Covid-19: Walking and Cycling
Baroness Verma Excerpts(4 years, 5 months ago)
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Baroness Vere of Norbiton [V]
Local authorities already have a number of responsibilities, one of which is ensuring the expeditious movement of traffic, including cyclists and pedestrians, on highways. There is a range of things that they can do to make this happen. The commencement of Part 6 is one of the things we are looking at; we are looking at the evidence and weighing up whether or not it is appropriate to commence it at this time.
Baroness Verma (Con) [V]
My Lords, local businesses in my city of Leicester are desperately trying to revive their lost incomes as lockdown is loosened, but will my noble friend instruct local councils to consult and work with businesses and local communities before they keep creating pop-up cycle and pedestrian lanes that take away parking spaces outside small businesses?
Infrastructure Bill [HL]
Baroness Verma Excerpts(9 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, I beg to move that this House agrees with the House of Commons in its Amendment 20, as well as with Amendments 32 and 38. I shall also speak to the subsequent Amendments 20B and 20C, which the Government have tabled in this group. I restate this Government’s commitment to reducing carbon emissions by 80% by 2050. To meet our challenging climate targets we will need significant quantities of renewables, nuclear and gas in our energy mix, and we are committed to listening to the experts and their advice on how to reach those targets. The Committee on Climate Change said that for flexible power supply, the UK will,
“continue to use considerable, albeit declining, amounts of gas well into the 2030s”,
which will leave,
“a considerable gap between production of North Sea gas and our total demand”.
The committee argues that this demand,
“can either be met through imports or UK production of shale gas”,
and concludes that,
“if anything using well-regulated UK shale gas to fill this gap could lead to lower overall lifecycle greenhouse gas emissions than continuing to import LNG. It would also increase the proportion of energy produced within the UK, improving our energy sovereignty”.
Notwithstanding this, concerns have been raised in both this House and the other place about how the UK’s shale industry will affect our carbon budgets. We therefore tabled amendments in the other place that will place a duty on the Secretary of State to seek advice from the Committee on Climate Change as to the impact of petroleum produced onshore in England and Wales on our ability to meet the UK’s overall climate change objectives over time. The Secretary of State must consider the advice of the Committee on Climate Change and report on his conclusions at least every five years.
The Government now seek to further strengthen this commitment by specifying that if the Committee on Climate Change advises that shale gas may adversely impact climate change objectives, the Secretary of State must either make regulations providing that the right of use for petroleum and deep geothermal exploitation will no longer be available for future projects or report to Parliament on the reasons for not doing so. Amendment 20B and the consequential Amendment 20C seek to address this commitment. By introducing these amendments we are making it absolutely clear that shale development will remain compatible with our goal to cut greenhouse gas emissions.
Lord Teverson
My Lords, I welcome these amendments and very much welcome what my noble friend just said. I do not point at my noble friend in saying this, but I am always disappointed, given the truism about gas being the future, that we have not made more effort to make sure that, in the short term, gas is substituted for coal and that we have a far more rigorous gas industry than we have at the moment. That was the route forward, but we have been unable to put it to bed during the passage of the Energy Bill and now of the Infrastructure Bill. I hope that it is something that can at least be given greater attention after the election. However, I welcome these new clauses.
Baroness Verma
I am grateful to all noble Lords for their support for these amendments. I think that all noble Lords will agree that it makes great sense to ensure that we have the informed advice of the climate change committee.
Motion agreed.
Motion on Amendments 21, 21B, 21C and 21D
Baroness Verma
My Lords, I shall speak also to the other amendments in this group.
There is a clear and pressing need to ensure that this legislation is absolutely right. Shale gas is an exciting new energy resource for the UK, with the potential to provide greater energy security, growth and jobs, alongside playing an important role in the transition to a low-carbon economy. Unlocking the shale industry is too big an opportunity to pass up. We all agree that it must be done safely and sustainably, but we cannot throw away the opportunity to create thousands of jobs and economic growth for communities across Britain.
The Government’s position comes from careful consultation of relevant experts and draws on many authoritative reports from the US. More specifically, it is based on reports by the Royal Society and the Royal Academy of Engineering, and Public Health England, which have considered a wide range of evidence and looked at the UK regulatory system. Their advice has outlined the risks and concluded:
“The health, safety and environmental risks associated with hydraulic fracturing … as a means to extract shale gas can be managed effectively in the UK as long as operational best practices are implemented and enforced”.
Following exhaustive discussions in this House and the other place, we have been considering the implementation and enforcement of operational best practices in the UK, which is why we accepted Amendment 21 during Report stage in the other place. We did so in order to show our acceptance of the intent of the 13 policy elements it sets out, but noble Lords—in particular, those with a legal background—will appreciate that, as currently drafted, the amendment cannot be included in the Bill. Although the courts would attempt to interpret the provisions, Amendment 21 is not viable as law and simply would not work in practice. Amendment 21 as currently drafted would have been wrong to accept, so we have been working hard to ensure that its spirit is maintained.
The government amendments in lieu are designed to ensure that the regulations we seek to introduce deliver the intended outcomes and support the growth of the shale industry while reassuring local communities that this will be done in a safe and responsible manner. They also ensure clarity for all interested parties by proposing clauses that are capable of being interpreted and enforceable.
Regarding the scope of our amendments, they will apply to hydraulic fracturing, which will be defined in UK law. Geothermal operations will be excluded, as the amendments are being taken forward through the petroleum licence, for which there is no geothermal equivalent. Conventional oil and gas well stimulation techniques will also be excluded—something that noble Lords will agree makes perfect sense, as these have been used for decades onshore.
The territorial extent of the amendments will be limited to England and Wales. In other words, Scotland will be excluded from the requirements of the new commitments. Noble Lords will be aware that, as a result of the Smith commission’s recommendations and the Command Paper published, it is planned that in the next Parliament responsibility for mineral access rights for underground onshore extraction of oil and gas will be devolved to the Scottish Parliament.
I now turn to the commitments themselves. First, our amendments mean that the Secretary of State will not issue a well consent, something that is required by an onshore licence for England or Wales, unless it prohibits associated hydraulic fracturing from taking place in land at a depth of less than 1,000 metres. The right-of-use provisions will be left unchanged at 300 metres. In land at a depth of 1,000 metres or more, hydraulic fracturing will not take place if the licensee does not have the Secretary of State’s consent for it to take place—something I will henceforth refer to as a hydraulic fracturing consent. For the hydraulic fracturing consent to be issued, an application for it has to be made by, or on behalf of, the licensee. Where an application is made, the Secretary of State will only grant consent if he is satisfied that a number of conditions have been met.
Some of these conditions relate to the planning systems in England and Wales. In particular, the Secretary of State will need to be satisfied that the environmental impact of the development has been taken into account by the relevant planning authority. He will also need to be satisfied that the relevant planning authority has taken into account, where material, the cumulative impact of the development proposed and any other development involving hydraulic fracturing to obtain oil or gas. He must be satisfied that the relevant planning authority has considered whether to impose a restoration condition in relation to the development and that the relevant water companies have been consulted before any planning permission is granted.
Similarly, a well cannot be drilled, and associated hydraulic fracturing cannot take place, within protected areas. The precise definition of protected areas will be decided at a later stage, as our clauses put a duty on the Secretary of State to bring forward secondary legislation to be laid before and approved by a resolution of both this House and the other place no later than the end of July this year. We must be very careful not to put in place restrictions in areas that do not achieve the intended aim of the condition or that go beyond it and needlessly damage the potential development of the shale industry. In order to satisfy himself that the conditions relating to planning have been met, the Secretary of State may rely on notices given by the local planning authority. A notice, which, in practice, means specifically that the process of an environmental impact assessment has to have been carried out, would be sufficient to satisfy the Secretary of State that the environmental impact had been taken into account.
