Shale Gas Production
Greg Hands Excerpts(2 years, 8 months ago)
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Lee Anderson (Ashfield) (Con)
(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to confirm what the Government’s current stance is on shale gas production in the UK.
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
In response to Putin’s barbaric acts in Ukraine and against the Ukrainian people, we need to keep all our energy options open. We have always been clear that the development of shale gas in the UK must be safe and cause minimal disruption and damage to those living and working in nearby sites. This is not a new position. Shale gas and new approaches could be part of our future energy mix, but we need to be led by the science and have the support of local communities. That was in our general manifesto, on which my hon. Friend and I stood at the last election.
The pause on fracking implemented in November 2019 on the basis of the difficulty in predicting and managing seismic activity caused by fracking remains in place, and we will continue to be led by the science in our approach. We are clear that shale gas is not the solution to near-term issues. It would take years of exploration and development before commercial quantities of shale gas could be produced. Additionally, fracking relies on a continued series of new wells, each of which produces gas for a relatively short time. Even if the pause were lifted, there are unlikely to be sufficient quantities of gas available to address the high prices affecting all of western Europe and it would certainly have no effect on prices in the near term.
As the Business Secretary has said, we will continue to back our vital North sea oil and gas sector to maximise domestic production while transitioning to cheaper, cleaner home-grown power at the same time. We will shortly set out an energy supply strategy that will supercharge our renewable energy and nuclear capacity, as well as supporting our North sea oil and gas industry.
Lee Anderson
Last Wednesday, the Secretary of State for Business told this House that
“it did not necessarily make any sense to concrete over the wells”.—[Official Report, 9 March 2022; Vol. 710, c. 354.]
Given that the wells at the Preston New Road site in Lancashire are the only two viable wells in the whole of the UK, pouring concrete down them would be the end of the shale gas industry in the UK. That would be an inappropriate step at this time. We are in the midst of an international crisis, and as the Prime Minister has said, the west has become addicted to Russian gas. We must rectify that immediately; it is a national emergency.
The House was assured last week that the Department for Business, Energy and Industrial Strategy and No. 10 agreed that those wells should not be filled. However, Government rhetoric is not being matched by action on the ground, and Cuadrilla, the company that owns the wells, has spent the last six days trying to get hold of anyone in the Government or the Oil and Gas Authority to get confirmation that it no longer needs to carry out the abandonment process, but it is being ignored. Officials are dragging their heels and, with just days to go, Cuadrilla is legally obliged to plug the wells by 30 June. The OGA keeps confirming that. The Business Secretary says that Cuadrilla should “formally request an extension”, but that is nothing but jobsworth mentality. It is just kicking the can down the road, and we will be back here having the same argument in a few weeks’ time.
Can I ask the Business Secretary why he does not just give practical effect to the words he uttered last week and instruct the OGA to reverse the decision to concrete over the wells? That is what Cuadrilla is waiting for. Either the Government think those wells should be filled or they do not. To concrete or not concrete, that is the question; to frack or not to frack. If we do not want to see concrete being poured down our only viable shale gas wells in the middle of an energy crisis, the Business Secretary needs to act quickly.
As western civilisation grapples with an energy crisis, I am at pains to understand why the Government are risking jeopardising Britain’s long-term energy security over some tiny procedural nonsense. The course of action is clear to me—[Interruption.] I hear some chuntering in the House today, but I challenge any MP in this House to come to my constituency and speak to some real people who are struggling with their gas bills. Not one person in this place has to worry about paying their gas bill, so those Members should hang their heads in shame.
Greg Hands
I thank my hon. Friend for his engagement, and I know he has a long-standing interest in energy on a number of fronts. I commend him for his continuing interest.
Nothing has changed in Government policy relating to fracking and shale gas. On the international crisis, my hon. Friend says the west is addicted to Russian hydrocarbons, but I would say that the UK is not. Last year we imported 4%, but typically we get less than 3% of our gas from Russia. The figures for oil are higher, but they are nothing like the eyewatering percentages we see among our European friends and partners.
On the holes in Preston New Road, Lancashire, the Oil and Gas Authority—the independent regulator—proactively approached Cuadrilla as recently as this week to ask whether it will apply for an extension. However, Cuadrilla has not made a straightforward application to do so. As with any licensee, Cuadrilla can apply for a straightforward extension from the Oil and Gas Authority if it wants to extend the deadline.
My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy and I met the Oil and Gas Authority today, and it is ready to consider Cuadrilla’s letter and potential application. The Government hope the regulator would consider it favourably.
Edward Miliband (Doncaster North) (Lab)
I congratulate the hon. Member for Ashfield (Lee Anderson) on securing this urgent question. He is right to try to smoke out the Government’s position, and it is no wonder he is confused—I think he will remain confused after the Minister’s reply.
Let us be clear that the Government placed a moratorium on fracking because they said it is dangerous and they could not rule out
“unacceptable impacts on the local community.”
The Business Secretary said in 2020 that “fracking is over,” and just a few days ago he wrote
“it would come at a high cost to communities and our precious countryside”.
Yet last Wednesday, just three days later, the same Business Secretary said
“the Government are open to the idea.”—[Official Report, 9 March 2022; Vol. 710, c. 355.]
Yesterday, at Chatham House, the Minister ruled it out. The Government are all over the place.
I will ask some questions, because this issue does matter. It is about our energy security, it is about communities that are deeply worried about the impact of fracking, and it is about the climate crisis. Has the Minister or his Department seen any scientific evidence since the 2019 moratorium that suggests fracking might not be dangerous and might be safe? If he does not have any evidence, why is he approaching the Oil and Gas Authority to ask it not to concrete over the wells, which was the original decision? If he does not think fracking is safe, why is he sowing uncertainty in communities across our country? If he does not have any evidence, will he assure the House that no review of fracking—no nods, no winks and no nudges—will be announced in the relaunch of the Government’s energy strategy? Clarity on this matters.
Finally, would it not be the best thing that the Government can do to guarantee energy security—the Minister should be clear about this—to have a green energy sprint by ending the onshore wind moratorium, ending the objection to solar power, embracing tidal power, moving forward with nuclear and having a properly funded national energy efficiency programme?
Greg Hands
I am delighted to see the right hon. Gentleman at the Dispatch Box. He says he is confused, but I have been absolutely clear that Government policy is unchanged from the 2019 manifesto. I am not sure what he finds confusing about Government policy being unchanged.
We did not put our 2019 manifesto on an Ed stone, but it is available online for anybody to see the manifesto pledges on which all Conservative Members ran. Government policy is unchanged, with or without an Ed stone. The right hon. Gentleman says we are sowing uncertainty. No, we have given absolute certainty. Government policy is unchanged from the pause announced in December 2019. There is no review. This is a science-led policy, and support from local communities would be needed if there were to be a change.
Finally, we heard about the “green energy sprint”, which is extraordinary. Since the right hon. Gentleman was Secretary of State for Energy and Climate Change in 2010, we have increased the proportion of our electricity generation coming from renewables from 7% to 43%. In any normal terms, that would be a sprint, but it is also a marathon, in the sense that we have done that over 12 years. It has been almost a “sextupling” of the amount of energy coming from our renewables since he was in office. He talks about nuclear, but he will also remember the 1997 Labour manifesto, which said that Labour saw “no economic case” for new nuclear power stations. He has the cheek to come to the Dispatch Box today to urge that we get on with nuclear. The Government are getting on with nuclear and with renewables, doing exactly the green energy sprint that he has suggested.
Mr Speaker
I call the Member whose constituency has been mentioned, Mark Menzies.
Mark Menzies (Fylde) (Con)
Let me outline at the start that this does affect my constituency, and I am disappointed that my hon. Friend the Member for Ashfield (Lee Anderson) did not have the courtesy to give me advance notice that he was going to be asking a question pertaining to my constituency.
These are not viable wells. Will the Minister just confirm that? The wells in 2012 that caused the first national moratorium were concreted over, with the blessing of Cuadrilla. The last thing it wanted to do at that point was frack again in those wells, so it dug 3 miles away. Both those wells have triggered the second national moratorium, so they are not viable wells. Will the Minister confirm that and stop this nonsense now?
Greg Hands
My hon. Friend illustrates well the point about the importance of keeping local community support if this were to happen. As stated in our manifesto, this was based on what local communities felt at that time. I do not think any local community felt it more strongly than my hon. Friend’s in Fylde. On the process, we have been clear that if Cuadrilla were to apply to the Oil and Gas Authority to extend that deadline, this would be considered by the OGA in the usual way. I repeat that the Secretary of State and I spoke to the OGA just this morning to confirm that.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is a rare thing in the Chamber but I completely agree with the hon. Member for Fylde (Mark Menzies) and the Minister’s opening remarks: now is not the time for knee-jerk reactions. Given that we have this energy crisis, now is the time to stay strategic and not make daft decisions. Clearly, doing fracking would not do anything to change the west’s reliance on gas, even if, as the Minister’s says, the UK does not rely on Russian gas. He can reconfirm that fracking would not release enough gas to change the international market price, so we would still be paying the same wholesale prices. Is it not the case that there is not enough geological and scientific coring information, to the right depths, to understand the viability of extraction, let alone the risks of seismic tremors, which, as we have already heard, occurred at Preston New Road? Therefore, fracking should be ruled out, in the way the Scottish Government have done. Do we not need to invest heavily in renewables? We keep hearing about nuclear from those on the two Front Benches, but committing £63 billion of capital and financing costs to Sizewell C is madness. Our approach should be straightforward renewable energy. I keep going on about pumped storage hydro. Last week, the Secretary of State said that I had been going on about it for 18 months and that it is a good solution but he needs to assess value for money. When are we going to get that value for money? When are we going to get a change to the transmission grid charging system, which is blocking the deployment of Scottish renewables? We need to invest more in tidal stream, to increase the floating offshore target and to set an onshore wind target as well. Let us maximise investment in renewable energy.
Greg Hands
I thank the hon. Gentleman for that response. He is right in the first part of what he says: fracking is unlikely to change gas prices—or UK fracking is unlikely to do so. It is certainly unlikely to change it quickly, which is what I said in my opening statement. He is also right to point to the importance of following the science, and geological information is really important. However, I have to say to him that on nuclear he continues to be wrong. The SNP’s ideological hardcore opposition to nuclear is against Scotland’s interests. We have just seen the closure of the Hunterston nuclear power station, which provided enough nuclear energy to supply every home in Scotland for 31 years. It was a great Scottish, as well as UK, solution. Our other great source of gas is the North sea, where I would like to see the SNP approach becoming more constructive and supportive of the North sea transmission deal that the UK Government did a year ago.
Sir Bernard Jenkin (Harwich and North Essex) (Con)
I support what my right hon. Friend is saying about the need for more renewables and for nuclear. We all support the objective of net zero by 2050, but we are now in a gas supply crisis. The Government insist that we are in a European market; Europe is heavily dependent on Russia. We need to produce as much gas as we can. It is a simple question: is shale an option for the Government in the immediate term, or not? That is what we need to know; otherwise, the wells will be concreted over, which the Government said they do not want.
Greg Hands
I thank my hon. Friend for his support for renewables, nuclear and net zero, all three of which belong together, right at the centre of Government policy. He said that there was a gas supply crisis, but I would not characterise it that way. The UK has very secure sources of gas supply: around about 50% comes from the UK continental shelf; a further 30% comes from Norway, our great friend and NATO ally; and 20% is bought on the international market. There is obviously an issue with the price, but I do not share in my hon. Friend’s characterisation of a gas supply crisis.
Finally, my hon. Friend asked whether shale is an option. I repeat that Government policy in this area is unchanged: if people can show that the scientific base and the local community support is there, Government policy would be to allow shale if that turned out to be where those two key considerations led.
Geraint Davies (Swansea West) (Lab/Co-op)
As the Council of Europe rapporteur on hydraulic fracturing, I know, as may the Minister, that 5% of the methane produced by fracking is leaked through fugitive emissions. As methane is 80 times worse for global warming than carbon dioxide, that makes fracking worse for global warming than coal, so instead of looking at fracking will the Minister redouble his efforts on renewables, in terms of wind farms in England and marine in Wales? Will he also look to store renewable energy in organic batteries which, when produced at scale, are cheap and do not result in pollutants?
Greg Hands
There were a few questions there. In respect of the data on emissions, it is impossible to judge what UK fracking emissions would look like because data has not been produced on that.
