum.

Fundamentally, this sop to Tory Back Benchers does not—as one of the Minister’s Back Benchers said—remove the barriers preventing community energy schemes from selling their power locally. The Local Electricity Bill would have done that, as would amendments made to the Energy Bill had they not been removed by Ministers in Committee in July. Why is this Tory Government so loth to put power in the hands of the people?

Turning to nuclear, English MPs maintain an enduring obsession with nuclear. Their total failure to concede or even rationally acknowledge the catastrophic decommissioning and clean-up costs of that energy source is, by any measure, incredible. As they drag Scotland and Wales along with them for the ride, it is almost as if those English MPs, and indeed the Government, can foresee a time in the not-too-distant future when they will need to buy Scotland’s energy rather than just taking it, as they have got used to doing over recent decades. Nuclear is their insurance policy against Scotland’s independent future.

New nuclear is a millstone around the neck of our net zero future, consuming disproportionate costs per megawatt-hour. If we contrast nuclear with offshore wind, we see that although construction costs for nuclear continue to spiral out of control, and SMR nuclear continues not to get off the ground, the cost of offshore wind has fallen by 80% in a decade. New offshore wind projects coming online within the next two years will be paid about £45 per MWh, which is half the wholesale power price of £90 per MWh forecast until at least the end of the decade, and 60% less than the £115 per MWh of electricity from Hinkley C nuclear power plant.

Tories and Labour Members alike will cry, “This is all about baseload for when the wind does not blow”—I am surprised they have not done so already. Of course, that is correct; we do need baseload, but it does not have to be nuclear. If successive Westminster Governments had invested nearly as much rhetoric and taxpayers’ money creating a renewable energy mix as they have done for nuclear, we would be in a very different place. It would be a place where tidal flow and barrage schemes complement widespread impoundment, pump storage and run-of-river hydro schemes, together with green hydrogen production, battery storage, solar on every appropriate elevation of a domestic or commercial property, and timely delivery of carbon capture, usage and storage.

Energy Bill [Lords]

Lord Sharma Excerpts

2nd reading
Tuesday 9th May 2023 Commons Chamber

[Grant Shapps]

I am pleased to report that on what is, I think, a largely uncontroversial Bill, we are working very closely with the devolved Administrations and trying to learn lessons from each other, in order to support the whole country in this energy security move. This Bill is the longest and most significant piece of energy legislation to ever come before the House; it is a critical part of making Britain an energy-secure nation. On that point, I thank colleagues across the House for their positive engagement with me and with the Bill Minister, my hon. Friend the Member for West Aberdeenshire and Kincardine, in the lead-up to this debate. I know there is much in the Bill that already has cross-party support.

[Sir Alok Sharma (Reading West) (Con)]

I commend the Secretary of State for the Bill, and I welcome its key objectives, as I think everyone in this House does. However, a number of amendments were made in the other place, particularly one relating to a net zero duty for Ofgem. Those amendments are now in the Bill. Could the Secretary of State clarify whether the Government will support all of them, particularly the one on Ofgem?

[Grant Shapps]

I thank my right hon. Friend for his intervention. We will be looking very closely at the proposed amendments—the Bill Minister himself will be addressing those in detail, which is the right way to do it—and of course, the regulator is already very largely focused in that direction. As I often point out, of everybody in this place I have a particular interest in making sure we achieve what we have set out to do, because this House has kindly legislated to send the Secretary of State for Energy to prison if they do not meet the net zero commitments, potentially through contempt of court. We take these things seriously, but my right hon. Friend will wish to hear more on that issue from my hon. Friend the Energy Minister.

Oral Answers to Questions

Lord Sharma Excerpts

Tuesday 18th April 2023 Commons Chamber

[Andrew Bowie]

Absolutely not. I have gone through in detail exactly what we are doing in Scotland. Indeed, his colleague, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) suggested that there was far too much in my initial answer to demonstrate what we are doing to support transition in Scotland. We will continue to do that, while championing jobs and opportunities across the whole United Kingdom, including in Scotland. That means investing in new technologies and renewables, and supporting our oil and gas industry as it transitions. All of that is possible because Scotland remains in the United Kingdom, which would not be the case if the hon. Gentleman had his way.