Similarly, notices from the relevant local planning authority confirming that the cumulative effects of permitted developments have been taken into account where material, that it has considered whether to impose a restoration condition, and that local water companies have been consulted before a decision to grant the relevant planning permission is taken, would allow the Secretary of State to be satisfied that the relevant conditions have been met. It would also be sufficient to receive a notice indicating that the area in respect of which the planning permission has been granted does not include any land which is within protected areas, once these have been clearly defined. I note that the absence of these documents does not necessarily prevent the Secretary of State satisfying himself that the conditions have been met. This is to ensure that if, for example, the kind of notice listed is not available, the Secretary of State could grant hydraulic fracturing consent provided he is satisfied that the conditions listed in the clause have been met. I should stress that it is not possible for the Secretary of State to grant hydraulic fracturing consent if these conditions have not been met.
Other conditions that would need to be met concern the environmental permitting regimes in England and Wales. Consent will not be granted unless the level of methane in groundwater has been monitored 12 months before hydraulic fracturing begins. Arrangements have also to be made for monitoring emissions of methane into the air for the period of the environmental permit, and for the monitoring results to be published. The substances used, or expected to be used, in associated hydraulic fracturing have to be approved by the relevant environmental regulator.
Lord Berkeley
My Lords, I follow the comments of the noble Lord, Lord Teverson, about geothermal plants. People may have read an article in the Times last week on 2 February about the Eden project, which is trying to develop the geothermal plant mentioned by the noble Lord, drilling several miles underground. It says in the article—it is quite surprising to me—that the water that will come out will eventually be 180 degrees centigrade, which is well above boiling point. That is wonderful. It would heat 4,000 homes and all the biomes of the Eden project. I hope that this geothermal drilling—which is purely water based, I think; there are no chemicals or anything else—will not be caught by these various amendments. To quote Michael Feliks, chairman of the Renewable Energy Association’s geothermal group:
“It would be a shame if geothermal energy ended up as collateral damage in a debate about shale gas fracking.”
It is a completely different thing. It is drilling, and it should be allowed under the normal planning procedures rather than coming into this Bill at all.
Baroness Verma
My Lords, I am extremely grateful to all noble Lords for their contributions, but particularly to noble Lords who have supported the government amendments in lieu of the amendments that were made in another place.
A number of questions were raised. I want to make sure that I respond to all of them, but there will be one or two questions that I cannot commit to answering now and on which I will have to write to noble Lords, such as the question posed by my noble friend Lord Caithness about the number of miles of tunnels going underground. I do not think that information is at hand, unless of course the noble Baroness, Lady Jones, has the answer.
I reassure the noble Baroness, Lady Jones, that our regulatory regime is robust. It will ensure that no hydraulic fracturing will be permitted where groundwater and drinking water supplies can be affected. We had a protracted debate not that long ago in which we made it very clear that this Government take very seriously that operations will take place only if all of the environmental impact assessments are met. I had hoped that I had laid out today very clearly in my detailed speaking notes our response to what the other House came up with on Report. We have bettered the amendments that the other place made, so that they will be able to stand up to legal challenge and to ensure that the safeguards that she and other noble Lords, such as the noble Lord, Lord Truscott, have asked for can actually be delivered.
It would be wrong to return to the detail of a debate that has been well practised in this Chamber. The industry is already voluntarily doing a lot of what was asked in the amendments put by the Opposition. I am pleased with the response from my noble friends about what we have taken on board. It is never about a U-turn for a Government, it is about listening carefully and then making sure legislation works. If the noble Lord, Lord Tunnicliffe, wants to make a political point out of it, that is entirely up to the noble Lord. I would say, however, that it is really important that responsible and sensible Governments look very closely at legislation and then respond. I think that the general consensus in the House has been that we have listened, responded and returned with a much better set of amendments, which answer exactly what noble Lords opposite and their colleagues down the corridor have asked for.
Infrastructure Bill [HL]
Baroness Verma Excerpts(10 years ago)
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Baroness Verma
“(4A) A person (“L”) who owns land (the “relevant land”) is not liable, as the owner of that land, in tort or delict for any loss or damage which is attributable to the exercise, or proposed exercise, of the right of use by another person (whether in relation to the relevant land or any other land).
(4B) For that purpose, loss or damage is not attributable to the exercise, or proposed exercise, of the right of use (in particular) if, or to the extent that, the loss or damage is attributable to a deliberate omission by L.
(4C) There is a “deliberate omission by L” if L, as owner of the relevant land, decides—
(a) not to do an act, or(b) not to allow another person to do an act,and the circumstances at the time of that decision were such that L would not have had to bear any of the costs incurred (whether by L or any other person) in doing or allowing the act.”
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, the UK stands to benefit enormously from the safe and effective development of the offshore shale gas and oil and geothermal industries. The Government have introduced provisions into the Infrastructure Bill which provide a right to use deep-level land 300 metres or more below the surface for the purposes of exploiting petroleum or deep geothermal energy.
I explained on Report that I had listened to the concerns expressed by stakeholders and by noble Lords that the right to use deep-level land could disadvantage landowners if claims were brought against them in connection with petroleum or deep geothermal operations. While the existing regulatory regime is robust, I agree that we can do more to reassure landowners. We need to be clear that these sorts of claims—brought by a third party against a landowner whose land is accessed through the right of use clauses—cannot be made against a landowner who has done nothing wrong. To this end, I committed to table an amendment to address this issue.
The amendment will provide protection for landowners against claims made by third parties for any loss or damage caused by the exercise of the right of use provision. It does, however, ensure that landowners—including persons with an interest in land, such as persons licensing the land—will not benefit from the exemption if they deliberately fail to act, or decide not to allow someone else to act. To make this fair to landowners, we also propose that a landowner would not have to do anything that would ultimately involve them in bearing any costs. This means, for example, that if a landowner prevented an operator from accessing his land to remediate any damage caused, despite the landowner not having to bear any costs, that landowner could be deemed liable. If, by contrast, the landowner allowed for the damage to be remediated, this amendment ensures that, as well as benefiting from existing protections, the landowner would not be liable to claims from any third parties for loss or damage.
This amendment will complement the existing comprehensive statutory and regulatory regime by protecting landowners, while allowing this source of home-grown energy to develop in a way that is fair to communities. I beg to move.
Lord Teverson (LD)
My Lords, I thank the Minister for having explained that amendment. I must admit that, when I went through it, I was not at all clear what it was trying to get at. I wondered whether this mystery person “L” would be listening to the debate or appearing in it. We have a number of such letters in this Bill.
My noble friend Lady Kramer has already thanked a number of people. I am not sure whether I am in the right area to do this but I want particularly to thank my noble friend Lady Verma for the work that she has done on this Bill. It has gone through everything from community energy to fracking to this whole area of oil. It has been a pleasure to work with her. We have our disagreements more in DCLG areas rather than here, but the Bill when enacted will make a number of things in the area of energy much better.
I also thank my noble friend Lady Kramer for guiding a Bill through the House when only about 10% included her departmental responsibilities. She has been present for a lot of our proceedings even when matters far from her department’s responsibilities were involved. Of course, I support the amendment.
Lord Davies of Oldham
My Lords, as the House is in congratulatory mood, I briefly congratulate the noble Lord, Lord Jenkin. I first met his formidable intellect, advantages and knowledge on energy Bills a decade or so ago, when we went through a very long energy Bill. From what I can recall, he was present for virtually every minute of a Bill that went through 13 days or so in Committee, to say nothing of the extensive consideration elsewhere. Others will have the chance to congratulate him later, but with regard to this Bill, he has displayed his usual insight and talent to improve the legislation. I also, of course, second his point about congratulating the noble Baroness, Lady Verma, and the Bill team—although I may say that they have only started the long road. I predict challenges yet to come on all parts of the Bill but in the area of fracking, I think that they will have quite an interesting time in the other place.