The hon. Gentleman says that fracking is worse than coal; I can be certain that there are more emissions in the production of liquefied natural gas than in the UK continental shelf natural gas. That is for sure—there is two and a half times as much. I would expect the hon. Gentleman to rally behind our call to maintain the UK continental shelf production that is currently ongoing and to import, hopefully, less LNG.
The hon. Gentleman talks about redoubling in respect of renewables. We have Europe’s largest installed offshore wind capacity, which we are already committed to quadrupling. That is twice the rate of the redoubling for which he called.
Mark Jenkinson (Workington) (Con)
The moratorium introduced ridiculously low seismic limits that appeared to have been written by someone who did not understand the Richter scale. Should not the decisions be taken by local planning authorities, with community involvement, and the limits set at levels similar to those we might see for development in London, for example? Should we not be locking in the community benefits of fracking sites?
Greg Hands
I strongly commend my hon. Friend for his support for Government policy on energy, and particularly nuclear. He mentioned seismic limits; I was not the Energy Minister at the time, but I believe that tens of thousands of complaints came in to the Geological Society at the time of the drilling. That showed the magnitude of the public impact of some of the drilling at the time.
On my hon. Friend’s point on local consent, I refer him to what I said earlier about the importance of the need to bring local communities on board in respect of any of these projects. With pretty much every type of energy production, we need to bring the local community on board, and that is the case for fracking as well.
Sammy Wilson (East Antrim) (DUP)
There has been much hand-wringing in the House about the cost of energy, energy security and our reliance on outside sources, yet within our own country we have sufficient gas to do us for 50 years. Does the Minister think it is sensible to turn our back on the jobs and taxes and to spend money to buy gas overseas when we have an indigenous source, a pipeline across the United Kingdom and one of the richest and deepest shale gas seams in the world?
Greg Hands
We are not turning our back on anybody. We have been absolutely clear that it is vital for us to keep our energy diversity and our energy security. We are not turning our back on anybody or anything, but Government policy on this issue is unchanged: we need to see both the scientific evidence and the local community support before we can proceed, as we set out in our 2019 manifesto.
Alexander Stafford (Rother Valley) (Con)
It is reassuring to hear from the Government that the support of the community is going to be at the heart of any decisions, because I can tell the Minister that in Rother Valley there is no community support for fracking. In Harthill and Woodsetts, where there is the potential for wells, nobody wants fracking—in fact, the fracking site in Woodsetts is mere yards from an old people’s retirement home. Will the Minister confirm that the Government will focus more on renewables, and not on fracking, because every single minute that they spend talking about fracking is a minute not spent talking about renewables and a minute that engineers are not working on renewables? We need to get renewables online, not fracking.
Greg Hands
My hon. Friend, who also takes a keen interest in energy matters, and particularly renewables, makes a really strong point about the need to maintain local support and local consent for these projects. He is quite right that we have a strong focus on renewables. The Prime Minister himself describes the country as the Saudi Arabia of wind. The commitment to renewables comes right from the very top of our Government and exists throughout the Government.
Cat Smith (Lancaster and Fleetwood) (Lab)
In his contribution, the hon. Member for Ashfield (Lee Anderson) characterised his constituents as “real people”; I assure him that the people of Lancashire are real people. The people of Lancaster and Fleetwood whom I represent are completely opposed to fracking in Lancashire, and I am sure that I speak for my friend the hon. Member for Fylde (Mark Menzies) as well when I say that.
The reality is that shale gas production is currently paused. The Minister says we would need support from local communities; does he hear loud and clear that Lancashire says no and people in Lancashire do not want fracking? Will he reassure my constituents that the wells will be concreted over and that the Government will consider turning the pause into a ban on fracking?
Greg Hands
What happens to the wells is soon to be a matter of discussion between the Oil and Gas Authority and Cuadrilla. On what the hon. Lady said about maintaining local support, the support of the local community is incredibly important. It is stating the obvious to some extent, but as Energy Minister I have discovered that for all energy projects—whether offshore wind, onshore wind or solar—we need local community support, and fracking would be absolutely no exception to that.
Dame Andrea Leadsom (South Northamptonshire) (Con)
I pay tribute to my hon. Friend the Member for Fylde (Mark Menzies), who has done so much over many years to support his constituents, who have been adamantly opposed to shale gas extraction. However, frankly, the Opposition talk a load of tosh when it comes to how we are going to meet our net zero ambitions. My right hon. Friend the Minister has set out our amazing achievements in renewables and in our commitment to achieving net zero. Nevertheless, to meet the exponential increase in electricity demand in order to make the transition, we have to look at the lowest-emission fossil fuel, which is gas. If we have safe and secure resources in this country, which we undoubtedly do, it is absolutely right that we talk to communities about whether they would like to have free gas in return for committing to shale gas extraction in their area. That is only right.
Greg Hands
A huge part of the Government’s delivery on renewables in the past 12 years is down to my right hon. Friend, first as Energy Minister and then as Secretary of State at my Department. In both those roles, she drove forward a big increase and made some of the early, tough decisions on renewables, so I absolutely pay tribute to her.
My right hon. Friend is absolutely right on gas: the Climate Change Committee itself has said that the use of gas can still be consistent with reaching net zero in 2015, and—let us face it—it is vital for our energy mix today. She also made some strong points about how we keep local consent and local communities on board. In respect of all forms of energy, that is one of the central principles that the Government are keen to maintain.
Justin Madders (Ellesmere Port and Neston) (Lab)
The Government say that the policy has not changed, but I wonder why it is so hard to make a decision. Ellesmere Port had a public inquiry more than three years ago for a shale gas development and we still have not had a decision from the Minister as to whether that will proceed. Is not it time that the Government stopped trying to have their cake and eat it, actually made a decision and rejected fracking once and for all?
Greg Hands
The policy is clear and laid out in our 2019 manifesto. It is not possible for me at the Dispatch Box to comment on individual decisions as they may be being assessed by the Department, but the policy in 2019 is clear that there is a pause on future fracking developments.
Paul Maynard (Blackpool North and Cleveleys) (Con)
I thank the Minister for what he has just said, which my constituents will welcome. Many in this House seem to think that I represent South Dakota rather than Blackpool, which has eight out of the 10 most deprived neighbourhoods in the country, all of which are deeply fearful of higher energy costs. Does not the Minister agree that this debate about fracking is a complete distraction from the task in hand of finding speedy, effective and efficient measures to reduce energy costs in the short run, not a further long-term gamble on unproven technology that is many years away from delivering anything meaningful to my constituents?
Greg Hands
My hon. Friend has represented Blackpool incredibly ably for the past 12 years and knows his community well. He makes, again, a strong point about the importance of community consent. He also makes the point about the speedy implementation of alternative, cheaper and cleaner forms of energy. That is why we announced, just a couple of weeks ago, a contracts for difference renewables auction on an annual basis to do precisely that.
Wera Hobhouse (Bath) (LD)
Renewables are the cheapest form of energy. It is a well-established industry; fracking is not. Reading the room, I think it is very clear that that is understood here, so why do the Government not ban fracking altogether? The Government have already made new commitments to renewables, but is not now the time, given this new challenge—there is a new challenge; we might not call it a crisis—to double and treble on the plans that are already in the pipeline and make and plan for even more renewables than the Government are currently doing?
Greg Hands
The hon. Member calls on us to double or treble renewables. That is not good enough. We are going for the quadrupling—the quadrupling—of our offshore wind capacity in this decade. It is already the largest in Europe. We are not just doubling or tripling —we are quadrupling that capacity.
Kevin Hollinrake (Thirsk and Malton) (Con)
Around 85% of the beautiful constituency of Thirsk and Malton is covered by shale gas exploration licences, and we will need gas for many decades into the future, so, in principle, I am not against it. I happen to think that it would be easier to do exploration in the North sea. The energy experts who spoke to the Treasury Committee yesterday were clear that one thing hampering that is the lack of willingness from our banks to extend moneys to invest in exploration, because they are focusing on environmental, social, and governance goals rather than the national interest. Will my right hon. Friend work with the Treasury to make sure that our banks do support exploration because we will need this gas into the future?
Greg Hands
I thank my hon. Friend for that incredibly important question. I agree with him: in principle, I am not against shale gas either. He also raised the important question about banks and lending, particularly to the North sea. Let me be absolutely clear from this Dispatch Box: this Government welcome continuing investment in the North sea. That is absolutely part of our energy security and part of our energy resilience. If there is any further sign that banks need a signal from the Government—either from the Department for Business, Energy and Industrial Strategy or the Treasury—let me send that signal today: we want to see continuing investment in our UK continental shelf.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Does the Minister accept that biogas from landfill and sewage waste produces cheaper electricity than almost any other form of gas? If that is so, can we do more to up the volume of that production, as, I think, National Grid suggested some seven years ago?
Greg Hands
The hon. Member raises a very good point and a strong point. In terms of what defines something as being cheaper, there are different ways to cut that. It will depend on what the prevailing prices are of alternative sources of energy. He will know that, for example, gas prices are more than 15 times their five-year historic high, so much depends on what the other prices are out there. But as I said earlier, a strategy will be launched by the Government before the end of the month, which will address a number of the different questions in terms of where our energy supply will come from in future years.
Craig Mackinlay (South Thanet) (Con)
Diverse organisations such as the Climate Change Committee and the Net Zero Scrutiny Group, which I chair, agree on one thing: gas will be part of our energy mix to 2050 and beyond. That makes domestic supply a very sensible endeavour. I just put the benefits to the Minister: 75,000 potential jobs; tens of billions of investment; billions in terms of tax revenues; massive savings of CO2 compared with LNG inputs, which are truly horrific on CO2, given that they come in on a diesel ship; and the balance of payments positivity. Is there anything in that list that my right hon. Friend disagrees with? Finally, I implore him to send a note of thanks to the US Government who took the dash to shale gas extraction some time ago and it is on the back of that that they have mitigated a lot of our energy failure.
Greg Hands
I thank my hon. Friend for his question and for his continued interest. I am always happy to meet with his group to discuss these issues. He is absolutely right: domestic supply is very important. This is not the time to be wanting to increase imports of foreign LNG. That is one reason why we want to see a robust UK continental shelf producing UK natural gas. The point he makes about investment, jobs, tax revenues and so on would be considered in the round, but I point out the earlier point about seeing the scientific evidence first and the local community support as well.
Margaret Greenwood (Wirral West) (Lab)
Many Wirral West residents are extremely concerned that petroleum exploration and development licence No. 184 covers Wirral West. The Government’s failure to ban fracking leaves my constituency at risk of this dangerous technology that would extract fossil fuels at the very time that we should be moving to renewables. I led a successful campaign against underground coal gasification in the Dee estuary in 2013 and last month the Government told me that they no longer support the development of UCG. Can the Minister reconfirm whether that position is still the case, or whether it has changed, and will he ban both fracking and UCG?
Greg Hands
I have laid out clearly that our policy on fracking is unchanged. The hon. Member illustrates well the need to keep community support. When it comes to renewables, this Government’s record is one of the best in the world in delivering on renewables. We have the world’s largest installed offshore wind capacity, a new dedicated pot for tidal, and a lot of progress on solar and on onshore wind. All these things are helping the UK to produce a very diversified set of energy sources, which is a key part of our response to the current crisis.
Sir Edward Leigh (Gainsborough) (Con)
I commend the Minister for his clear answer today that, if an application for shale gas is made, there will be no political objection from the Government, but it must be determined on the basis of the support of the local community, by which I presume he means the local planning process. Can he confirm that that approach, based on local community support, will also apply to large solar farms?
Greg Hands
We have an established process in place for large solar farms and I am not changing policy on that. Solar offers a great addition to our armoury of renewables and it has been a big success in this country in recent times. When it comes to commenting on individual applications, I obviously cannot do that because that is the quasi-judicial role of my right hon. Friend the Secretary of State.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
At COP26, Wales signed up to the Beyond Oil & Gas Alliance, and we have comprehensively rejected fracking or any new hydrocarbon developments. Shale production will not meet our current energy needs; it will take too long, be too expensive and condemn our climate targets. Will the Minister assure me that he will respect Wales’s opposition to fracking, honour our COP26 pledges and not give in to climate deniers and fossil fuel opportunists?
Greg Hands
I remind the right hon. Lady that energy is reserved. However, I refer her to my earlier point about local community support being important in all our energy policy.
