North Sea Energy
Debate between Baroness Blake of Leeds and Earl Russell
Earl Russell (LD)
My Lords, we welcome this important step towards developing a framework for future energy in the North Sea and, in particular, the clear intention to engage in a constructive dialogue with North Sea communities, business supply chains, trade unions, workers and environmental groups. We also welcome the clear recognition that the North Sea will remain at the heart of Britain’s energy future, supplying home-generated, clean, renewable energy, supporting jobs and our future energy security long into the future. We urgently need a coherent transition plan for the North Sea to support workers, supply chains, families and communities. We need much more thinking and planning on how we transition away from oil and gas after 50 years of drilling in what is now a rapidly declining basin and how we can all work to ensure a just transition for our oil and gas industry workers.
While we welcome the consultation and the Government’s vision for an internationally leading offshore clean energy industry, we believe that more decisive and accelerated action is required to ensure a truly speedy and just transition for the workers and communities who have powered this country for decades. The consultation period is very short. The closing date is 30 April. Is this really enough time, considering the complexity of the task at hand and the range of consultees? What reassessment of the urgency and support needed for a just transition are the Government making, considering the impact of the Supreme Court decision on new oil and gas fields? The implications of the Supreme Court judgment must mean that these matters are now more pressing and require a rethink and more resources than they did. We are seeing multilateral energy companies such as BP rowing back from their commitments to the energy transition. What impact is this having on planning to transition and what actions are the Government taking to work constructively with these companies?
At its heart, this is about rapidly teaching the skills and creating the job opportunities for the future during a period of exceptional social change. While the consultation outlines improvements in clean energy industries, more concrete commitments and funding mechanisms are needed to ensure a truly just transition for the existing oil and gas workforce. Although research suggests high skills transferability, bridging the gap between potential and actual job creation in the clean energy sector requires significant government intervention. We call for more proactive and adequate funding for retraining and upskilling programmes.
There has been talk of GB Energy cuts. We believe that these are counterproductive. The green economy grew by 10.3% last year and, since the war in Ukraine started, we have spent £40 billion importing foreign energy. Cutting GB Energy will simply lead to higher energy bills and more money for the Russian war economy. Policy certainty is of paramount importance and I call on the Government to maintain clear lines to ensure the investment we need to transition. The Government must provide a clear and unwavering long-term vision and must do more than just simply phasing out oil and gas. This will clearly need business plans and investment to ensure that we can transition. Will the Minister say what comes next after the consultation has closed? How will the results be published? What role will Parliament have in making future recommendations?
Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)
My Lords, I thank both noble Lords for their contributions to this crucial debate. I thank the noble Earl, Lord Russell, for his positive comments at the beginning of his contribution. I look back fondly on the time we worked together, when I was the Opposition Whip for this area, and we did some useful work together.
To go to the nub of the Statement, which came out in the Commons last week, the Secretary of State launched a consultation on the steps this Government have taken to seize the opportunities of the clean energy transition in the North Sea. That was the critical point that we are talking about tonight. It is about working with businesses, workers and communities to strengthen north-east Scotland’s status as the energy capital of the UK and, obviously, reaching beyond. It is important that all of us talk up the opportunities that we have got going forward.
At the same time, we obviously have the backdrop of global warming to 1.5 degrees and all the evidence we have around that, but I reassure the noble Lord, Lord Offord, that making Britain a clean energy superpower is one of the five missions of this Government, as he quite rightly stated. We are committed to delivering clean power by 2030 and accelerating to net zero across the economy. As part of this mission, the Government remain committed to achieving the UK’s NDCs, carbon budget 6 and net zero by 2050.
We all know, and need to acknowledge, that the North Sea is a maturing basin. Oil and gas production has seen a natural decline of 72% between 1999 and 2023, and, as a result, the industry has already lost a third of its direct workforce over the last decade. We cannot ignore the situation that we are in and, as the noble Earl, Lord Russell, identified, we need a new plan to move forward. We cannot continue to exist as we are; this plan is urgent, as expressed last week in the Statement.
It is a government manifesto commitment not to issue new licences to explore new fields, and we have always been clear that oil and gas will continue to play an important role for decades to come. The reality is that new licences for oil and gas awarded in the last decade have made only a marginal difference to overall production. To continue granting them would not help our energy security and not be compatible with our climate commitments.
Furthermore, as domestically produced oil and gas are traded on international markets, it will not mean cheaper prices for consumers. We have to continue to work with the sector to make sure that the existing fields are managed appropriately for the entirety of their lifespan, and, in answer to the noble Lord’s questions, I want to give real assurance that that is very much part of the Government’s plans. We will respond to the consultation in due course. I cannot give a specific timeframe at this point, other than that we recognise that this is urgent, as I have already said. Developers will, of course, be able to apply for consents under this revised regime.