Baroness Verma
My Lords, I am extremely grateful to all noble Lords for their participation in our proceedings on this Bill, particularly our discussions outside the Chamber, which have been very helpful. I end by thanking my noble friend Lord Jenkin for being there throughout all the energy Bills that I have worked on. He has provided a stream of information and expertise, and I have learnt a great deal from him in the past two and a half years at the Department of Energy and Climate Change. I wish him well. His forensic examination of legislation has made us all realise that this House has such excellence to offer that we should never underestimate the expertise among those who sit here.
Infrastructure Bill [HL]
Baroness Verma Excerpts(10 years ago)
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The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, I thank the noble Baroness for tabling the amendment and my noble friend for his contribution.
The amendment seeks to extend the scope of the community electricity right provisions to include all electricity generation. I listened very carefully to what the noble Baroness said about also looking at different models. I hope I will be able to lay out clearly that what we are trying to do, in the first instance, is to take the positive step of focusing on community-shared ownership of renewables but our drive really is to increase that shared ownership as a positive step in enabling people to take some stakeholding in their local communities and to drive forward a voluntary approach, as has been worked through the Shared Ownership Taskforce.
We have made it very clear that we are not excluding other forms of energy; we are just saying that within the renewables sector we are concentrating on wind and solar, which are two mature sources and therefore it is easy to demonstrate their benefit to local communities. We are absolutely clear that this legislation should apply only to renewable electricity technologies. There are two key reasons for this.
The noble Baroness said that some communities embrace renewables and others do not. We want to bridge that disconnect between national and local benefits for renewable electricity schemes. What we have seen often is that nationally there is great support for the renewables sector but that is not always reflected when it becomes a local issue, where the impacts are felt directly by communities.
What we want to do through this legislation is to seek to redress the imbalance by ensuring that communities have the opportunity to get much more involved and can develop a real sense of ownership of local schemes being developed on their doorstep. This is about promoting decentralised energy generation that is happening in people’s homes and in local communities right across the country.
Renewable electricity generation, particularly from technologies such as wind and solar power, is now well established. This typically translates into lower risk profiles for community investors, which is an important safeguard. It is important to remember that shared ownership is still very much a developing concept in this country. The Shared Ownership Taskforce published its final framework on Monday, and I very much take on board the point my noble friend made that it came a little later than expected. The members of the taskforce have worked long and hard to develop a framework which both developers and local communities can work with. This has been a challenging task, even for the most established renewable technologies where there are successful case studies working on the ground.
To say simply that we need to extend the concept of shared ownership to all forms of electricity generation, without proper consideration of the inherent issues that each faces, therefore makes little sense to me when the voluntary approach on shared ownership to date has been solely developed for, and has focused on, those particular renewable sectors. It is right that, if these powers were ever exercised, we would expect them to focus specifically on established and mature renewable electricity generation technologies, such as solar and onshore wind.
I would like to reassure the noble Baroness again that this is the first step in increasing community shared ownership of renewables. If it is successful, there is nothing to stop us considering extending it to other technologies, because we want lessons to be learnt and to do the proper consultation that everybody would expect to take place when we extend this.
In responding to a couple of questions that were raised by my noble friend, we are encouraging local electricity discount schemes and recognise that they are a valuable initiative which we wholeheartedly support. However, we must remember and recognise that offering reduced-price electricity is giving a gift to the community, not providing the community with the chance to invest in schemes such as community electricity. There is a slight difference there, which we need to be able to recognise.
Lord Jenkin of Roding
A moment ago my noble friend said that there was absolutely nothing to prevent the scheme being extended to other forms of community involvement. However, the word “renewable” is in the first paragraph of the first clause of the part of the Bill which deals with energy. Will extending it to other forms require further primary legislation?
Baroness Verma
It would require proper consultation. We would have to go through the proper consultation processes to ensure that, having seen what has worked or not worked with these initial schemes, when going forward on including other schemes we are able to respond to the needs of those technologies. That is what local communities will ultimately have to face. It is not about primary legislation; it is about looking at how we would be able to add those new schemes through consultation. We have said very clearly that we are not stopping or excluding other provisions of electricity supply. We would have this opened up but we are starting with the focus on the renewable sector. I hope that I have been able to make that a little clearer to the noble Baroness. If I have not done so, I will repeat what I have already stated: these provisions would apply only to renewable electricity schemes. To clarify my noble friend’s point, we would have to readdress it in primary legislation.
Baroness Worthington
My Lords, there we have it. This does not feel to me like appropriate primary legislation. If we have the potential for bringing in new definitions of what these schemes apply to, perhaps we should put it in a schedule or in secondary legislation and have this slightly less draconian in order to give us that flexibility. The Minister has made it clear that this is quite a new thing; it is not tried and tested. I find it quite surprising that this is coming from an anti-regulation Government, and that we should be imposing this quite bizarre new set of regulations on an industry that is growing and developing and delivering great economic benefit to the regions. Yet here we are, imposing this ownership requirement from on high. Although it is obvious that the Government have consulted the industry, it is none the less really unhappy about this—that goes certainly for the solar industry. It does not see the right as something that will help it boost investment; rather, it sees it as an impediment to increasing investment. I am afraid that I am not persuaded.
On which technologies are mature, we have been using various forms of renewable electricity for many decades, including hydro, energy from waste and biomass, but these are excluded. The Government have chosen just two technology types, which happen to be, coincidentally, a little bit contentious politically, and have decided that they are going to impose this ownership right on them.
It is not appropriate to be rushing this measure through with primary legislation at this stage. I have not been persuaded that the definitions are clear. I suspect that this will be an issue that is returned to when this Bill passes to another place. However, at this stage, I do not feel inclined to divide the House, and I am happy to beg leave to withdraw the amendment.
Baroness Worthington
My Lords, it is very late and I do not wish to detain the House. However, I want to add my strong support for the amendments tabled by the noble Lord, Lord Jenkin of Roding. They seem very sensible. I am absolutely convinced that we need to ensure that there is a proper consultation process. It is absolutely right that we should be stipulating that this should not have a retrospective element. I hope that the Minister will be able to put our minds at ease by at least helping us to understand that this should not apply retrospectively. I have looked carefully at the schedule, but it does not seem to be explicit there and it needs to be clear. Should there be any doubt over that, it would set a difficult and unwelcome precedent so we are supportive and we look forward to the response.
Baroness Verma
My Lords, I thank my noble friend for tabling these amendments. The first part of Amendment 109 seeks to include a requirement on government to conduct a progress review of the voluntary approach and report the findings to Parliament before regulations may be made in respect of onshore facilities. The second part seeks to require government to appoint a panel of experts to review, advise and report on community stakes in relation to offshore renewables before regulations may be made in respect of offshore facilities.
To start with the first element of the amendment, as I mentioned in an earlier discussion, the Shared Ownership Taskforce published its final framework on Monday. I appreciate that there has not been much time to consider it, so I will set out today the relevant commitments that the taskforce has made in relation to reviewing and reporting progress. In doing so, I hope to demonstrate that there is already a clear process in place for reviewing and reporting. As such, there is no need to include these additional requirements in the Bill, as my noble friend proposes.
The taskforce intends to set up a monitoring group to ensure that progress is evaluated and reported. It proposes six-month and 12-month reviews and will report its findings to my department. As set out in the Community Energy Strategy, the Government will conduct a review of progress next year. The findings from the taskforce’s progress reviews will be critical to this. The Government wholeheartedly support the work of the taskforce. We will be formally responding to its report early in the new year. In it, we intend to endorse its monitoring and reporting process and confirm that this process will feed into the Government’s review next year. Both the Shared Ownership Taskforce and the Government will be monitoring and evaluating the success of the voluntary approach prior to backstop powers coming into force in line with the Government’s Amendment 129, which we will debate a little later.