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
The important thing in all these matters is to remain pragmatic. We will need gas even after we hit 2050, because gas, for example, will be the way we make hydrogen and hydrogen is clearly part of the way ahead. The reality is that the Minister knows that. I ask him, whether on shale gas or the North sea, to remain completely pragmatic—as Conservative Governments should be—to recognise that fact and not to allow this new ideological religion to take over everything. If we want to ask somebody, let us ask them whether they feel their gas prices should be rising at the current rate, or whether they would like lower gas prices.
Greg Hands
I agree absolutely with my right hon. Friend on both the importance of hydrogen and on the importance of being pragmatic. He and I were both elected on a 2019 Conservative party general election manifesto and Government policy is unchanged from that manifesto. That is the height of pragmatism: to stick to our manifesto and keep our options open.
Paul Blomfield (Sheffield Central) (Lab)
It is unfortunate that the boss of Cuadrilla has, with the support of the hon. Member for Ashfield (Lee Anderson), used the Ukraine crisis to reopen the discredited case for fracking. Will the Minister simply agree that we are better off investing in the renewable technologies of the future in terms of both our energy security and of meeting our climate commitments?
Greg Hands
We are investing massively in renewables. Our current round of allocations in the contracts for difference auction is larger than in any previous round. Within that, we have announced big support for offshore wind and other technologies and, for the first time, a dedicated £20 million pot for tidal.
Mr Steve Baker (Wycombe) (Con)
Real projects take time and money, as my right hon. Friend knows all too well from his work on nuclear and elsewhere. That is why we are here today. There has been inadequate communication between the decision makers in authority and the company, which knows it has to act now if it is to meet the deadline to put concrete in the wells. Will he please personally intervene to ensure that there is effective communication between the authorities and the company, so that we do not have to bring urgent questions such as this to the House?
Greg Hands
I thank my hon. Friend for his question and for his ongoing interest in all matters relating to energy, but I must say to him that Cuadrilla was told almost a year ago, in June 2021, of the requirement to decommission the two wells by the end of June 2022. It was given a huge amount of notice to do that. I mentioned earlier that the Secretary of State and I have spoken to the Oil and Gas Authority today, and I believe that further communication will happen with the company.
Caroline Lucas (Brighton, Pavilion) (Green)
I am glad the Minister has acknowledged that fracking would do nothing to increase our energy security, given that the energy would then be sold on global markets at international prices. I am also grateful that he talks of the importance of public consent. He will know that, given that only 14% of people support fracking and the fact that it would require 6,000 wells to replace even half the gas we are currently using, that will not happen any time soon. However, I urge him to do more on energy demand. This whole debate has been about energy supply—where is the action on reducing demand? That is where the Government are dragging their feet and that needs to change now.
Greg Hands
We have comprehensive investments going on through the heat and buildings strategy and other initiatives to ensure that energy demand is also addressed. But may I say this, because I think the hon. Member missed the last couple of occasions to put questions to the Dispatch Box? One thing I am sure of is that I am glad we did not follow the advice of the Green party back in 1989, when it scored its record result in an election with 15%. Its advice was that it was impossible to take action on emissions while simultaneously growing the economy. I am really glad that we decided to ignore that advice, because in the intervening 30 years we have grown the economy by 78% and reduced our emissions by 44%, comprehensively proving the Green party totally wrong.
Anthony Browne (South Cambridgeshire) (Con)
I speak as chair of the all-party parliamentary group on the environment. After the 1973 oil price shock wreaked economic havoc across the western world, different countries responded in different ways to ensure it never happened again. Denmark went for increasing wind power, Japan went for increasing solar, France went for increasing nuclear power and in Britain we went for increasing oil production in the North sea. Does my right hon. Friend agree that we should learn the lessons of history to ensure that we do not repeat the mistakes, and that the response to high international energy, oil and gas prices should not be to press pause on net zero, but to push full steam ahead with it, growing renewables and nuclear power?
Greg Hands
I think I am meeting my hon. Friend’s APPG either this week or next, and I am looking forward to that. He makes some strong points. Net zero is not part of the problem; it is part of the solution when it comes to both the transition and energy security. He talks about not repeating the mistakes of the past and he mentions nuclear. I will put on record that I am glad to see the conversion of the Labour party from saying it was anti-nuclear in its 1997 manifesto to now backing the Government’s nuclear programme. I welcome that conversion.
Bill Esterson (Sefton Central) (Lab)
My constituents in Formby have experienced test drilling, and they have very real safety concerns. I can assure the Minister that there is widespread community opposition to fracking in my constituency. Will he give my constituents certainty that fracking is ruled out? I will tell him how he can do it—by ending the moratorium on onshore wind and giving full-throated support to tidal energy, both of which are realistic options in the Liverpool city region.
Greg Hands
We have just announced a dedicated pot for tidal energy in the CfD round. In terms of providing certainty, may I suggest to the hon. Gentleman that he goes back to the 2019 Conservative party manifesto? The policy is unchanged from that. As a friendly, cross-party suggestion, if he wants to give his constituents some assurance, he could perhaps reprint that manifesto in full and distribute it to all his constituents, saying that there the policy is unchanged.
James Wild (North West Norfolk) (Con)
Gas suppliers are asking energy-intensive businesses, including a major paper mill in my constituency, for large up-front payments. As the Government review their energy strategy, will my right hon. Friend look at a proposal for a Government-backed payment guarantee scheme to help companies to manage cash flow and avoid the need for prepayment?
Greg Hands
Of course we are acutely aware of the difficulties that some energy-intensive industries face. My ministerial colleague, my hon. Friend the Member for North East Derbyshire (Lee Rowley), is looking at that all the time, and we review the situation constantly, but those schemes are often a matter for the Treasury and for agreement with the Treasury.
Matt Western (Warwick and Leamington) (Lab)
Back in 2014, the people of Warwickshire were very vocal in their opposition to proposed fracking licences across the county by Cluff Natural Resources. I am sure the Minister would agree that our objective must be to reduce energy demand. Why was it, then, that his Government tore up the zero-carbon homes legislation of the previous Labour Government, which would have seen 1 million new zero-carbon homes built from 2016, reducing the demand for energy in this country?
Greg Hands
I think the hon. Gentleman is inviting me to go back down memory lane to 2010. I will tell him this: thanks to the actions of this Government, the number of homes that are energy efficient and clear those minimal criteria has massively increased in the past 12 years. Ensuring that energy-efficient homes are there is something that this Government are delivering on.
Alison Thewliss (Glasgow Central) (SNP)
Evidence to the Treasury Committee yesterday reiterated that fracking is not worth doing, but also pointed out that part of the problem is the UK Government’s poor and inconsistent stewardship of our resources in the North sea compared with our neighbours in Norway, who have had a long-term and consistent plan for their resources. What commitment do the Government really have to their own transition plans—that was a question yesterday—and will they invest in renewables, which will benefit not only the environment and our economy but our energy security in years to come?
Greg Hands
I will give the hon. Lady two pieces of advice. First, she may want to visit north-east Scotland herself and see who the people there, particularly the people in and around Aberdeen, think are more supportive of the offshore sector in its entirety, including oil and gas and renewables—the Scottish Government or the UK Government, because the answer is normally the UK Government. Secondly, she asks whether I am still backing the North sea transition deal. That is a deal done by this Government, so of course we are still backing it. I keep asking her colleagues whether they back the North sea transition deal, and I never hear anything. If she is now announcing that the Scottish National party is backing it, then that is one clear gain from today’s contributions from the SNP.
Rachael Maskell (York Central) (Lab/Co-op)
It is time that the Government’s policy moved from a pause on shale gas production to a full stop. The people of this country have moved on, and so has the science. On Friday, the Under-Secretary, the hon. Member for Mid Norfolk (George Freeman), was in York looking at the BioYorkshire project, which will change and transform the future of our energy supply through the biofuels industry. Will the Minister not invest in that instead of old technology that simply will not deliver?
Greg Hands
We do invest in biofuels. My hon. Friend had a very good and productive visit, and I thank everybody in York who received him. We do invest, and we make sure that this is part of our diversified energy mix. Diversification is absolutely key in the space of energy, as other countries have perhaps learned to their cost.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
We cannot allow the current crisis to be used as an excuse to greenlight fracking, and, as the Minister said, any potential benefits to prices would not even be seen for years to come. The Government should be focusing on identifying other solutions such as investment in wind or solar power, or using new agricultural policy schemes in the UK to increase nitrogen use efficiency to reduce the waste of artificial nitrogen fertiliser. What alternative projects is the Minister considering?
Greg Hands
I thank the hon. Lady for that question. On hydrogen, I can confirm that one project pretty near to her constituency—the Whitelee wind farm just south of Glasgow, which I went to in November—is looking at how wind power, in this case onshore wind power, can be converted into hydrogen, with £9.8 million of UK Government support. That will drive buses and dustcarts in Glasgow city for many decades to come. It is exactly that sort of innovative project that the UK Government are backing.
Liz Saville Roberts
On a point of order, Mr Speaker. I asked the Minister very carefully about whether he would respect Wales’s policy of refusing further coal and gas. I am sure that most people in this House will appreciate that this aspect of energy is devolved to Wales, but he replied that energy is a reserved matter. Can you advise me, Mr Speaker, on how awareness could be established within this Government as to which powers are reserved and which powers are devolved to Wales?
Greg Hands
Well, Mr Speaker, I have nothing to change from my answer. What I can say is that we do have a very constructive relationship with the Welsh Government on areas of energy, as I always had on trade. They hold key levers in areas that are important on delivering energy, such as planning and skills, so of course it is in our interests, on behalf of the people of Wales, to work together as the UK Government and the Welsh Government.
Bulb Energy Ltd: Letter of Credit
Greg Hands Excerpts(2 years, 8 months ago)
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The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
Today I will lay before Parliament a departmental minute describing a contingent liability arising from the issuance of a letter of credit for the energy administrators acting in the special administration regime for Bulb Energy Ltd (Bulb). This letter of credit replaces a previous one provided in December, announced within a written ministerial statement on 6 January, which has now expired.
It is normal practice when a Government Department proposes to undertake a contingent liability of £300,000 and above, for which there is no specific statutory authority, for the Department concerned to present Parliament with a minute giving particulars of the liability created and explaining the circumstances.
I regret that, due to negotiations with the counterparty only just concluding, I have not been able to follow the usual notification timelines to allow consideration of these issues in advance of issuing the letter of credit.
Bulb entered the energy supply company special administration regime on 24 November 2021. Energy administrators were appointed by court to achieve the statutory objective of continuing energy supplies at the lowest reasonable practicable cost until such time as it becomes unnecessary for the special administration to remain in force for that purpose.
My Department has agreed to provide a facility to the energy administrators, with a letter of credit issued, with my approval, to guarantee such contract, code, licence, or other document obligations of the company consistent with the special administration’s statutory objective. I will update the House if any letters of credit are drawn against.
The legal basis for a letter of credit is section 165 of the Energy Act 2004, as applied and modified by section 96 of the Energy Act 2011.
HM Treasury has approved the arrangements in principle.
[HCWS655]
Oral Answers to Questions
Greg Hands Excerpts(2 years, 9 months ago)
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Liz Twist (Blaydon) (Lab)
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
Delivering our landmark net zero strategy is well co-ordinated across Government. The Prime Minister chairs the Climate Action Strategy Committee, which, along with the Climate Action Implementation Committee, provide two ministerial forums to drive co-ordinated action across Government.
Liz Twist
The UK’s credibility as COP President over the next year rests on demonstrable climate action at home, but the Government’s net zero strategy has been torpedoed by the Treasury. Without the scale of investment needed to support households and industry, the Government cannot guarantee that they would put us on track for their 2030 or 2035 targets. Labour would invest £28 billion every year until 2030. What representations is the Minister making to the Treasury to get us back on track to meet our targets and deliver the benefits of a green transition?
Greg Hands
I thank the hon. Lady for her question and for her engagement on this, but the basis of her question is not quite right. Actually, BEIS had more capital uplift in the spending review than, I believe, any other Department. We have doubled the amount of money going into international climate finance. My right hon. Friend the COP26 President is working tirelessly to show UK leadership in this space. In the time that we have had the presidency, the amount of the world’s GDP covered by net zero commitments has increased from 30% to more than 90%.