The other part of the Statement very much referred to the North Sea’s unique strengths, and I would hope that all of us can come together to be much more positive about the potential we have going forward. We know that low-carbon technologies such as CCUS—carbon capture—and hydrogen will play a key role in supporting decarbonisation across the economy, including hard-to-abate sectors.
It is estimated that the offshore renewables workforce, including in offshore wind, hydrogen and other technologies, could increase to between 70,000 and 138,000 by 2030. I hope this addresses some of the concerns that obviously have been expressed. It is vital for delivering the best outcomes for workers, communities, energy security and sustainable economic growth. This also shows how quick and decisive action is needed with the cessation of fossil industries, as we saw at Grangemouth. We acknowledge that we have supported Grangemouth with £200 million from the National Wealth Fund for co-investment with the private sector to unlock Grangemouth’s full potential and secure our clean energy future.
The fact that the Government have moved so quickly to establish Great British Energy is a real indication of our commitment to our clean power target, overseeing a record-breaking renewables auction and improving the offshore wind auction. We all know how disastrous the previous auction was, with no responses at all. We obviously need to kick-start the UK’s carbon capture and hydrogen industries with strong early investment.
The other factor that we need to acknowledge—and I do not think has been picked up—is just how important it is to accelerate the build of new network infrastructure which is essential for reducing curtailment and constraint payments. But this is just the start. The independent NESO has also set up pathways to a clean power system in 2030 and confirmed that a clean power system was deliverable, more secure and could see a lower cost of electricity and lower bills. Building on this advice, our clean power action plan will drive £40 billion-worth a year of investment to meet our goal of clean power by 2030.
I would just like to restate how fortunate we are to have the North Sea as part of the United Kingdom. In response to the noble Lord, Lord Offord, I can say that the North Sea workers will be central to the discussions that we take forward—and not just the workers but the communities, the supply chains and all the rest of the support that our development and plans require.
The plan is the scale-up of clean energy industries and giving the oil and gas sector the support and clarity it needs to continue operating for decades to come. The plan is to keep working with the people who matter the most, as I have said—the North Sea’s businesses, workers, communities and the trade unions—to take advantage of the tremendous opportunities of the years ahead.
I have to say that our experience is not the negative picture from the private sector as has been described. We are in very productive conversations with different sectors, with industry, to move forward. We recognise just how important the work is to support the workers. We absolutely understand the step-change that needs to happen around the skills agenda—this is fundamental —but the potential and the opportunity must drive everything we do going forward.
I am sure that noble Lords will understand that I cannot comment on the spending review in any detail at this point. The outcome of the review will be made public very soon. We look forward to seeing a positive step forward to make sure that the North Sea gets the investment and particularly enables the energy sector up there to contribute to the security of this country. We know that the status quo is not acceptable. We were incredibly exposed after Russia invaded Ukraine; we need to make sure that we move forward at pace, with confidence and with the support of the country behind us.
Carbon Dioxide Transport and Storage Revenue Support (Directions and Counterparty) Regulations 2024
Debate between Baroness Blake of Leeds and Earl Russell(10 months, 4 weeks ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Earl Russell (LD)
My Lords, I rise to speak to both of these SIs. I note that neither of them has been subject to any report by the Secondary Legislation Scrutiny Committee.
Both SIs relate to carbon capture, usage and storage—CCUS—and are broadly welcomed on these Benches. I will not partake in any debate on CCUS today. It is a suite of technologies that enable the mitigation of carbon dioxide emissions from large point sources, such as power plants and refineries, and the removal of existing CO2 from the atmosphere. In short, CCUS is one vital tool in the toolbox to help us reach net zero.
The Government envisaged building a competitive, self-sustained CCUS market in the UK. I note that, as of today, no commercial-scale CCUS projects are up and running. CCUS could provide economic growth potential as part of the transition to net zero—£1 billion of government money has already been made available for investment in four potential clusters, which aim to be capable of storing 20 to 30 megatonnes of carbon dioxide by 2030—but CCUS has had a slow and slightly rough start in the UK.