Turning to the second part of the amendment on offshore renewables, our focus now is on increasing community shared ownership for established onshore technologies such as onshore wind and solar. These are the technologies covered by the Shared Ownership Taskforce’s voluntary framework. Having said that, the community electricity right powers provide future flexibility to include offshore technologies, but we have been very clear from the start that this would be on a longer timescale. This is not to say that we would not encourage offshore developers to offer a stake to communities where they choose.
The suggestion that my noble friend Lord Jenkin makes in Amendment 109 is sensible. If the Government were ever to consider exercising these powers for offshore renewables, I agree it would make sense to set up a panel of independent experts to provide advice on offshore renewables in advance. This would be a similar approach to the one we have taken for onshore renewables with the Shared Ownership Taskforce, which is comprised of experts from the renewables industry and the community energy sector. However, at this stage our focus is firmly on onshore renewables. It is not our intention to establish a voluntary process for offshore renewables right now. As such it would be premature to commit to this and to restrict ourselves at this point to the wording that my noble friend has proposed. We should therefore wait and consider the option of a panel of offshore experts when we have a clearer position on whether this is needed, and if so, what any panel might look like and report on.
Amendment 110 seeks to introduce an obligation on the Government to consult a range of interested parties in advance of exercising the community electricity right provisions and developing any secondary legislation. I completely agree that consultation is essential to ensure that the Government hear the views of all relevant stakeholders and take them into account before deciding the best course of action. These views will also be critical to the formation of secondary legislation that is fit for purpose and can be implemented successfully. However, I do not believe the amendment is necessary. In Grand Committee I made it clear that the Government intend to conduct a formal consultation before exercising the powers. That position has not changed. The consultation would be open to everyone, including the parties listed by my noble friend in Amendment 110, such as community groups, developers, the Scottish and Welsh Governments and Ofgem. My noble friend’s amendment includes some of the very organisations and bodies that we would expect and encourage to contribute to a public consultation given their clear interest, knowledge and understanding of this area.
I will provide a single response to Amendments 111 and 112 as they are inextricably related. I recognise that this is an extremely important aspect of the provisions, particularly in terms of providing future certainty to the renewables industry. The community electricity right provisions would apply to new renewable electricity projects coming forward in the development process. I confirm that the provisions would therefore not apply retrospectively nor to projects that have already received planning consent. The Government have always been clear that this is our policy intent. For example, the Explanatory Notes to Clause 28(5) explain that this provision ensures that the regulations would not apply retroactively and would apply only to facilities that have not, at that date, reached a specified point of development.
While I am keen to provide these reassurances in the House, it would not be right for me to commit to include in primary legislation a qualification that the regulations may not apply to projects that have applied for, but not yet received, planning consent. That may be an appropriate approach to take, but as I am sure my noble friend will understand, the Government would wish to consult on this matter before making a final decision. In doing so we would look closely at the experiences of successful shared ownership schemes including lessons learnt from the voluntary approach. In conclusion, I hope that I have provided noble Lords with enough reassurance about the Government’s position on these matters and, on this basis, I hope my noble friend Lord Jenkin will withdraw his amendment.
Lord Jenkin of Roding
My Lords, I was grateful for the support of the noble Baroness, Lady Worthington; I hope that she will share my view that we have got almost all that we want. The amendment has not been agreed, but my noble friend on the Front Bench has gone as far as one could possibly expect to say, “Without actually accepting your amendments, we are going to do pretty well everything in them”. It will be for the other place to decide whether that is sufficient or whether it would like to see these included in the Bill. As I explained at the end of my speech, that was the purpose of moving the amendments on Report. Having said that, I thank the Minister for what she said and take much pleasure in begging leave to withdraw the amendment.
Baroness Worthington
My Lords, briefly, I again support the noble Lord’s amendment and welcome the government amendment which will indeed delay the “when” aspect of this question. There remain considerable questions about why these provisions have been brought forward, given that the voluntary approach is moving forward. I still think that we are unfairly singling out two technologies relative to other forms of electricity generation. However, I am happy that we now have more time to think. I absolutely echo the words of the noble Lord, Lord Jenkin, that this should be seen as a backstop power, which we hope should not need to be enforced.
Baroness Verma
My Lords, I am grateful to my noble friend and the noble Baroness for their contributions. We listened carefully to my noble friend in Committee and I have very much taken on board all the views that were expressed on that matter, including those of my noble friend, industry stakeholders and the Shared Ownership Taskforce. I am pleased, in response, to bring forward government Amendment 129 which revises the date of commencement of these provisions to 1 June 2016. That ensures absolute clarity on the minimum amount of time the Government intend to allow for the voluntary approach to take effect. It means that the Government could not exercise these powers before 1 June 2016 at the very earliest. This date allows just over 18 months from the date on which the Shared Ownership Taskforce published its voluntary framework, earlier this week, to when the powers may be exercised. I hope that by bringing forward this amendment I shall allow my noble friend to go home feeling satisfied with his input, which—as much as is possible—is always my intention.
Lord Jenkin of Roding
I am grateful for my noble friend’s graciousness. She has gone a long way to meet us but, as has been indicated in the original amendment tabled by the noble Baroness, Lady Worthington, I think there is a lot more exploration that will need to be done in the other place. In the mean time, I beg leave to withdraw.
Infrastructure Bill [HL]
Baroness Verma Excerpts(10 years, 1 month ago)
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Baroness Verma
“Petroleum and geothermal energy: right to use deep-level land
(1) A person has the right to use deep-level land in any way for the purposes of exploiting petroleum or deep geothermal energy.
(2) Land is subject to the right of use (whether for the purposes of exploiting petroleum or deep geothermal energy) only if it is—
(a) deep-level land, and(b) within a landward area.(3) But that does not prevent deep-level land that is within a landward area from being used for the purposes of exploiting petroleum or deep geothermal energy outside a landward area.
(4) Deep-level land is any land at a depth of at least 300 metres below surface level.
(5) This section confers the right to use Scottish deep-level land for the purposes of exploiting deep geothermal energy only in cases where the sole, or main, use of that energy is to be, or is, the generation of electricity.”
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, in the UK, gas provides around three-quarters of our heating needs and a third of our electricity. However, North Sea gas is declining. By 2025 we expect to be importing close to 70% of the gas we consume. Natural gas from shale could play a crucial role in supporting UK energy security, building on our 50-year history of onshore oil and gas exploitation. I ask noble Lords to bear that in mind when weighing up the amendments we lay before the House today. I know some will, rightly, raise concerns about the impact of shale gas development on our climate goals. I see shale as a part of the transition to a low-carbon economy.
Shale gas has a role to play in this. The carbon footprint of UK-produced shale gas would likely be significantly less than coal and also lower than imported liquefied natural gas. As the Committee on Climate Change said last year, for flexible power supply and for heating and industrial use, the UK will,
“continue to use considerable, albeit declining, amounts of gas well into the 2030s”,
which will leave,
“a considerable gap between production of North Sea gas and our total demand”.
It argues that this demand,
“can either be met through imports or UK production of shale gas”,
and concludes that,
“if anything, using well-regulated UK shale gas to fill this gap could lead to lower overall lifecycle greenhouse gas emissions than continuing to import LNG. It would also increase the proportion of energy produced within the UK, improving our energy sovereignty”.
So the benefit to the UK of using home-grown shale gas is clear. It can displace a proportion of gas and oil imports. We have to face it: North Sea gas production is falling and we are becoming increasingly reliant on gas imports. Domestic shale gas could increase our energy security by cutting those imports. It can benefit the UK in terms of jobs, tax revenues and growth, mitigating some of the falling revenues from the North Sea. Ernst & Young’s recent supply chain report found that the industry could support around 64,000 direct and induced jobs. It can support the UK’s transition to a low-carbon economy by helping balance the intermittent supply of renewable energy.