Jane Hunt (Loughborough) (Con)
Tim Loughton (East Worthing and Shoreham) (Con)
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
We are delivering on the hydrogen strategy that was published last August and will soon launch our £240 million net zero hydrogen fund and the first £100 million allocation round for electrolytic hydrogen projects and publish our sector development action plan.
Jane Hunt
Intelligent Energy in Loughborough is keen to build a hydrogen fuel cell gigafactory, hopefully in the east midlands freeport. How will my right hon. Friend help to promote hydrogen fuel cell technology and production in the UK so that we can lead the world in that technology, harness green jobs and growth and avoid having to play catch-up?
Greg Hands
I thank my hon. Friend; it is always brilliant to get a question about that great hub of innovation and science in Loughborough, and it is brilliant to hear about Intelligent Energy’s plans to build a hydrogen fuel cell gigafactory in the east midlands. That is the kind of investment that will support highly skilled jobs in the UK’s nascent hydrogen economy and the Government’s levelling-up agenda. The Government provide support for fuel cells through various funds, including the Advanced Propulsion Centre and the automotive transformation fund, which have already committed over £38 million to 16 projects with a total value of almost £85 million.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Onshore and offshore, my constituency has more wind turbines than I can shake a stick at. Does the Minister not agree that we should generate hydrogen where the electricity is being made? Perhaps if he came to have a look at the wind turbines in my constituency, he would get the same delicious scones that I promised the Prime Minister when he comes to see the first space launch.
Greg Hands
I thank the hon. Gentleman for that question; I think I have an existing commitment to go to his constituency. In fact, in my five months in this job, I think I have been four times to Scotland, and one of those visits was to the Whitelee wind farm, just south of Glasgow, to look at precisely what he mentioned . It is the UK’s largest onshore wind farm, which generates extra energy to produce hydrogen on-site, which will hopefully power Glasgow’s buses and dustcart fleet for years to come.
Ian Paisley (North Antrim) (DUP)
Does the Minister believe that the best way to stimulate the UK hydrogen strategy is to build hydrogen products that the public ultimately use, such as buses, trains and heavy goods vehicles? Will he commit to joining that up to the Department for Transport and encouraging it to get on with hydrogen bus development that will stimulate the entire economy?
Greg Hands
The hon. Gentleman and I know that Northern Ireland has an incredible capability and tradition in bus making. He is absolutely right that hydrogen-powered buses have a big future. I mentioned Glasgow City Council’s commitment to move to hydrogen buses, thanks to the Whitelee wind farm; I imagine that we will want to do something similar in Northern Ireland. I look forward to further engagement with the Northern Ireland Executive on the topic.
Scott Benton (Blackpool South) (Con)
Mark Menzies (Fylde) (Con)
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
The Government have announced a £120 million future nuclear enabling fund to support new nuclear and are aiming for a final investment decision on at least one more large-scale nuclear project in this Parliament, subject to value for money and relevant approvals.
Scott Benton
Springfields nuclear fuel manufacturing facility employs hundreds of people on the Fylde coast. I thank the Minister for recently visiting the facility and for his personal interest in protecting the operations there. Will he commit to continuing to work with colleagues to explore the opportunities for developing operations at the site and protecting the hundreds of jobs that it sustains?
Greg Hands
My hon. Friend is a passionate supporter of local jobs in Blackpool. He is right: in December, I visited Springfields, which is just outside his constituency. It reminded me of the strategic national importance of our fuel industry, which is why we secured £75 million in the spending review to preserve and develop the UK’s nuclear fuel production capability. That funding will support the UK supply chain to power the reactors of today and advanced nuclear in the future.
Mr Speaker
Let us go to the constituency that Springfields is in. I call Mark Menzies.
Greg Hands
My hon. Friend is the MP for Springfields, as you rightly point out, Mr Speaker, and is a passionate backer of our nuclear industry. New nuclear is crucial to our plans for a low-cost, low-carbon resilient electricity system. On fracking, the Government’s position is unchanged: fracking will not be allowed to proceed in England unless compelling new evidence is provided that addresses concerns about the prediction and management of induced seismicity.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
The Nuclear Decommissioning Authority has rejected proposals aimed at increasing transparency and accountability. There is wide disparity from plant to plant in engagement with local communities on concerns about safety issues such as breakdowns. What does the Minister make of the NDA’s rejection of increased transparency? What steps is his Department taking to reassure communities?
Greg Hands
I am not aware of any rejection by the NDA of increased transparency. I am happy to look at what the hon. Lady has to say; my experience from quite a few meetings with the NDA is that transparency is very good, but I am happy to engage with her if she has a specific concern in relation to transparency in any nuclear plant in or near her constituency.
Wera Hobhouse (Bath) (LD)
To deliver the Government’s ambitious roll-out of renewables such as solar—but also nuclear electricity, if that is what the Government want—we need to proactively develop grid capacity. Why have the Government still not reformed the remit of Ofgem, which is a real barrier to increasing grid capacity?
Greg Hands
The hon. Lady is right: we have to make sure that our grid capacity is good for the big expansion of renewables, and indeed for the big expansion of nuclear, which is what this question is about. By the way, she might have a conversation with some of her colleagues, two of whom have recently mentioned support for nuclear— against Lib Dem party policy, it would seem. We and Ofgem are looking very actively at grid capacity: a lot of reviews are going on and there is a lot of action to ensure that grid capacity is in place, not least for the quadrupling of our offshore wind capacity.
Sir Edward Leigh (Gainsborough) (Con)
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
My officials have regular discussions with DEFRA about the deployment of low-carbon solar photovoltaics on farms. Many solar farms are constructed with raised panels that enable the continued grazing of livestock. Solar energy can also help farmers to increase their revenue streams from land less suited to higher-value crop production.
Sir Edward Leigh
A planning application has been submitted for a giant solar farm around Gainsborough, with an area equivalent to 5,000 football pitches. It is designed to be a so-called national infrastructure project in order to bypass all local planning. Local people will have no control; this development will enrich a few local landowners, and some entrepreneurs in London. Is it not time for an urgent discussion throughout Whitehall about how we can stop these companies bypassing local planning and secure proper community gain and the protection of agriculture, and, for instance, ensure that there are buffer zones around villages?
Greg Hands
As my right hon. Friend knows, I am unable to comment on potential planning applications. Solar projects developed through the nationally significant infrastructure project planning process are subject to strict controls to protect local communities and the environment, including requirements for environmental impact assessments and public consultations. The Government recognise the importance of preserving the most productive farmland. Planning guidance is clear: where possible, large solar farms should use previously developed land, and projects should be designed to avoid, mitigate, and where necessary compensate for impact.
Valerie Vaz (Walsall South) (Lab)
May I start by paying tribute to Sir Richard Shepherd, who has sadly died? He was a fantastic parliamentarian in the constituency next to mine, and he was very kind to me when I first came here.
There is a plan to build a battery energy storage system on green belt land. We appreciate that such a facility is needed to provide capacity for green energy, but will the Minister give a commitment that it will not be built on green belt land?
Greg Hands
Let me first join the right hon. Lady in her tribute to Sir Richard Shepherd. I share her sadness at his passing, of which I was not aware. He and I used to overlap with each other, and enjoyed a number of very productive times together.
I do not know whether the right hon. Lady is referring to a specific planning application, in which case it may be difficult for me to comment on it. What I will do is agree to meet her to discuss it, and if it does relate to a specific application in or near her constituency, I will ensure that I have officials there to hear what she has to say about the proposal.
Gareth Davies (Grantham and Stamford) (Con)
A large number of solar farm applications are being processed in Lincolnshire. Some are comparatively small in scale, but others, such as the Mallard Pass development, are significant and are causing great concern locally. Can my right hon. Friend assure me that the Government have a strategy to ensure that solar farms will be spread evenly across the country, so that rural areas such as mine do not see a disproportionate amount of development?
Greg Hands
We are committed to ensuring that solar developments are carried out with local community support. That is the most important consideration. We recognise that in some cases solar farms can affect the local environment, which is why applicants must complete an environmental statement as part of their planning application, including assessments of the impacts on wildlife, land use and biodiversity. However, well-designed solar projects have been shown to enhance biodiversity.
David Johnston (Wantage) (Con)
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
I thank my hon. Friend for his long-standing and passionate interest in community energy. I was delighted to meet him and colleagues just before the recess. Through the introduction of UK-wide growth-funding schemes such as the towns fund, the Government are enabling local areas to tackle net zero goals. We intend to publish an updated retail energy market strategy in due course.
Peter Dowd (Bootle) (Lab)
Antony Higginbotham (Burnley) (Con)
Greg Hands
Energy security is an absolute priority for the Government. Our exposure to global gas prices underscores the importance of not only our own UK North sea gas production but building a strong renewables sector to reduce our reliance on energy imports in the first place. To that end, we recently published both a comprehensive net zero strategy and the North sea transition deal.
Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
Dr James Davies (Vale of Clwyd) (Con)
Greg Hands
As the current energy Minister and the former exports Minister, I agree entirely with my hon. Friend on the export potential of the Rolls-Royce SMR technology, which has the potential to provide levelling-up jobs precisely in areas such as north Wales, as he so ably urges.
Janet Daby (Lewisham East) (Lab)
Last week was the ninth anniversary of the death of Ella Adoo-Kissi-Debrah, a nine-year-old girl who died following an asthma attack brought on by toxic air on a busy road on the South Circular. Our towns and cities need low and non-carbon transport solutions. We all know that electric cars are expensive, but second-hand electric cars are seldom available, which means that each car needs to be purchased from new. The current maximum Government grant for part-purchasing a new electric car is just not enough.
Greg Hands
The death of the hon. Lady’s young constituent bears heavily on all of us as London Members of Parliament. I remind her that the principal responsibility for air quality in London rests with the Mayor of London. On the action that we are taking to encourage more low-carbon and zero-carbon vehicles, we have announced: the phasing out of petrol and diesel-driven cars; a big investment in our electric vehicle charging infrastructure; and a big move to hydrogen-powered vehicles. Work in these areas will see low and zero-carbon vehicles become the future of urban transport in this country.
Mr John Whittingdale (Maldon) (Con)
Edmonton EcoPark: Proposed Expansion
Greg Hands Excerpts(2 years, 9 months ago)
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The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
It is pleasure to serve under your chairmanship today, Mr Hosie. I congratulate my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) on securing this important debate.
The Edmonton incinerator was given development consent in February 2017 after the consideration of relevant issues, including potential environmental and health impacts. The Government have no statutory or financial basis for undertaking a cost review of the Edmonton project. That would be a matter for the local auditors, but I have listened carefully to my right hon. Friend and, having heard what he said today, if I were a council tax payer in his constituency, I would be concerned about whether there is value for money in the project. He reports costs increasing from £650 million to £1.2 billion, which is a huge increase. I am not surprised to learn from him that local people are testing whether the North London Waste Authority has the necessary robust practices in place.
Let me lay out the process. All large energy-from-waste plants in England must comply with strict emission limits and cannot operate without a permit issued by the Environment Agency—in this case, the one granted in 2017. The Environment Agency assesses the emissions from new plants as part of its permitting process and consults the UK Health Security Agency on every application it receives. UKHSA’s position relating to incineration is that modern, well run and regulated municipal waste incinerators are not a significant risk to public health. I will come back in a moment to the arguments about weighing them up versus other means of waste disposal and waste avoidance. The concerns raised by my right hon. Friend’s GPs could usefully be directed towards the UK Health Security Agency, if he thinks that there is evidence that their conclusion does not abide with what is going on locally.
Greg Hands
I want to make some more progress. I am going to describe the policy, and then I will respond to the points raised in the debate and, if I have time, I will take some interventions.
In relation to the Edmonton energy-from-waste plant, the Environment Agency issued a permit for the new plant in 2017. Once the plant becomes operational, the Environment Agency has pledged to perform regular inspections and audits to ensure that the plant is complying with the requirements of its permit.
I will now turn to the debate itself. My right hon. Friend the Member for Chingford and Woodford Green is coming up to 30 years in this House. He has had a wide variety of roles, including six years as Secretary of State for Work and Pensions, and has always been an extraordinary champion for his part of London. He is a fellow London MP and has been a brilliant representative on a huge number of fronts, not least this issue, working with local campaign groups. He has raised the issue with the Prime Minister, various Secretaries of State and me. He made some very strong points on value for money and the process.
A number of Members made the point about recycling falling short, and I agree with them. I represent two local authorities, and Hammersmith and Fulham has one of the worst recycling rates in the country, so I have every sympathy with my right hon. Friend and every other Member, including the hon. Member for Southampton, Test (Dr Whitehead), when it comes to recycling.