The revenue, directions, eligibility and counterparty SI establishes the process by which the Secretary of State can direct a carbon capture counterparty to offer to contract with an eligible carbon capture entity. It also sets out the requirement that certain information must be published by the counterparty in respect of contracts entered into, as well as the requirement on the counterparty to notify the Secretary of State promptly if it is likely to be unable to perform its functions. This instrument concerns the implementation of industrial carbon capture business models, or ICCBMs—there must be a better acronym—which are intended to support the ambition set out in the net-zero strategy to deliver carbon capture, usage and storage, or CCUS, in four industrial clusters. The ICCBMs have been designed to incentivise the deployment of carbon capture technology by industrial and waste users who often have no viable alternative, as the Minister set out, and are similar to contract for difference schemes.
My questions on this SI relate to the future review and scrutiny of those contracts. As they are commercial contracts—I note that they are in the public domain, but some of this may not be made public—and are signed off by the Secretary of State, can the Minister explain what, if any, further parliamentary scrutiny there will be of these processes? These contracts are for new and in some cases yet unproven technologies, so how will value for money be ascertained and reported back to Parliament in future, especially given that the SI allows for the amendment of those contracts in future and no statutory review is envisaged? I welcome the response to the consultation and the changes, including the use of the term “energy recovery generating station” and around the exclusions and support.
Because of time, I will not go through all that the SI on carbon dioxide transport and storage does. It seeks to help establish first-of-the-kind infrastructure in the UK to transport and permanently store the carbon dioxide that has been captured. It provides Exchequer-funded revenue support to mitigate the financial risks of the initial investors. The investment in this infrastructure is welcome, and I recognise the need for it, but what level of financial support is envisaged at this stage? If none is required now but money is perhaps required at some later point, can I ask if and how Parliament might be consulted on that and what limits are in place on those future financial investments in this scheme? If more money goes in, how will that be reported and noted by Parliament?
My other questions relate to parliamentary oversight and scrutiny of the new types of technology and new contracts—what they are delivering and whether they are delivering value for money, how they are monitored and how Parliament gets future say in scrutiny of them.
Finally, in relation to both SIs, the process is delivered via commercial contracts, and both SIs allow for alterations and a requirement on the parties to inform the Secretary of State if the counterparty is unable, or likely to be unable, to fulfil its role as entered into. What, if any, dispute resolution mechanisms exist here between the department and the contractors? I am particularly interested in what legal dispute resolution mechanisms exist to give adequate oversight of this process to Parliament before any potential legal disputes end up in court.
Baroness Blake of Leeds (Lab)
I thank the Minister for his in-depth introduction to the two SIs that are before us today and for the comments we have heard so far. There will be some repetition in some of our concerns and questions.
I start by setting a bit of the context. I admire the ambition that is expressed, as we discussed during the passage of the Energy Act, recognising that this whole area is just one part of the toolkit in addressing the need to remove carbon from our industry. The Minister outlined the sheer scale of the proposals here, which involves going from 6 megatonnes in 2030 to 9 megatonnes in 2035, but I do not think he expressed what that will mean in terms of the infrastructure required to support the operations. I have to be honest that this Government have so far not had a great track record in delivering infrastructure across the piece, particularly transport infrastructure.
I would like to have a bit more sense, given the backlog in transport investment, of whether investment in this area will jump the queue, if you like, in the planned progress. Is there a plan? That is a question we come back to again and again in terms of delivering on this agenda. Of course, the other major issue around all this is the way the planning system works, or does not work. Can the Minister assure us that we can move forward with confidence in delivering a fairly steep timetable approaching 2025—next year? The clock is well and truly ticking.
Gas-fired Power Stations
Debate between Baroness Blake of Leeds and Earl Russell(1 year ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Blake of Leeds (Lab)
My Lords, it is fair to say that there has been some scratching of heads as to why exactly this announcement was deemed necessary. There is general agreement that gas-fired power stations will be needed during the transition to net zero. However, there is disquiet at the emphasis on this aspect of policy rather than on alternative approaches such as ramping up investment in renewables.
If new-build plants are needed, it is essential that they are capable of converting to hydrogen or are connected to functioning carbon capture and storage. May I seek assurance from the Minister that this is indeed the Government’s view? Can he also inform us what estimate has been made of how many of these new gas plants will be needed, when they will come on stream and how long reliance on them is expected to last?
Earl Russell (LD)
My Lords, this announcement comes out of the blue and fuels doubts that this Government are on track to meet their own target of fully decarbonising power generation by 2035. So far, instead of progress we have seen repeated failures to prepare; the offshore wind auction collapse; an effective ban on onshore wind; nuclear power projects delayed; slow or no progress on battery storage, hydro-generation and tidal projects; and a lack of investment in overall grid capacity. I ask the Minister to confirm that the Government are still committed to fully decarbonising power generation by 2035 and that these will be the last ever carbon-based power generation plants to be built in the UK.