The Government therefore support the development of shale gas and oil. However, it has become clear that difficulties in obtaining underground access pose a barrier to exploring this new industry. The same problem also applies to the deep geothermal industry, which is likewise at an early stage of development in the UK. There is growing interest in the role that geothermal district heating networks could play as part of the transition to low-carbon heating.
Currently, petroleum and deep geothermal energy companies must attempt to negotiate an access agreement with each landowner through whose land activities pass, no matter how deep the works. For new lateral drilling methods which can cover much larger areas underground, existing means of obtaining underground access can be disproportionately costly and time-consuming in relation to the potential benefits. Where a single landowner, or a group of landowners, refuses access, this can create significant delay and in the case of geothermal is likely to stop the project entirely. This is despite the fact that allowing underground access at depths below 300 metres is unlikely to affect the landowners’ use of their land.
These amendments therefore seek to simplify the current process by granting use of land below 300 metres in order to access petroleum and geothermal resources. Let me be crystal clear: we are not proposing any changes to surface access or to the regulatory system that deals with the potential risks associated with drilling and hydraulic fracturing. These regimes will remain the same. The Government have been clear that shale development must be safe and environmentally sound. A company looking to develop shale or geothermal would still need to obtain all the necessary permissions, such as planning and environmental permits. In addition, the onshore oil and gas industry has committed to engage with communities early at each stage of operations, as well as consulting through the planning application process. I reassure noble Lords that there are robust regulations in place to ensure on-site safety, prevent water contamination, mitigate seismic activity and minimise air emissions, and the Government are not proposing to change them.
The government amendment before the Committee follows a 12-week public consultation on our proposals. The consultation attracted a large number of responses and provided an opportunity for the public to voice their concerns. The majority of respondents included campaign text opposing hydraulic fracturing or the proposed change to underground access legislation but did not specifically address the questions to the consultation. Surveys have shown higher public support. For instance, a recent University of Nottingham survey shows that among people who are aware of shale gas, support is more than 50% and more people support its extraction than oppose it. Support for the consultation proposals among stakeholder organisations that provided detailed responses on specific issues was considerably higher than the individual responses. Stakeholder responses from the petroleum and geothermal industry unanimously supported the legislation, as did wider industry, such as manufacturing, the steel industry and engineering associations. There were diverse views among local authorities and land and farmers’ associations, with a majority of local authorities and consultancies in favour of the proposal. Most public institutions and law societies remained neutral to the proposal, often agreeing with the proposal’s rationale, but raising specific issues. Environmental groups and various civil society organisations opposed legislation. Having carefully considered the various issues raised within the consultation responses and whether any compelling new arguments had been presented, we firmly believe that the proposed policy is the right approach. The full government response has been published on our consultation website.
I will now outline our proposals, as set out in these clauses. The first new clause seeks to introduce a right to use land at least 300 metres below the surface for the purpose of exploiting petroleum or deep geothermal energy. The right is limited to these purposes. For deep geothermal energy, the right to use Scottish deep-level land is limited to cases where the sole, or main, use of that energy is the generation of electricity.
The second new clause provides details on the scope of the right of use, and further clarifies the types of ways in which the right may be exercised and the sorts of purposes for which it may be exercised. This clause includes references to passing substances through or into land at depth and includes leaving substances in that land. This applies only in relation to the use of the land for the purposes of exploiting petroleum or deep geothermal energy, so it would not, for example, create any provision for nuclear waste. It does not replace any of the existing regulatory regime, so an operator will still require all the necessary permissions, like planning and environmental permits. Indeed, this clause also ensures that the provisions grant only a right of use and nothing more, so companies will have to comply with existing regulatory requirements.
The third new clause provides the Secretary of State with a delegated power to require companies, by regulation, to make payments to landowners under whose land the right is exercised or other persons as defined by the regulation in return for the right of use. The regulation may also introduce a requirement for companies to provide specified information on these payments. The provisions are included only as a reserve power because both industries have made voluntary commitments to make a one-off payment of £20,000 to affected communities for each unique lateral well that extends by more than 200 metres. The key advantage of such a voluntary approach is to enable flexibility on the detailed arrangements. Different sites may require different arrangements depending on their characteristics. However, in case these voluntary payment schemes are not honoured, this clause will ensure that the Secretary of State can through regulation render them mandatory. Any such regulation will be subject to prior consultation.
The fourth new clause provides for a similar delegated power for a notice scheme. As with the payment scheme, the details of a statutory notification scheme would be set out in regulations following consultation. For now, both industries have committed to notifying communities of works taking place at depth, outlining the area of underground land accessed and the payment to be made. At this very early stage in the development of the shale gas, shale oil, and deep geothermal industries, the typical characteristics of a site and the typical timeframe for development are unknown. We cannot with certainty foresee the way in which industries’ activities will develop in different areas across the UK. A voluntary notification scheme is flexible so it can be adapted as the industries develop. The reserve power to create a statutory notification scheme would be applied only in case the voluntary approach proves not to be satisfactory.
The new fifth clause contains supplementary provisions concerning the powers to introduce payment and notice schemes. The clause contains provisions for the enforcement of statutory payment and notice schemes, including financial penalties for companies that breach the requirements. It also permits statutory schemes to confer functions on certain people, including the Secretary of State, such as a duty, or a requirement to consult. A sunsetting provision is included, which provides that the Secretary of State must review the payment and notice scheme provisions after five years and repeal the relevant sections if a power is not exercised within seven years and if the Secretary of State is satisfied there is no convincing case for retaining it. The Delegated Powers and Regulatory Reform Committee has recommended that regulations made by the Secretary of State to repeal these provisions be subject to the affirmative resolution procedure, and we will be looking to table an amendment to this clause before Report to that effect.
The sixth clause contains the relevant definitions and interpretations. Areas that are “onshore” are currently identified by the definition of “landward area” in regulations made under the Petroleum Act 1998. This clause includes a power to make changes to that definition.
Finally, the amendments seek to update Clauses 28 to 31 to reflect the inclusion of the new clauses on the right of use, and set out matters such as when the new clauses will come into force. We have also introduced an amendment to update the Title of the Bill.
Baroness Verma
My Lords, I thank all noble Lords, in particular my noble friends Lord Borwick, Lord Teverson and Lord Jenkin, for their support for the amendments. The debate has been informative and measured. I hope, in responding to the amendments, that I can reassure noble Lords and address some of the concerns that have been raised. If I do not satisfy noble Lords today I will read Hansard and write back to them in fuller detail.
The amendment in the name of the noble Baroness, Lady Young of Old Scone, would exclude these proposals at a range of locations, including national parks, the Broads and areas of outstanding natural beauty. She called them the jewels of our great country. Companies will still need all their other permissions to be in place before accessing underground land. Sensitive areas would be protected in exactly the same way as they are now. The Government have recently clarified the strong protections that exist for these areas. Where applications represent major development, planning permission can and should be refused in national parks, the Broads and areas of outstanding natural beauty except in exceptional circumstances where it can be demonstrated they are in the public interest.
Applicants for licences will also have to show that they understand the environmental sensitivities of the area applied for and are ready and geared up to address them. They will have to consider the implications of the new planning guidance. We do not intend to include any exemptions to these in our proposals, because we believe that the existing regimes have already been clarified to allow for these sensitivities.
The noble Baroness also asked whether this clause would lead to water shortages. Where water for fracking operations has been provided by local water companies, they are obligated to produce and update every five years a long-term plan that has contingency reserves in case of drought. Therefore, water companies will always assess the amount of water available before providing it to operators. The Environment Agency has said that it will not license abstraction above environmentally sustainable levels. The amount of water used for fracking is controlled by an abstraction licence specifying the maximum amount that can be used.