My right hon. Friend said that there was only one bidder. It is not right for me to comment on the operation of the process, but I think he reported that the winner of the bid said that there was “massive oversizing”. I am not at all surprised that local taxpayers would be concerned to discover those reported comments from the chief executive of the bidding company.
The right hon. Member for Islington North (Jeremy Corbyn) also spoke. Waste incineration with energy recovery should not compete with waste prevention, re-use or recycling. We do not see them as being competing technologies. Notwithstanding new technologies, which he and my right hon. Friend the Member for Chingford and Woodford Green raised, the evidence available shows that it remains the case that the carbon impact of most mixed waste streams is lower if sent to energy-from-waste plants than if sent to landfill. Obviously, that is not a comparison with recycling or waste reduction, but in terms of the strict comparison with landfill—I think that the right hon. Gentleman and I agree on this—energy from waste is better than from landfill. I am not suggesting that he was making an alternative point. I think that his point was that recycling is better. We do not disagree with that at all.
The hon. Member for Swansea West (Geraint Davies) talked about the doubling of incineration. I am afraid that I do not recognise that figure. That is not our understating of what is in the planning pipeline. In line with the commitment in DEFRA’s resources and waste strategy to monitor residual waste capacity, officials are currently assessing planned incinerator capacity against expected future residual waste arisings, so that we can understand what future incineration capacity may be required following the implementation of key commitments in the RWS. There is, therefore, an assessment of our overall waste capacity vis-à-vis the incinerator capacity. That is being carried out by DEFRA, which is the policy lead on the waste element, while I am the policy lead on the energy element.
The hon. Member for Hornsey and Wood Green (Catherine West) rightly drew attention to the tragic case of Ella Adoo-Kissi-Debrah and her mother Rosamund. We London politicians are all keenly aware of the findings in that case and the reverberations that it has had across London and the country for public policy on air quality and air pollution, which has been improving significantly in London since 2010. However, it is still not satisfactory for any of us as Londoners or London MPs. We still have a way to go, and the tragic case of Ella Adoo-Kissi-Debrah is a stark reminder of the important work that has to be done.
Carbon capture, utilisation and storage at the incinerator is a matter for local decision making, but the Government have very ambitious targets on CCUS, including 6 megatonnes of CO2 equivalent by 2030, rising to 9 megatonnes by 2035. We have an industrial decarbonisation and hydrogen revenue support scheme to fund our new hydrogen and industrial CCUS business models. The Government take our air quality obligations extremely seriously, and we are already taking significant action to improve air quality. The Government absolutely recognise that there is more to do to protect people and the environment from the effects of air pollution, and that is why we are taking the action set out in our world-leading clean air strategy, which includes proposals to reduce emissions from domestic burning.
Geraint Davies
Does the Minister accept that the doubling of incineration that I mentioned is predicated on the 50 consent orders that have been given by BEIS—his Department—for new incinerators? The 2022 standards of technology and health, rather than those of 2017, should surely be applied to the Edmonton EcoPark incinerator, but the main point is that his Department is giving out development consent orders.
Greg Hands
The hon. Gentleman raises an interesting point, and I will go back and check that. My understanding is that that is not consistent with the consent orders that have been granted, but I will write to him on the detail as to whether we have the same set of figures and whether we are arguing at cross-purposes. I am very happy to write to him and give him some more detail.
Our clean air strategy includes proposals to reduce emissions from domestic burning, industry and farming, alongside stronger powers and an improved framework for local government to tackle more localised issues. The legacy of our reliance on landfill is responsible for around 75% of the carbon emissions from the waste sector, so it is not simply a matter of switching back to landfilling any non-recyclable waste. That is why we have been clear in the resources and waste strategy that we wish to reduce the level of municipal waste sent to landfill to 10% or less by 2035, and why we are actively exploring policy options to work towards eliminating all biodegradable waste to landfill by 2030.
My right hon. Friend the Member for Chingford and Woodford Green has raised some serious concerns about the North London Waste Authority, the finances of the incinerator at Edmonton EcoPark, and whether it represents value for money. I have listened very carefully, and I am sure local taxpayers will be very concerned at what he reports to the House. I hope the waste authority responds in full, as I have done, to the points that he has raised today. In the meantime, I commend him for securing this important debate, and I hope I have laid out the Government’s views on the overall national policy behind waste and energy.
North Sea Oil and Gas
Greg Hands Excerpts(2 years, 9 months ago)
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Caroline Lucas (Brighton, Pavilion) (Green)
(Urgent Question): To ask the Secretary of State for Department for Business, Energy and Industrial Strategy if he will make a statement on reports that six North sea oil and gas fields are due to be given the green light this year.
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
There will continue to be ongoing demand for oil and gas over the coming years. It is a clear choice between a transition that secures our energy, protects jobs and leads to innovation in new technologies like carbon capture and hydrogen, and an extinction for our energy sector, as I think the hon. Lady proposes. Flicking a switch and turning off our domestic source of gas overnight would put energy security, British jobs and industries at risk, and we would be even more dependent on foreign imports. The way we produce oil and gas is cleaner than in many jurisdictions, so it would be illogical to import them at further expense to Britain and our planet.
The fields referred to in these reports are already licensed, some dating back to as early as 1970, and are now going through the usual regulatory processes. All proposals are subject to a rigorous scrutiny process prior to consent, as opposed to licensing, by our expert regulators, including an environmental impact assessment and a public consultation. No decisions have been taken by the regulators, so it would be inappropriate to comment further on that process. However, to be clear, continued support for Britain’s oil and gas sector is not just compatible with our net zero goals; it is essential if we are to meet the ambitious targets we set for ourselves while protecting jobs and livelihoods.
As announced last year, and forming part of the North sea transition deal, we will introduce a climate compatibility checkpoint for any new licences to ensure that any future licensing rounds remain consistent with our goals. Meanwhile, we continue to make progress on developing new nuclear, which I think the hon. Lady also opposes, and renewables that will power our future. Today, we have announced that we are ramping up our options for our flagship renewable scheme, contracts for difference, establishing new industries, boosting investment and creating jobs in our former industrial heartlands.
Caroline Lucas
That was a frankly extraordinary statement by the Minister. The idea that the solution to an energy crisis caused by high gas prices is to increase our reliance on gas seems pretty risible. The UK still holds the COP presidency and is, of course, bound by the Glasgow climate pact, so why is he ignoring the international agreement that
“limiting global warming to 1.5 °C requires rapid, deep and sustained reductions in global greenhouse gas emissions”
and giving the green light to the extraction of more oil and gas?
Will the Minister confirm whether he and his Government are actually still committed to net zero by 2050 and the interim targets? Frankly, judging by their actions, that seems to be in question.
Why is the Minister not listening to experts such as the International Energy Agency, which could not have been more explicit? Perhaps he has not read its “Net Zero by 2050” report, but if he had, he would know that 2021 is the cut-off point for the development of any new oil and gas fields if we want to hit internationally agreed climate goals. Does the Minister acknowledge that the proposals go against the spirit, if not the letter, of that warning?
Is the Minister aware that renewables are already cost competitive, with wind and solar beating new gas generation hands down? Let us not have any more of this guff about more transition fuels being needed.
Will the Minister explain to the House and to our constituents why the Government are not investing in real energy security for people? Why not roll out an ambitious street-by-street energy efficiency and insulation programme, instead of pretending that we need more oil and gas to keep our homes warm and to bring people’s bills down?
Why are Government decisions about new licences being taken behind closed doors? MPs only hear about them through media reports.
When does the Minister plan to update the Oil and Gas Authority’s usual processes and the environmental impact assessment framework to minimise the economic recovery of North sea reserves? When will he get rid of the outdated MER duty that calls on the Government to maximise economic recovery? He needs to be guided by the climate science and, quite frankly, he is not.
Finally, will the Minister agree that any Government recommendation to the OGA that undermines the House of Commons’ formal declaration of a climate emergency, as well as our international climate obligations, should at the very least be subject to a parliamentary vote?
Greg Hands
Let me first say that it is a pleasure to take a question from the hon. Lady. I have been in this role for four months, and I think I am right in saying that this is the first time that she has actually asked me a question about energy and climate change, so I am delighted to see her here today.
We are not increasing our dependence on gas. We are clear that we are increasing the production of renewables, which is actually part of the solution for the medium to long term—and even the short term. We are not resting on our laurels about having the world’s largest offshore wind sector; we are quadrupling that capacity over the decade. What we are not increasing is our dependence on imported foreign gas. The point of this is that our domestic production emits far less carbon and is obviously better for our energy security.
The hon. Lady says we are ignoring COP, but it is quite the opposite. The COP President continues to be hard at work for the rest of the year. Of course, we remain adherent to our net zero strategy, which I launched at this Dispatch Box back in October.
Renewables are cost-effective—the hon. Lady is quite right. They have become a lot more cost-effective thanks to the actions taken by this Government on contracts for difference and our hard work over 12 years to increase the percentage of our electricity generation coming from renewables from 7% to 43%.
The hon. Lady talks about decisions behind closed doors, but these are not decisions. These licences have already been licensed, and further regulatory processes will continue throughout the year.
The hon. Lady asked whether we are guided by the climate science. Of course we are. We are leading in climate science.
Finally, it is now 33 years since the Green party’s best ever electoral performance in the UK. I think it scored 12% in the 1989 election, but it has not come close since. Why is that? At that time, it was saying that it was impossible to take action on emissions while still growing the economy. This country and the Conservative party has proven the Green party comprehensively wrong. We have grown the economy by 78% while cutting emissions by 44%, delivering for the people of this country both on the economy and on the environment.
Bob Blackman (Harrow East) (Con)
My right hon. Friend mentions nuclear power. Does he welcome the successful nuclear fusion experiment that has taken place today? Does he agree that it is far better for us to produce our own gas and oil than to depend on expensive foreign imports?
Greg Hands
I entirely agree. A very important announcement on fusion is being made today by the Under-Secretary of State, my hon. Friend the Member for Mid Norfolk (George Freeman). My hon. Friend the Member for Harrow East (Bob Blackman) is quite right about the progress we are making in this place, which is opposed by the hon. Member for Brighton, Pavilion (Caroline Lucas), her party and various other Opposition parties. We are moving forward on nuclear. Money is going into the Rolls-Royce small modular reactors programme; Hinkley Point C is being built; we are moving towards a final investment case for a further nuclear power plant in this Parliament; and we have a future nuclear enabling fund. We are moving forward on nuclear, which is an essential part of this country’s future energy needs and energy security.
Dr Alan Whitehead (Southampton, Test) (Lab)
The truth is that the Government are thrashing around after what we now know has been a decade of failure on energy, particularly on the transition to a low-carbon energy economy. They have no answer to the energy crisis that millions of families in our country face.
This is not a long-term answer either. The energy price crisis is a fossil fuel crisis, so the long-term answer must be to go further and faster on zero-carbon energy, energy efficiency and clean energy storage. On energy security, the Opposition believe that the long-term answer lies in zero-carbon energy. We need a phased and just transition in the North sea, but that cannot be an excuse for business as usual and pretending that the climate crisis does not exist.
There is one crucial climate test that should be applied to the current proposals and other proposals: whether they are compatible with keeping global warming to 1.5°. In the energy White Paper, the Government said that they would
“develop the existing checkpoints in our processes before proceeding with future licensing rounds.”
Is the Minister saying that the proposals he describes are exempt from that statement in the energy White Paper? Can he explain how what he has said today is consistent with its approach? Can he tell the House whether he believes that any future licensing decisions must be compatible with keeping global warming to 1.5°? Can he tell us how that assessment will be made?
Greg Hands
I thank the hon. Gentleman for his questions. Of course, he could have made his own UQ application today on this very topic, but let me answer him.
Yes, we are absolutely committed to a zero-carbon energy system. We are committed to a decarbonised power sector by the year 2035, so long as it is consistent with security of supply, as well as being consistent with the net zero strategy to get the UK to net zero by 2050. I have not heard recently whether the Labour party is still committed to getting to net zero by 2030, which I think was in its manifesto at the last election. Perhaps it would be helpful if one day the hon. Gentleman updated us on that really very ambitious target.