[Sir Alok Sharma (Reading West) (Con)]

11. What steps he is taking to help increase private sector investment in clean energy technologies.

[The Minister for Energy Security and Net Zero (Graham Stuart)]

Our “Powering up Britain” plan seizes opportunities from our transition to a decarbonised energy system. Our policies, backed by billions of pounds of Government funding, will leverage around £100 billion of private investment and support up to 480,000 jobs in 2030. My right hon. Friend is absolutely right to highlight the importance of unlocking that private investment if we are to deliver our net zero ambitions.

[Sir Alok Sharma]

One of the ways to ensure more private sector investment is to support UK companies to export to key markets. With that in mind, will the Minister update the House on any discussions between the UK and the US Governments on critical minerals? Is he confident that there will be an agreement between the UK and the US on critical minerals, allowing UK companies to gain access to the financial support available in the Inflation Reduction Act, on which other blocs such as the European Union are already doing deals?

[Graham Stuart]

I thank my right hon. Friend for his question. He shares my enthusiasm for leading the world in meeting our net zero challenge and, by doing so, developing technologies and then being able to export those solutions. He is right to highlight issues following the Inflation Reduction Act in the United States, and making sure that in the negotiations with the US and other partners, critical minerals and other issues are dealt with. We are engaging solidly and I know my right hon. Friend was in Japan only last week, talking to Secretary Kerry about that point.

Powering Up Britain

Lord Sharma Excerpts

Thursday 30th March 2023 Commons Chamber

[Graham Stuart]

The hon. Gentleman’s party of course opposes nuclear, despite the opportunity it provides to this country, and it means that Scotland does not benefit as it should. He talked about pumped hydro, and I would be happy to meet him to discuss that further.

We are the world leader in tidal energy, although we would be hard pushed to understand that from the hon. Gentleman. We have put a ringfenced number on that, and budgets can be changed. The budgets were set on the basis of those projects that were ready and were coming forward. As that changes through this year, as I very much hope it will, we have the flexibility to change those budgets upwards appropriately. Like him, I believe that tidal has a great future, and I love the fact that we are the global leader. There are many jobs in Scotland and around the rest of the country from it.

On carbon capture and storage, this is a major announcement today. I am delighted about the eight projects for carbon capture that have come forward as part of track 1. Today, we have launched track 2, and we have said in the papers, as the hon. Gentleman will be delighted to hear, that we think the Scottish cluster—and Acorn—and Viking in the Humber are the two best placed at the moment to go ahead, although there will be a competition and we are opening that now. We will be having an extension of track 1, we will be having track 2 and we are cracking on with it. I very much look forward to seeing what the Scottish cluster has to offer, because I know it is particularly well prepared, and that is why it was not a reserve, but the reserve in our track 1 process.

[Sir Alok Sharma (Reading West) (Con)]

Mr Deputy Speaker, thank you for calling me. Could I start by saying that I welcome the announcements that have been made? I think this does move us forward on the road to decarbonising our economy. I want to thank the Minister and particularly his officials for all of the work that has gone into this and the thousands of pages that have now been published. He made a really important point when he talked about how

“investment will be key to our success”.

I could not agree more. I agree with him that, over the last 10 or 12 years, we have managed to attract tens of billions of pounds of private sector investment, but we have to deal with the world as we find it now. The reality is that the US, the EU and other nations are speeding up and attracting billions and billions of private sector investment right now. Why are we waiting until the autumn to respond to that? Do we not need to speed up and respond now to the Inflation Reduction Act and measures by other nations?

[Graham Stuart]

I thank my right hon. Friend, and I pay tribute to him for his role as COP President and all the leadership he has given in this area. He is absolutely right to highlight the investment competition, but as I think The Economist mentioned last week, the US approach, with its direct subsidy regime, is not as effective—not as cost-effective—as the UK regime. I am confident in our system, and we are rolling this forward. We have attracted £50 billion of green investment from 2021 to 2022. [Interruption.] Since 2010—when the right hon. Member for Doncaster North, who does not stop chuntering, left power, fortunately—we have had 50% more expenditure per share of GDP in this country than in the US, and we are opening up today the policies to ensure that that continues. My right hon. Friend will be delighted to learn that the CBI has said:

“The package of measures announced by the government represents a gear shift to boost energy security, reduce household bills and re-establish the UK’s credentials as a leader in green technologies.”

That is the CBI speaking for British business, and I believe that the policies today will deliver implementation, which is our main aim as we go forward.