My noble friend Lord Jenkin very eloquently laid out the potential of geothermal—far better than I did. His amendment proposes to extend the right to use deep-level land for geothermal energy where the main use of that energy is, or will be, the generation of heat, as well as electricity. He also asked about Scotland. My noble friend the Duke of Montrose was able to respond to and answer that question for me by saying that the amendment includes geothermal energy for the purpose of electricity generation because, under the Scotland Act 1998, generation is a reserved matter. So the use of deep geothermal energy for other purposes is devolved to the Scottish Government and, for that reason, we have had to exclude it from clauses; however, we are in discussion with the Scottish Government as to whether they wish to extend the scope to cover this area of heat generation.
My noble friend Lord Borwick asked why we used the word “petroleum”. Licences to exploit oil and gas in the UK are awarded under Section 3 of the Petroleum Act 1998, and that Act permits the Department of Energy and Climate Change to grant licences to search for, bore for and get petroleum. So we use “petroleum” in the context of the Bill because the licences granted to operators are petroleum licences under the 1998 Act.
I turn to the amendments of the noble Baroness, Lady Worthington, to which the noble Lord, Lord Davies, has put his name. The purpose is the production of a report on fugitive greenhouse gas emissions from onshore energy extraction, and that the report be produced six months after the passing of this Bill, and will include,
“monitoring, reporting and managing of existing and future fugitive emissions”.
I draw noble Lords’ attention to the fact that these fugitive emissions are reported already at a national level on an annual basis, as part of the UK Greenhouse Gas Inventory. The detailed methodologies and data sources used to inform these emission estimates are provided in that report, which is publicly available.
The noble Baroness of course raises the concerns of certain groups, and we should take all concerns raised by all people very seriously. However, we must remain committed to ensuring that we work absolutely to the rigour of the regulators. As I set out in my opening remarks, fracking will enable us to reduce our carbon footprint. I know that both the noble Baroness and I share concerns about environmental impact, and we work hard and closely together. I am very pleased that the Opposition agree that we want to ensure, first and foremost, that it is environmentally acceptable to reduce our carbon footprint and work towards reducing carbon emissions. I have certainly never felt that the Government have seen fracking as the silver bullet. What I have seen and heard many times over is that it is part of the wider energy mix that we need to have in our country to ensure that we have energy security and less dependency on outsourcing it from international markets.
I turn to the amendment proposed by the noble Lord, Lord Whitty, for the establishment of a contingency fund by undertakings engaged in the onshore oil and gas industry in order to meet the cost of any environmental or economic damage caused as a result of onshore oil or gas activities. Let me make it clear that the operator is liable for the shale gas well and any damage or pollution it may cause. When operations finish, the operator is responsible for safe decommissioning of the well and for restoring the site to its previous state or suitable condition for reuse. Regulators and controls are in place to minimise risks and any impact on landowners. Any one of these regulators will consider individual concerns about impacts, as far as they fall within their responsibilities. If any environmental damage were to occur, then, in accordance with statutory requirements and government policy, remediation of the damage would be dealt with under the main regimes for dealing with contamination. These regimes provide for the remediation of environmental damage and contaminated land, including water, and apply to the extraction of both petroleum and deep geothermal energy. Taken together, if a company causes damage, harm or pollution to the environment, companies can be required under these regimes to remediate the effects and prevent further damage or pollution. This is the same approach that applies to other industries and we believe that the existing law is robust.
At present, if a shale gas operator becomes insolvent and no rescue mechanism for the company can be found, in limited circumstances the liability could ultimately pass to the landowner. Environmental regulators and planning authorities have the power to require upfront financial bonds to address this risk wherever they deem this necessary. This is more expensive for companies than a group scheme would be but it provides the reassurance that neither taxpayers nor landowners will be left to foot the bill. As a less expensive alternative to upfront bonds, my department has been working with the industry’s trade body, the UKOOG, the onshore operators group, to ensure the development of an industry scheme that will step in and pay for the liabilities in this situation and any other where the liable company cannot be identified.
Baroness Verma
“Further provision about the right of use
(1) The ways in which the right of use may be exercised include—
(a) drilling, boring, fracturing or otherwise altering deep- level land;(b) installing infrastructure in deep-level land;(c) keeping, using or removing any infrastructure installed in deep-level land;(d) passing any substance through, or putting any substance into, deep-level land or infrastructure installed in deep- level land;(e) keeping, using or removing any substance put into deep-level land or into infrastructure installed in deep-level land.(2) The purposes for which the right of use may be exercised include—
(a) searching for petroleum or deep geothermal energy;(b) assessing the feasibility of exploiting petroleum or deep geothermal energy;(c) preparing for exploiting petroleum or deep geothermal energy;(d) decommissioning, and other activity which falls to be continued or undertaken, in consequence of activities undertaken for the purposes of exploiting petroleum or deep geothermal energy.(3) The right of use includes the right to leave deep-level land in a different condition from the condition it was in before an exercise of the right of use (including by leaving any infrastructure or substance in the land).
(4) The right of use—
(a) does not give a person (“R”) any power which is greater than, or different from, the power which R would have had if the right had been granted by a person legally entitled to grant it; and(b) does not relieve a person (“R”) from any obligation or liability to which R would have been subject if the right had been granted by a person legally entitled to grant it.(5) Section (Petroleum and geothermal energy: right to use deep-level land) and this section bind the Crown.”
Baroness Verma
“Payment scheme
(1) The Secretary of State may, by regulations, require relevant energy undertakings to make payments in respect of the proposed exercise, or exercise, of the right of use.
(2) The regulations may require payments to be made—
(a) to owners of relevant land or interests in relevant land;(b) to other persons for the benefit of areas in which relevant land is situated.(3) The regulations may—
(a) specify the amount or amounts of payments;(b) make provision for determining the amount or amounts of payments.(4) The regulations may require relevant energy undertakings to provide the Secretary of State, or any other specified person, with specified information about—
(a) the proposed exercise, or exercise, of the right of use;(b) the making of payments in accordance with regulations under this section.(5) Before making any regulations under this section, the Secretary of State must consult such persons as the Secretary of State considers appropriate.”
Baroness Verma
“Notice scheme
(1) The Secretary of State may, by regulations, require relevant energy undertakings to give notice of the proposed exercise, or exercise, of the right of use.
(2) The regulations may require relevant energy undertakings—
(a) to give notice—(i) to owners of relevant land or interests in relevant land;(ii) to persons of other specified descriptions;(b) to display notice within the area in which relevant land is situated or elsewhere;(c) to publish notice (otherwise than by displaying the notice).(3) The regulations may make provision about the information which the notice is to contain, including provision about information relating to—
(a) any payment scheme regulations which are in force;(b) the application of any payment scheme regulations to the proposed exercise, or exercise, of the right of use;(c) the method for obtaining a payment under any payment scheme regulations.(4) The regulations may make provision about the manner in which notice is to be given, displayed or published, including provision requiring notice to be—
(a) displayed at specified places or places of specified descriptions;(b) published in specified publications or publications of specified descriptions.(5) The regulations may require relevant energy undertakings to provide the Secretary of State, or any other specified person, with specified information about—
(a) the proposed exercise, or exercise, of the right of use;(b) the giving of notice in accordance with regulations under this section.(6) Before making regulations under this section, the Secretary of State must consult such persons as the Secretary of State considers appropriate.
(7) In this section “payment scheme regulations” means regulations under section (Payment scheme).”
Lord Whitty
My Lords, I want to underline one point under Amendment 95ZBN, which will be tedious because it was raised during the course of the passage of the Water Bill, on the role of water companies. I understand the exasperation of my noble friend Lord Young and the noble Lord, Lord Borwick, who referred in similar terms earlier to scares being raised about shale gas, and their not necessarily being very scientifically based. However, I do not think that Thames Water or Severn Trent Water fall into the category of scaremongering green organisations. They really ought to be brought into this process, because the biggest anxiety is about the effects on the water system and giving the water companies a statutory consultee role would help to reassure a number of people about the effect of fracking operations on the water supply. I therefore hope that proposed new subsection (3) in that amendment is adopted by the Government.