On compatibility with action on global emissions, the answer is “Absolutely.” That is why a key part of the North sea transition deal was the climate compatibility checkpoint that we announced just a year ago. The consultation, which closes on 28 February, refers to future licences; the current licences would still need consent from the regulators. Nothing has changed in the Government’s position or in the process. We look forward to responding to the climate compatibility checkpoint consultation in due course.
Robert Jenrick (Newark) (Con)
Our commitment to net zero is not in any sense incompatible with making use of our domestic reserves. Otherwise, we will simply be reliant on imported gas from Putin and the Gulf, creating insecurity and greater emissions in the process. If we want our oil and gas companies to invest, we need to provide them with certainty. Will my right hon. Friend reaffirm the principles that I committed to as Exchequer Secretary, as other Treasury Ministers did: fiscal stability and maximising economic recovery in the North sea basin? It is through that combination that we can encourage our world-leading oil and gas companies to invest for the future.
Greg Hands
My right hon. Friend was a brilliant Exchequer Secretary.
As a former Treasury Minister, I can say how well he was regarded in Government and in this House for the important work that he did at HM Treasury. He is right: this is not in itself a debate between gas and renewables. The current debate is whether we get the gas that we currently need from the UK continental shelf or import it from abroad. Foreign imports come at a higher price in regard to emissions and our energy insecurity.
It is worth reminding ourselves that 50% of UK gas comes from the UK continental shelf; that is a good position to be in. An additional 30% comes from Norway, which I regard as a very good, stable and secure source. On the investment picture, he is also right—and the Chancellor was absolutely clear on this in his statement on Thursday—on the importance of more investment coming into the North sea, not just for the short term but for the transition going forward.
Stephen Flynn (Aberdeen South) (SNP)
I welcome this urgent question because it gives us all an opportunity in this Chamber to reflect upon the fact that when the UK Government need to meet their energy demands and their financial demands, the first thing they seek to do is to turn the tap on in Scotland and exploit our natural resources. Whilst they are willing to do that, they are simultaneously unwilling to deliver carbon capture and underground storage in the north-east of Scotland, unwilling to match the Scottish Government’s £500 million just transition find, and of course unwilling to finally end the renewables robbery that is the TNUoS—transmission network use of system—account charging scandal. May I ask the Secretary of State a very simple question: when is he going to show similar haste on those important issues?
Greg Hands
I listen to the hon. Gentleman week in, week out, claiming that the UK Government, when it comes to energy, are doing down Scotland. The exact opposite is the truth. We are very supportive of Scottish nuclear, which he is opposed to. The Hunterston nuclear plant closed just a few weeks ago, which had provided, at low cost, zero-carbon energy to all of Scotland’s homes on an equivalent basis for 31 years. We heard not a peep out of him. We hear the Scottish First Minister recommending that particular fields not be given approval. How does that land among the 200,000 people in this country who are dependent on the oil and gas sector, of which about 40%—80,000 or so—are in Scotland, particularly north-east Scotland?
On CCUS, the hon. Gentleman knows that the Acorn cluster is the reserve cluster, and has significant UK Government support. I have met with Storegga and many other participants in recent weeks. The transition review is led by Ofgem and of course we will look at cost and affordability in relation to transition.
I am afraid that the hon. Gentleman’s ideological opposition to nuclear, and now the increased opposition to oil and gas and the North sea transition, shows that the SNP is not fit to run an energy policy for Scotland, and the people of Scotland will be thankful that the matter is reserved.
Sir Desmond Swayne (New Forest West) (Con)
Nothing could be more dangerous to our position as a secure destination for investment than the imposition of windfall taxes, could it?
Greg Hands
My right hon. Friend makes a strong point. Of course the line from the Treasury—speaking as a former Treasury Minister—is that all taxes are always under review, but I repeat the words of the Chancellor from Thursday, that a windfall tax is “superficially appealing” but probably counterproductive. He reminded us that oil and gas companies pay corporation at twice the rate of non-oil and gas companies, and that the sector has already paid some £33.7 billion in taxes since the year 2010.
Kerry McCarthy (Bristol East) (Lab)
In November, the COP President was reduced to tears after ambitions to phase out fossil fuels were voted down at the last minute. Three months later, the UK Government are tanking efforts to keep us to 1.5º by approving these six new oilfields. It is not just about looking at the energy supply and demand in this country; it is about setting an example. If we are to approve this fossil fuel exploration, what is to stop other countries from following suit?
Greg Hands
I very much welcome the hon. Lady’s question and the chance to put on the record the brilliant job done by the COP President. At the start of the year running up to the conference, only 30% of global GDP was covered by a net zero commitment. That rose to 90% after the conference, which sets an example. I am the co-chair of the Powering Past Coal Alliance, an international group calling for the phasing out of coal—something I am proud of.
Adam Afriyie (Windsor) (Con)
There is one thing that none of us in this House must ever apologise for: defending the interests of our constituents. I look across my constituency and across the country, and it is quite clear that energy bills are going to soar. That is partially due to a lack of energy security. But let us be clear: coal is a very dirty fossil fuel; gas is less so; nuclear is fairly clean; and renewable is right at the top of the tree. I commend the Government for recognising that we must never let the perfect be the enemy of the good, by ensuring that we get cheaper fuel supply to our people.
Greg Hands
My hon. Friend puts it very well and succinctly. The key word to use is “transition”: the transition from our existing energy mix to the energy of the future.
Wera Hobhouse (Bath) (LD)
Granting new oil and gas exploration in the North sea flies in the face of the Government’s net zero commitment. Closer to home, the Tory-controlled Surrey County Council is defending in court a decision to approve four oil wells in Horse Hill, Surrey. Why are the Government getting behind Surrey County Council’s defending in court the destruction of green land and the introduction of massive new CO2 pollution, in direct conflict with their own net zero ambition?
Greg Hands
On the second matter, it would not be right for me to opine on planning decisions. On the first, the licences are not new—I do not think the hon. Lady heard my statement—regardless of what she may read in The Daily Telegraph. In some cases, they were granted as early as 1970. The issue is how those licences are taken forward once they have regulatory approval.
David Duguid (Banff and Buchan) (Con)
I welcome my right hon. Friend’s confirmation that these are not new fields and, in some cases, have been licensed for many decades. Can he confirm that these fields and their production profiles are already factored into this Government’s energy transition plans for net zero by 2050—not only the Government’s plans but the recommendations of the Climate Change Committee? As part of an already declining domestic production profile, even those and further oil and gas fields that are still to come do not close the gap between current oil and gas provision and renewables, although that gap will steadily close as time goes on.
Greg Hands
My hon. Friend makes some strong points. He is absolutely right that these are not new fields; they are fields that have already been licensed and that therefore have been taken into account in our net zero strategy and in our upcoming carbon budgets. What that would mean if they were to get regulatory approval—I stress that that is an independent process—is that probably, in the future, we would be importing more gas, which would come with higher emissions and at a higher price.
Matt Western (Warwick and Leamington) (Lab)
We have a Prime Minister whose approach is “Do as I say, not as I do”. In his speech to the United Nations General Assembly on 22 September last year, he stated:
“We are approaching that critical turning point—in less than two months—when we must show that we are…learning, and maturing, and finally taking responsibility for the destruction we are inflicting...It is time for humanity to grow up.”
I do not care much for the Prime Minister, but I care about this country’s reputation. Has he misled the United Nations?
Greg Hands
We are proud of the record and our delivery at COP, and the COP President continues to deliver. It is a fantastic achievement to get coal written into a COP document for the first time. We should be proud of the fact that we are the co-chair of the Powering Past Coal Alliance, and the fact that so much more of the world’s GDP has been under net zero obligations at the end of the UK’s year than at the beginning.
Andrew Jones (Harrogate and Knaresborough) (Con)
The UK’s journey to net zero will still require some fossil fuels during the transition period. While my right hon. Friend focuses on our sustainable future, will he ensure that domestic production meets our transition needs? If we do not see that, all we will see is increased emissions.
Greg Hands
My hon. Friend is right: this is an industry in transition, which is why we did the North sea transition deal with the sector last March. There are obligations in both directions. For instance, the industry has an obligation to electrify offshore, while we need to work with the industry to transform jobs, skillsets and the energy mix. As my hon. Friend says, this is a transition, not an attempt to close down the sector, which I think is what the Green party is calling for.
Sammy Wilson (East Antrim) (DUP)
I welcome this decision, especially because it will secure important investment, create jobs, help to reduce fuel imports, give us greater fuel security, and indeed, in the longer term, help to reduce the energy crisis that the country faces. Does the Minister agree that the objective of any energy policy should be to safeguard those who are vulnerable, and that that should take precedence over the possibility that any such policy will influence global temperatures in the future?
Greg Hands
The right hon. Gentleman has asked a probing question. I would say that we have both those obligations. We are obligated to take action on climate change and reducing emissions, and the UK is a world leader in that regard. We are also obligated to deliver energy, at an affordable price, to the people of this country. The £9.1 billion package of support that the Chancellor announced last week, with the £350 rebate on bills, was intended to do precisely that.
Rachael Maskell (York Central) (Lab/Co-op)
The problem is that the Minister is still talking about 2050 when we have a crisis right now. It is clear that the Government refused to support a windfall tax on the energy companies so that they could invest in their oil and gas production, rather than the money going to our constituents who are struggling with their energy bills. That is not going to be settled, so may I ask the Minister why he will not impose a windfall tax on these companies so that they can contribute to the just transition and invest in green energy for the future?
Greg Hands
The Chancellor outlined the disadvantages of a windfall tax at the Dispatch Box last Thursday, when he said that it was “superficially appealing” but probably counterproductive. He also said that oil and gas companies were paying corporation tax at twice the rate paid by other companies, and that taxing UK activity on something that is traded globally would probably cost UK jobs and drive up the price of retail fuel, and would certainly make the UK less energy-secure.
Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
I cautiously welcome this news. It will help to secure 100,000 jobs in the industry and in the north-east of Scotland, and I think that in the current political times it will help to deliver resilience to energy supplies not just here but across Europe.
Will the Government commit themselves to taking three actions in parallel to help to save the planet as well as saving jobs? First, will they attach a zero-carbon obligation to each new licence underpinned with fiscal and fine regimes? Secondly, will they accelerate just transition approval for the Acorn carbon capture and storage cluster? Thirdly, will the Minister meet me to discuss how to support the development of carbon capture technologies at sites such as the Mossmorran Natural Gas Liquids and Ethylene plants in my constituency?
Greg Hands
I thank the hon. Gentleman for taking a slightly more constructive approach than his Scottish National party colleague, the hon. Member for Aberdeen South (Stephen Flynn). He is right: we can save the planet and save jobs at the same time. He called for a zero-carbon obligation, but I suggest that he should wait to see the results of the consultation on the climate compatibility checkpoint; he will have heard what I said earlier about how the UK Government are supporting carbon capture, utilisation and storage; and as for meeting him, of course I will do so.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
According to UK statistics, the amount of oil and gas sourced from the North and Celtic seas has ballooned. It has doubled year on year. One oil company chief executive is reported to have described his company as
“literally like a cash machine”
as he handed billions of pounds to shareholders as a result of those increased exports. Is the reality not that that exploitation has more to do with maximising profits and tax revenues than dealing with the domestic energy crisis?
Greg Hands
I thank the hon. Gentleman for that question. I will need to have a look at the timeframe for his statistic on doubling production, because clearly during the first year of the pandemic, in particular, production was very low. I would have to look at that. I think his call is for higher taxation, and again it is worth looking at the tax being paid by the sector. Since 2010, the sector has paid £33.7 billion in taxes, and £375 billion over the past 50 years.
Jim Shannon (Strangford) (DUP)
Although I, like many, welcome the fact that new gas and oil supply can be found in the North sea, the timescale will not help fuel poverty in the interim. What is the Department doing to secure fuel at appropriate prices for working families in my constituency of Strangford and, indeed, across the whole United Kingdom of Great Britain and Northern Ireland?
Greg Hands
The hon. Gentleman is right that matters being discussed today are for gas production in the future, but I refer him to the Chancellor’s statement to the House on Thursday for the package of support being provided by the Government. That will include £350 on bills, made up of a £200 discount on the bill and a £150 rebate on council tax. We are also raising the national minimum wage from £8.91 an hour to £9.50, we have frozen fuel duty for 12 years, and, of course, we are providing additional discretionary funds to local authorities to make sure that those who are not covered by those schemes are.