Baroness Verma
My Lords, again, I am extremely grateful for the measured way in which this debate is taking place and for the very eloquent way in which noble Lords have presented their arguments, whether supporting what the Government are doing or raising amendments to show concerns. I welcome the spirit behind the amendments, which are aimed at ensuring that environmental safety is fully protected throughout the shale gas extraction process and reassuring the public that that is the case. My noble friend Lord Borwick said that to enable trust we need to ensure that the regulators are presenting a trustworthy way in which to approach the regulatory system.
We have among the most trusted regulators in the world. The commitments the regulators—the Environment Agency and so forth—have undertaken has allowed the debate to become much more measured.
Baroness Worthington
My Lords, I thank the Minister for her response although, again, I am not wholly reassured. Particularly, one of her final comments served to illustrate why there is a level of distrust in the current approach. Put simply, if you leave it to the operators to do everything on a voluntary basis, including paying for all of this, where is your reassurance that it is done to the correct standards? Obviously, a profit motive drives this. Let us not try and beat about the bush. This is about not UK sovereignty of energy but shareholders and people making money. If you ask them to pay for monitoring, they will do monitoring in the best way they think fit. That may well be simply a handheld device or the very minimal level of monitoring, which will not be good enough to establish whether we have a problem, either in terms of establishing the baseline or keeping on monitoring against it.
Baroness Verma
Of course, the Environment Agency has to be satisfied. As the noble Baroness is aware, it is among the toughest of the regulators we have.
Baroness Worthington
Absolutely, but the noble Baroness will also be aware that it is under quite considerable pressure in terms of its budget. This is an additional new task that it is being asked to perform but is it being given the budget to do it properly?
Baroness Verma
Again, I apologise for intervening but I should like to reassure the noble Baroness that the Environment Agency has reassured us that it has adequate resources.
Baroness Worthington
Then perhaps my anecdotal point about the money being asked for in order to do the very best in laser monitoring is not true. Perhaps we can have some more correspondence about that before Report.
I will not dwell on this for too long. I think it is fine to say that we are going to take a risk-based approach but exactly how are we going to do this, what level of monitoring will be done and how are the Government going to keep monitoring all these voluntary approaches that are being proposed—voluntary EIAs, for example? The industry can say that but are the Government monitoring whether applications are going in at a local authority level without EIAs? I have certainly had representation from groups saying that they are going in without publicly available impact assessments. I hope that that is not the case but my sense is that the Government are taking rather a lackadaisical approach to this in thinking, “Well, if the industry says it’s doing it, it must be doing it, so that’s fine”. I am afraid that that is not how you engender trust.
I hope that more can be said about the role of the water companies as well. It is not just us who think that they should be statutory consultees; this is coming from Water UK. Therefore, it is certainly something that the Government should take seriously. Of course, if the water companies are required to make a response, they do not have to make it a voluminous response; it can be very short. However, they will then at least be part of the process and there will not be the potential for them not to be involved, which would severely weaken the level of information and knowledge that local planning officers have.
I shall leave it there. I am sure that we will return to this on Report but, at this stage, I am happy to beg leave to withdraw the amendment.
Lord Oxburgh (CB)
My Lords, briefly, I support the thinking behind the amendment. I have two points. There has been significant discussion of the gas price and the coal price. One should bear in mind that both of these could go up and down fairly dramatically. It is quite likely that the shale gas price in the US will rise, simply because the majority of the shale gas in the US resource is not economically exploitable at the present price of between $3 and $4. This is not of great importance, except to emphasise that coal and gas can change. It is important that we see the long-term perspective here and that we do not legislate now on the basis of how these prices look today.
I am not sure that the wording that we have here is right, but the Government need to come back to the House and let us know how they are actually going to meet their obligations under the Climate Change Act in the light of the elevation of the carbon price and the other considerations to which noble Lords have drawn attention.
Baroness Verma
My Lords, I am grateful to the noble Baroness for tabling these amendments. I know that many of us heard the well rehearsed arguments during the passage of the Energy Bill. I agree with the noble Lord, Lord Whitty; I do not think it was four years, although it probably felt like four years. Whatever, we all got a lot of grey hairs from it—I remember that.
The measures in the Bill and our electricity market reforms have demonstrated that they are already working and starting to deliver new investment in electricity infrastructure: a clear demonstration of industry confidence. In April, we announced the allocation of the first contracts for difference to eight renewables projects. These projects included offshore wind, coal-to-biomass conversions and a dedicated biomass plant with combined heat and power. By 2020, these projects alone will be able to provide up to £12 billion of private sector investment, supporting 8,500 jobs, and could add a further 4.5 gigawatts of low-carbon generation capacity to Britain’s energy mix. This builds further on the major growth in the UK’s renewable electricity sector that we have seen, with capacity more than doubling since 2010 and with renewables now providing around 15% of our electricity. I wanted to point that out before I came back to the noble Baroness’s amendment.
We recognise that the intent behind the Energy Bill amendment was to achieve outcomes broadly consistent with those to which the Government are firmly committed. The potential uncertainties of applying the EPS in the way proposed by the amendment, on balance, pose risks that the Government should be unprepared to take.
The noble Baroness has already helpfully explained that existing coal-fired power stations will need to invest in fitting equipment in order to meet the requirements of the EU industrial emissions directive. That directive succeeds the large combustion plants directive and sets much more stringent limits on emissions of oxides of sulphur and nitrogen from 1 January 2016. However, I recognise that there have been a number of developments since last year as we have set about implementing our electricity market reforms.
I do not share the noble Baroness’s analysis of the current position or her prediction of the future. I am therefore not convinced that in the case of this amendment there is a need to revisit the conclusion reached by both Houses on this point less than a year ago. I do not think that I want to go back and rehearse the arguments made during the debate on the Energy Bill that led to the rejection of the amendment previously. They highlighted the risk that it could lead to a scenario where coal plants closed earlier than might otherwise be necessary to most cost-effectively achieve the decarbonisation of the electricity system. Were this to happen, the need for more generation capacity to be built earlier than we currently project could result in an increased cost to consumers. The noble Baroness may be prepared to risk imposing such unnecessary cost but I am not. The argument in recent months has been how consumers feel about the cost of energy.
I think there is almost unanimous consensus on the need substantially to decarbonise electricity generation by 2030. There is similar consensus that there will be little or no role left for unabated coal generation in future. However, we continue to believe that applying the EPS as proposed by the amendment is unnecessary and potentially a risky intervention to the market. It is our other EMR policies that will work to deliver the outcomes that we all wish to see but without risking our security of supply and ensuring that we are able to give consumers energy at as low a cost as possible.
The noble Lord, Lord Whitty, asked why we allow existing coal stations to participate in the capacity market. We do it so that the market ensures security of electricity supply at the least cost to the consumer. It is important to reiterate that all existing coal plants still need to meet their environmental commitments and will be subject to the carbon price floor. I assure the Committee that it is also about the fact that we have seen 7 gigawatts of new gas plant come forward seeking capacity agreement, which indicates that the capacity market is bringing on new investment.
I am not convinced that we need to revisit this argument. I know that the noble Baroness is absolutely committed to raising this issue again but I hope that I am able to convince her that the steps we are taking in the broader argument are ensuring that we are able to deliver at a cost value to the consumer and that security of supply remains, and that we remain committed to bringing on as much low-carbon energy as possible through the reforms that we have made in the Energy Act. I hope that on that basis she is able to withdraw the amendment.
Baroness Worthington
My Lords, I am grateful to the Minister for her reply. I am particularly grateful to the noble Lords who contributed. It is certainly true that the noble Lords, Lord Teverson and Lord Whitty, explained what the amendment does more clearly than I was able to do. For the avoidance of any doubt, we were simply seeking to limit the amount of time that old coal-fired power stations could run so that they did not provide base load power. That is the purpose behind it. It would not mean that they should shut or that they should not upgrade; it would simply mean that we had a mechanism for preventing them from base loading and thereby displacing otherwise clean capacity.
It is true that one of the cheapest ways of reaching a lower carbon intensity is to run your gas stations first and your coal stations as peaking plant; that is just incontrovertible. Every kilowatt hour produced with gas produces half the emissions compared with a coal station. In the act of upgrading these stations, those kilograms of CO2 per kilowatt hour will increase. That is because it takes energy to run the filters. So we are taking an already inefficient station, making it less efficient and more carbon intensive, all apparently in the interests of keeping the lights on, when, in fact, we have seen that far more capacity than is needed is coming forward. This coal will displace investment in gas if that gas turns out to be more expensive. Therefore, it does not deliver on security of supply, and it does not deliver on cost-effectiveness because it forces us to do more of the more expensive things. We will have to decarbonise in other ways if we do not close coal, and that will be expensive. It is about cost-effectiveness, and that is why we want this amendment.
The Government do not have a coal policy. They do not have a plan for phasing out coal. Everyone can say fine words about it but coal stations are in the ownership and hands of the private sector. If they can make a profit from running these plants, they will. The Government put nothing into the Act dealing with EMR that stopped old coal—in fact, the reverse. They have created a new incentive, and by allowing firms to apply for three-year contracts the Government are paying them to upgrade. Eight gigawatts of coal is a lot of capacity. Eight gigawatts of new gas would engender a large amount of lower-carbon capacity that would be more flexible and, in the long run, cheaper and more reliable.
We listened with great care to the arguments put forward in the previous debate. The world has changed since then, not least—as my noble friend Lord Whitty pointed out—because policies have changed. The Government took the opportunity in the Budget, shortly after Royal Assent, to freeze the carbon price floor, which was a key defence mechanism. I shall not go on any further. This is a fundamental flaw in the Energy Act. I would like to revisit it, and I am not persuaded by the arguments that have been made. However, at this stage, I beg leave to withdraw the amendment.
Baroness Verma
My Lords, as I made clear during previous discussions on the Energy Bill—now the Energy Act—a decision to exercise this power is absolutely not something that should be rushed into or done in isolation. We had some very long discussions around this target so I will not go back and repeat those. But such a target would have a significant implication for the power sector, the so-called “non-traded” sector, for consumers and the wider economy. It is therefore vital to understand fully, based on evidence, whether a target represents the best approach to meeting our economy-wide carbon budgets cost-effectively and, if so, at what level it should be set.
It is for these reasons that the Government have maintained that the right time to consider whether to set such a target is in 2016. That is the point at which, in line with the requirements of the Climate Change Act, we will undertake extensive analysis to set the level of the fifth carbon budget in law which will cover the year 2030. This will allow us to consider the target in the context of the whole economy and what is required to ensure that the UK not only meets its 2050 emissions target but also remains competitive with other member states. In 2016 we will also have a better understanding of how the market will respond to the reforms that this House debated in the passage of the Energy Act and a clearer idea of EU and global climate change ambition. It is about timing. We laid out very clearly that 2016, in line with the fifth carbon budget, is the right time for this. I suspect that the noble Baroness and I will not agree here but I hope that at this point she will withdraw her amendment.
Baroness Worthington
My Lords, I do not propose to detain us any longer on this. I listened to that response. I sincerely hope that whoever is in government will set a challenging decarbonisation target in 2016. It would be better if we let the next Government make that decision but I am very happy to withdraw at this stage.
Lord Davies of Oldham
My Lords, I will be very brief. First, I congratulate the noble Lord, Lord Hodgson, on his excellent exposition of a very important concept. We see much merit in it. The one thing that we cannot replicate as far as the Norwegians are concerned is that they launched their fund at a time of great and increasing prosperity. Any Government in power at present or for the foreseeable future in the United Kingdom are not faced with that same position.
Secondly, there is a community dimension to the issue of shale gas. We are all too well aware of the price that local communities might pay in terms of disruption while the shale gas is mined. Thirdly, I emphasise that while we may underestimate how much is there, of course we may overestimate it too. It is much easier to identify how much is there than to actually extract it. Therefore, we must be able to follow the greater balance of optimism that exists in some places. None the less, the Committee ought to be enormously grateful to the noble Lord, Lord Hodgson, for raising this issue. I hope that the Minister will give him a positive response.
Baroness Verma
My Lords, first, I thank my noble friend Lord Hodgson for his amendment and for the most eloquent way in which he explained the merits for the Norwegian people of having a sovereign fund. Of course, shale represents a huge economic opportunity for the UK. It could potentially create thousands of jobs, generate significant business investment and provide substantial revenue for the Exchequer in future.
However, unlike the offshore industry in Norway, the shale industry in the UK is still very much in its early stages. The Norwegian Government’s petroleum fund was established in 1990, as my noble friend said, but that was nearly 20 years after oil first started being produced and when the levels of revenue were well known. In the UK, shale gas is still in the exploration phase. My noble friend said that it was a potential but as yet an unknown. The Government will not be able to forecast the scale or timing of shale revenues until more work is done to determine the extent of gas that can be technically and commercially recovered. It would therefore be inappropriate to indicate now how potential future revenue would be used. As a result, the Government have no current plans to assess the possibility of creating a sovereign wealth fund from this revenue.
I recognise the arguments behind this amendment. Diverting future revenues from government finances to a specific shale fund, or one created by revenue from other natural resources, would come at a cost. Shale revenues may also be needed to make up for shortfalls elsewhere. The UK continental shelf is a mature basin and oil and gas revenues from the North Sea are declining; the Government would likely need to either raise additional tax revenue elsewhere or cut spending to maintain the fiscal balance. The Government consider that, in general, hypothecation, or earmarking revenues for a particular spending purpose, is not always an efficient way in which to manage the public finances. Like all government receipts, revenues are remitted to the consolidated fund to support general expenditure. My noble friend Lord Teverson recognised that fact. Once it goes to the Treasury, it becomes slightly difficult to extract it—but that is because of the methods that we have used, whichever Government have been in power. It allows the Government to allocate resources most efficiently across the economy.
I thank all noble Lords for contributing. It has been a very informative debate, which has raised some very important points. The noble Lord, Lord Davies, said in his concluding sentence that I should be sympathetic to this proposal. Is it something that the Labour Party will put in its manifesto for the next general election? It would be interesting to know how that debate would follow.
Lord Davies of Oldham
Could I ask the Minister whether she thinks she will put it in her manifesto?
Baroness Verma
I have laid out very clearly our position in government. Generally, hypothecation of revenue is not something that we support.
I conclude by recognising that the noble Lord has made some incredibly important points, but I feel that I cannot accept his amendment and hope that he withdraws it.
Lord Hodgson of Astley Abbotts
I thank my noble friend. I feared that “inappropriate” and “hypothecation” would be words used in the arguments produced. I am grateful to noble Lords who have taken part in support of the amendment. The noble Lord, Lord Teverson, put his finger on the matter. If we do not set it up when we start, it will never get set up; it either happens now or it will never happen. Once the money starts to flow, no Government will ever take their hands off it, and the Treasury certainly will not. So we either set the framework up now or this will go the same way as North Sea oil.
The argument that my noble friend has not answered at all—it is unanswerable—is about the inter-generational fairness. Why should we spend it all on ourselves? No matter what the situation may be, if we have got ourselves in a hole we should clamber out of it and not try to rob future generations of what they should share with us. I shall not go on any further, but I am disappointed with what my noble friend has said, although I am not surprised. I shall discuss the matter with people who are more sympathetic with what I am trying to achieve and see whether they want to come back to this at a later stage. I beg leave to withdraw the amendment.