Oil and Gas Producers: Windfall Tax
Greg Hands Excerpts(2 years, 9 months ago)
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The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
This has been a useful debate. May I start by paying tribute to those workers who are working hard out there, helping the recovery from Storms Malik and Corrie? As we know, the storms hit Scotland and north-east England very hard. Some 214,000 customers have had power restored, but approximately 10,900, particularly in the north-east of Scotland, were still without power as of 10 o’clock this morning. I spoke to Scottish and Southern Electricity Networks last night and have updated MPs.
As we have heard today, the Government have a wide range of support measures in place to help the most vulnerable households. We have both rebates and energy efficiency measures to help households reduce their energy consumption. To recap, the warm home discount scheme provides support with energy bills through rebates, helping households to stay warm and healthy in winter. The scheme currently provides more than 2 million low-income and vulnerable households with a £140 rebate off their winter energy bills. The Government have already consulted on proposals that would expand the scheme from approximately £350 million in value to £475 million per annum in 2020 prices, which will help it reach 3 million households from winter 2022-23 onwards.
We are of course considering a range of options to address the current challenges further, but we must also be mindful of the wider consequences of any actions that we take. The Government already place additional taxes on the extraction of oil and gas, with companies producing oil and gas from the UK continental shelf subject to headline tax rates on their profits that are currently more that double those paid by other businesses.
Dan Carden
While the Minister is on his feet, will he respond to the comment from the head of BP that his company was like a cash machine?
Greg Hands
We have ourselves raised more than £375 billion-worth of production taxes. North sea oil and gas have been a big success story for this country, and also for our Exchequer. As a former Treasury Minister, I can repeat that of course all taxes are kept under review by the Treasury, and any changes are considered and announced by the Chancellor.
Greg Hands
No, I am going to make a bit more progress.
The oil and gas industry and its supply chain are supporting more than 195,000 jobs, but investment in 2020-21 was at an all-time low of £3.5 billion. Meanwhile, there are £11 billion-worth of opportunities awaiting investment. We would be cautious about the potential implications that any change in the tax regime could have on investment, not just in oil and gas developments but in the development of cleaner-energy technologies. Moreover, continuing investment in the UK continental shelf is needed to support production and our security of supply. That is particularly important this winter, but it is also important in the longer term, because UKCS production can help to mitigate potential supply issues.
When it comes to the sector itself, I heard nothing from any of the Opposition Front Benchers about whether they supported our world-leading North sea transition deal. However, we want to support up to 40,000 high-quality direct and indirect supply chain jobs, including jobs in Scotland and our industrial heartlands in the north-east and east of England, generating up to £14 billion to 16 billion of investment to 2030 and delivering new business and trade opportunities to assist our transition to a low-carbon future.
For the longer term, the Government are looking at how policy costs, which help to fund low-carbon energy infrastructure, support vulnerable consumers and ensure security of supply, are distributed between gas and electricity. Investment in renewable and nuclear energy will be key to achieving that, and we have made and are continuing to make massive progress in both those areas since 2010. As of 2020, renewables contributed 43% of our electricity mix, more than six times the percentage in 2010, when the right hon. Member for Doncaster North (Edward Miliband) was Secretary of State. On 13 December, we launched the latest round of our flagship renewable energy deployment scheme, contracts for difference.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I hope the Minister will forgive me if I point out that an increase in the energy price cap is likely to be announced on 7 February, and ask what he will say to my constituents who will be pushed into fuel poverty as a consequence of that.
Greg Hands
I would say this: we are providing support. We have the warm homes discount, we have winter fuel payments, we have cold weather payments, we have the household support fund, and, of course, we have the energy price cap itself to protect customers.
The latest CfD round is the largest yet, with a goal of about 12 GW, more capacity than the last three rounds combined. The offshore wind that this round will deliver could be enough to power up to 8 million homes.
Alan Brown
All the policies that the Minister has described as helpful are policies that already exist. Is he having any discussions with the Chancellor about new Treasury-funded policies that will kick in to mitigate the cap rise in April?
Greg Hands
I have been clear that matters of taxation are for the Chancellor, but of course the Government continue to monitor the situation very closely. I was answering a specific point about what support is already available for consumers.
I did not hear a word from any of the Opposition parties in support of our incredible North sea transition deal, concluded just last March, between the UK Government and the oil and gas sector. It will support workers, businesses and the supply chain through this transition by harnessing the industry’s existing capabilities, infrastructure and private investment potential to exploit new and emerging technologies such as hydrogen production, carbon capture, usage and storage, offshore wind, and decommissioning.
Greg Hands
I will make a bit more progress.
We will see commitments from industry that will achieve a 60 megatonne reduction in UK greenhouse gas emissions, including 15 megatonnes through the progressive decarbonisation of UK production over the period to 2030, which puts the sector on a path to deliver a net zero basin by 2050.
I turn to the contributions in the debate itself. My right hon. Friend the Member for Wokingham (John Redwood) made an excellent speech. He said: please can we burn our own gas, rather than importing it? That is a really strong point, not just in terms of jobs in this country but for our energy security as well. It makes no sense for us to be importing, beyond what we have to, expensive volatilely priced foreign hydrocarbons—hydrocarbons that come with a significantly increased emissions content. LNG has up to two and half times the emissions content compared with natural gas produced in the UK. He also made strong points about tax revenues.
My hon. Friend the Member for Banff and Buchan (David Duguid) knows oil and gas better than anybody in the House. The sector is hugely important for his constituency, as I saw when I visited in December. He talked about the punitive intervention that Labour is proposing. He also rightly pointed out that renewables have increased by four times under Conservative Governments since the right hon. Member for Doncaster North was Secretary of State.
My hon. Friend the Member for Waveney (Peter Aldous) talked about the unintended consequences. He is right that in the transition we need the oil and gas sector to co-operate with the offshore wind and hydrogen sectors. He is the living embodiment of transition, representing both the older and newer energy industries.
My hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie) made an excellent speech. He praised British business and discussed how Labour is giving up on Aberdeen. Mr Deputy Speaker, you, the right hon. Member for Doncaster North, the Labour Chief Whip, the right hon. Member for Tynemouth (Sir Alan Campbell), and I were here in the days when Labour had two Members of Parliament for Aberdeen. It has now totally given up on the North sea and the North sea transition deal, and the jobs that it represents. My hon. Friend’s excellent speech was about how Labour is giving up on Scotland. We have seen the right hon. and learned Member for Holborn and St Pancras (Keir Starmer) implicitly doing a deal with the SNP—it was implicit in one of his rare visits to Scotland just this last week.
My hon. Friend the Member for Poole (Sir Robert Syms) made another excellent speech, rightly pointing out that energy prices are rising due to world economic recovery and praising the work of this Government on job numbers and economic recovery. I agree with him. The North sea is a great British success story. He also made a really strong point about nuclear energy.
I want to correct a few points made by Labour Back Benchers. The hon. Member for Birmingham, Hall Green (Tahir Ali) made an extraordinary speech. He seemed to be saying that companies cannot make a loss without going bust. That is extraordinary: of course companies can make a loss without going bust. The hon. Member for Sunderland Central (Julie Elliott) made some important points about the supplier of last resort processes. If she has constituents whose credit balances are not being transferred from their previous suppliers to their new suppliers, could she write to me—or even better, to Ofgem—with details? I am sure we could look at that.
The right hon. Member for Leeds Central (Hilary Benn) made his usual quality speech. He said that there are not enough heat pumps—of course there are not. The role of the Government, though, is not to provide a heat pump for every home but to stimulate the private sector heat pump market, so that it can provide that solution. He asked where our plan was for 10, 15 or 20 years’ time. The answer is the net zero strategy, which we published back in October and which the Climate Change Committee says is a leader in the world.
We then heard from the SNP spokesman, the hon. Member for Aberdeen South (Stephen Flynn). I am afraid his nice words about oil and gas are at odds with his party overall, which has a nonsensical energy policy. The people of Scotland will be relieved that energy policy is reserved.
Not only is the SNP anti-nuclear, cheering the closure of plants such as Hunterston and Chapelcross and reportedly telling Rolls-Royce that its small modular reactors are not welcome in Scotland, but the hon. Gentleman’s colleagues and the Scottish First Minister seem to be opposed to new gas licences off the Scottish coast. They want to close oil and gas down. They say they want a windfall tax—just not the same windfall tax that Labour wants. They are still on a mission of trying to close down the industry. The SNP is against Scottish energy consumers, it is against Scottish energy jobs and it is against Scotland’s energy transition.
To finish off, Labour is still in a state of confusion. This time, the motion is not four pages. It has been shortened to around 100 words—or perhaps 280 characters; I am not quite sure. Where Labour has cut the words, however, it has not made up for them with any numbers. The motion includes no costings. There are no numbers in it at all. We have no information about this windfall tax and no information on the package of support for families and businesses. There is no detail there, but still a lot of confusion. There are no impact assessments on the taxes raised, on jobs—there are 40,000 jobs in north-east Scotland and 195,000 jobs in all—on fuel bills or on gas production.
Labour has split energy from climate change; the right hon. Member for Doncaster North is the person who combined them, and now the Labour Front Bench has split them, which means inevitably it is following a policy of hammering business. Labour is not the party of business; it is the party against business. The hon. Member for Kilmarnock and Loudoun (Alan Brown), who often makes quite acerbic interventions on other Opposition parties’ policies—I sometimes wish he would probe his own party’s policies as well as he probes those of others—asked whether the Labour Front Bench had spoken to anybody in the sector, and there was no answer. We did not hear anything about whether it had engaged with anybody in the sector.
Does Labour agree with our ground-breaking North sea transition deal? No answer. Its solution is, again, to hammer domestic UK continental shelf production and increase imports, reducing our energy security and increasing our emissions at the same time. Labour’s approach is confused and misguided. It is not a plan, it is a motion for less energy security, higher emissions and higher fuel bills. I urge the House to stick with our approach: North sea transition, support for households and the UK’s remaining open for business.
Mr Deputy Speaker (Mr Nigel Evans)
The Question is as on the Order Paper. As many are of that opinion say “Aye”—[Hon. Members: “Aye!”] Of the contrary no—I think the Ayes have it, the Ayes have it. [Interruption.] I am sorry, you had the opportunity to do it then, and nobody shouted “No” when I put the Question. Do you want me to put the Question again? [Hon. Members: “Yes.”] Can you be a little more prompt this time, please? Do not forget that your votes should follow your voices.
Question put.
Draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2022
Greg Hands Excerpts(2 years, 9 months ago)
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The Chair
Before we begin, I remind everybody that we are still under socially distanced rules, and please to wear masks if you are not speaking, as ordered by Mr Speaker and the Commission. I call the Minister to move the motion.
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
I beg to move,
That the Committee has considered the draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2022.
The draft order was laid before the House on 6 January.
The UK emissions trading scheme—the UK ETS—was established under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020 as a UK-wide greenhouse gas emissions trading scheme to encourage cost-effective emissions reductions that will contribute to the UK’s emissions reduction targets and net zero goal. The scheme replaced the UK’s participation in the EU emissions trading system—the EU ETS—and the 2020 order applied EU ETS rules on the monitoring, reporting and verification of emissions, with modifications to ensure that they work for the UK ETS.
The 2020 order was subsequently amended by the Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2020 to include provisions for the free allocation of emissions allowances and to create the UK ETS registry. Regulations under the Finance Act 2020 established the rules for auctioning allowances and mechanisms to support market stability. The UK ETS launched on 1 January 2021, and the first auction successfully completed on 19 May. The scheme has been running well since its launch, but there is a need to continue to improve its operation.
Further amendments have been made by the Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2021, which is subject to the negative procedure and comes into force on 7 February 2022. In broad terms, the 2021 order makes various technical and operational amendments to the UK ETS across a number of scheme aspects, including providing for installations in the hospital and small emitter opt-out scheme to be able to increase their emissions targets, and for installations in both opt-out schemes that return to the main scheme to benefit from free allocation.
The purpose of this order is to amend the 2020 order to address several residual operational issues identified during the development and legislation of the scheme, and to support the scheme’s technical operation. This legislation also addresses an issue of doubtful vires relating to previous amendments, raised by the Joint Committee on Statutory Instruments. This proposed order consists of various operational issues identified by the Department for Business, Energy and Industrial Strategy, the devolved Administrations and the national scheme regulators during the establishment of the scheme that were required to be legislated for via an affirmative procedure.
This order does three things: introduces a civil penalty to enforce an existing obligation to return overallocated allowances; creates an offence of intentionally obstructing the scheme regulators that are exercising enforcement powers; and makes it clear that some enforcement powers previously introduced by the negative procedure are valid.
In conclusion, this order will help to improve the effective operation of the UK ETS. This in turn will help to ensure that the scheme plays its part in reducing emissions. I therefore commend the order to the Committee.
Greg Hands
I thank all Members for participating in this debate. The hon. Member for Southampton, Test mentioned the trouble with the lift opposite the Strangers’ Bar. It can sometimes be confusing, taking a lift directly outside a bar. I have to say that I took one of the two lifts there and came up without any difficulty. To be fair, he may well have taken the other lift, and it may well also not stop at the first floor. I am sure that the House authorities will want to have a look at it. Perhaps they might also find an explanation for the SNP’s failure to attend the Committee, which may also have its origin in that interesting feature of the House as it has been reconstructed.
The hon. Gentleman said that the draft order was not controversial, and I agree. He described the evolution of the affirmative SI that we are considering today, and he is correct that it is generated out of the 2020 order. One set of changes is subject to the negative procedure, and one set is subject to the affirmative procedure—particularly those changes that create new offences, which is what is before us today.
The hon. Gentleman asked two questions about the UK ETS system in general. Its intention, as he sees it, is to shadow the EU ETS. I do not think that is the right way to describe it. Its original features were based on the EU’s ETS scheme. He is right that our prices have been higher, but I would not say drastically so; as the hon. Member for Rotherham pointed out, they have been around 5% higher. We never said that the prices—or, indeed, the eligible elements within the scheme—would necessarily track, but the hon. Member for Southampton, Test is right that there is a common origin.
In terms of linking mechanisms, we are open to dialogue with the European Union in consideration of linking to the EU scheme. That follows our commitments in the trade and co-operation agreement. The two sides updated each other at the trade specialised committee on 12 October.
The hon. Gentleman also asked about the EU carbon border adjustment mechanisms. As he will know, that is an EU proposal that has not yet been legislated for. In my previous ministerial role at the Department for International Trade, the UK was well aware of that proposal, and we continue to watch it very closely. The two things that I would say in relation to it are that it needs to be World Trade Organisation compliant, and that we must make sure it does not discriminate against genuine developing countries. I know that the hon. Member for Rotherham, in her role as Chair of the International Development Committee, will take a strong interest in that point as well.
It is always good to hear about the practical impact that Government decisions and policies can have on successful small and medium-sized enterprises such as Beatson Clark in the constituency of the hon. Member for Rotherham, which has been there since 1751—a remarkable achievement in its own right. We want to make sure that, having been around for 271 years, that company might have a future for the next 271 years, so I will pass on the information about it to the Minister for Industry, my hon. Friend the Member for North East Derbyshire (Lee Rowley), who is more directly involved with the glass sector.
To respond to the points that the hon. Lady raised, we are in daily contact with energy-intensive industry stakeholders regarding ongoing concerns over energy markets. Ministers and officials continue to engage with industry to further understand the impacts of high global gas prices. Our priority is to ensure that costs are managed and supplies of energy are maintained. We are committed to minimising energy costs for businesses, which is vital. In 2020, relief to energy-intensive industries for electricity policy costs alone was worth over £470 million.
Sarah Champion
In debates like this I am normally arguing for steel, which I also have in my constituency. I know that Liberty Steel was a beneficiary of those grants, but I do not think that glass is getting the same support as steel. If the Minister could look into that issue, I would be extremely grateful.
Greg Hands
I will certainly look into that in conjunction with the Minister for Industry; I will make sure that he is aware of the issue that the hon. Lady raises. As she rightly pointed out in her speech, allowances were allocated freely in 2021. The 2022 free allocation amounted to 42 million allowances, as it did the year before, and will be issued by 28 February 2022, in advance of the 2021 compliance deadline of 30 April 2022. There is good continuity of approach there.
By putting a price on carbon emissions, the UK ETS incentivises market participants to find the most cost-effective solutions to decarbonising. We understand, of course, that there is a risk of carbon leakage, which we mentioned just a moment ago in relation to the EU’s approach. The UK ETS authority, which is the four Governments in the United Kingdom together, will consult in the coming months on the trajectory of the scheme’s cap, particularly to keep it aligned to our net zero obligation. As part of that consultation, we intend to review our free allocation in the UK ETS, for which we will start a call for evidence in the spring. Energy prices, policy and taxes are all things that we keep under constant review—particularly taxes—so I can assure the hon. Lady that we already have a total review.
Turning to the points made by the hon. Member for Swansea West, in terms of Drax, it is important to recognise that policies are not specific to any particular company. Currently, installations that use only biomass are out of the scope of the ETS, but I can take away the points that he made and follow up on them. He mentioned British Airways flying in Australian sheep; I think he might have meant sheepmeat or lamb meat, rather than the sheep themselves. Having negotiated the Australian trade deal, I am pretty sure that the movement of sheep themselves would not be within scope.
Geraint Davies
Just for clarity, the point I was trying to make was simply that British Airways is buying up sheep farms in order to offset the aircraft it uses to send people on holiday or whatever, and—separately from that—that obviously gives rise to less sheep production in Wales. We have an open-door deal with Australia to allow exports of sheep, so we end up displacing consumption of Welsh sheep with consumption of Australian sheep and burning more carbon, which does not seem to be very good, either economically or environmentally.
Greg Hands
The hon. Gentleman is tempting me down the path of debating the Australia free trade agreement—
Greg Hands
Which I will not go down. The two of us have been here before—I know that he is a member of the International Trade Committee—but I will not engage with him on the topic of British Airways and Welsh farms.
I thank hon. Members for their valuable contributions to today’s debate. This order will help improve the effective operation of the UK ETS and, in doing so, will help support delivery of our climate ambitions. I therefore commend it to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Greenhouse Gas Emissions Trading Scheme (Amendment) Order 2022.
Misuse of Fireworks Bill
Greg Hands ExcerptsFriday 21st January 2022
(2 years, 10 months ago)
Commons ChamberRead Full debate Misuse of Fireworks Bill 2021-22 View all Misuse of Fireworks Bill 2021-22 Debates Read Hansard Text Read Debate Ministerial Extracts
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
I pay tribute to the hon. Member for Luton North (Sarah Owen) for sponsoring the Bill. I know that she met the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam (Paul Scully), earlier in the month—I think on the 10th—to discuss her ambition for the Bill, and I know from him that they had a very constructive conversation on the misuse of fireworks. I understand that this is an important issue to hon. Members, as was demonstrated in November by the attendance at the most recent Westminster Hall debate on fireworks licensing. I would therefore like to use this opportunity to explain the Government’s position on the matter as well as to address—
Small Modular Reactors and Energy Security
Greg Hands Excerpts(2 years, 10 months ago)
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The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
I congratulate the hon. Member for Ynys Môn (Virginia Crosbie) on securing this important debate. She made a fantastic speech. It was a real tour de force around the whole sector. I thank her for her hard work in setting up the all-party parliamentary group on small modular reactors, which has already been an effective voice in Parliament. The hon. Member for Ynys Môn is one of the two original atomic kittens, along with my hon. Friend the Member for Copeland (Trudy Harrison). It is good to see other new members of the group, including my hon. Friend the Member for Hartlepool (Jill Mortimer), here today.
I was delighted to take on responsibility for the nuclear sector when I was appointed as Energy Minister in September, having been a champion for investment in nuclear energy during my time at the Department for International Trade, as I was before that. You and I, Mr Bone, during the 2005 to 2010 Parliament, were recorded as being part of a group called the atomic eight—a group who voted more strongly in favour of nuclear than the parliamentary Conservative party as a whole. I am looking forward to visiting my hon. Friend the Member for Ynys Môn’s constituency later this year—hopefully sooner—as the home of the former Wylfa nuclear power station and the site of the proposed Wylfa Newydd plant. Before getting into my hon. Friend’s excellently made points, I will address some other points mentioned.
My hon. Friend the Member for Copeland is not here in person but is very much here in spirit. My hon. Friend the Member for Stone (Sir William Cash) gave a very supportive intervention. The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) made very strong points on the importance of both nuclear and renewables in producing hydrogen; I ask him to have a word with his hon. Friends, who are still opposing the Nuclear Energy (Financing) Bill, which will cheapen the cost of nuclear, and ask the Liberal Democrats to reconsider and vote for it. We heard from my hon. Friend the Member for Aberconwy (Robin Millar) on the important role that nuclear could play in reducing bills. The Nuclear Energy (Financing) Bill will reduce the cost of a gigawatt nuclear power station by in excess of £30 billion overall. On a present-value basis, that is about £10 per bill payer—a very significant reduction.
Two months ago, the UK hosted the COP26 summit in Glasgow, which focused the world’s minds on the role of clean energy in tackling climate change. It was there that I had the privilege of opening a nuclear innovation event at the UK’s presidency pavilion, highlighting the largest ever nuclear presence at COP. It is great to be joined by the Exchequer Secretary to the Treasury, my hon. Friend the Member for Faversham and Mid Kent (Helen Whately), who I know has just come back from a visit to Hinkley Point C, and is also an enthusiast for the sector.
In April last year, the UK Government set into law the world’s most ambitious climate change target, through our carbon budget 6, in which we aim to achieve a 78% reduction in our emissions by 2035 compared to 1990 levels. In order to achieve this commitment, the UK will need to use a wide range of green technologies, of which nuclear is undoubtedly going to play a key role. The recently published net zero strategy sets out how the UK will deliver our commitment to reach net zero emissions by 2050, and it is clear that nuclear is an important part of our plans to achieve that.
I welcome the enthusiasm of my hon. Friend the Member for Ynys Môn for new nuclear. We will aim to bring at least one large-scale nuclear project to the point of final investment decision by the end of this Parliament, and we will take measures to inform investment decisions on further nuclear projects. SMRs will be important in delivering new nuclear for the UK. The smaller size of SMRs and their factory-based modular build potentially allows for more flexible deployment options—that is stating the obvious. My hon. Friend the Member for Hartlepool put in a bid for not just one, but two SMRs, and made the strong point that nuclear always goes down best in communities that are used to hosting nuclear. That has always been the case in our country, and Hartlepool is very much in that category.
Damian Collins (Folkestone and Hythe) (Con)
On that point, the Dungeness A power station in my constituency is in advanced decommissioning. The site is owned by the Nuclear Decommissioning Authority. I reinforce the point made by my hon. Friend the Member for Ynys Môn (Virginia Crosbie) that it would be helpful for the Department for Business, Energy and Industrial Strategy to give direction to the NDA that it can enter into negotiations with Rolls-Royce about the use of sites like Dungeness A, which may well be very suitable—indeed, ideal—for small modular reactors.
Greg Hands
I am always happy to meet the hon. Gentleman to discuss that. It is important at this stage that we are not too prescriptive about sites for SMRs; it would be too early for us to do that. I am very happy to meet him and discuss what might be done about the general position of Dungeness.
Jamie Stone
In the same spirit, I extend an invitation to the Minister: if he would care to come north to Caithness, he would receive a cordial welcome from the trade council and civic leaders.
Greg Hands
I welcome that intervention. I am very happy to offer the hon. Gentleman a deal: if he can persuade his party to become more pro-nuclear, he will ease the path of a visit to the very northernmost part of mainland Scotland. If the Liberal Democrats will vote for the Nuclear Energy (Financing) Bill when it returns to the House of Commons, I will come to Caithness and Sutherland in due course.
Good points about the exportability of this technology were also raised by the former Secretary of State for Wales, my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns), and by my hon. Friend the Member for Ynys Môn—points that are very much true. As my hon. Friend said, in November last year, the Government announced £210 million for Rolls-Royce SMR Ltd to further develop the design for one of the world’s first small modular reactor designs. Funding for that project is matched by private investment, with the design potentially capable of deployment in the UK in the early 2030s. We recognise the significant export potential of the Rolls-Royce SMR technology, which has already generated considerable overseas interest.
My Department and my former Department, the Department for International Trade, are working closely with the company to support it into overseas markets, and UK Export Finance has indicated its willingness to provide cover to Rolls-Royce, subject to the normal lending criteria being met. As my hon. Friend the Member for Ynys Môn pointed out, this funding is part of the advanced nuclear fund—a significant Government investment of up to £385 million to develop a domestic SMR design and demonstrate innovative advanced modular reactors, also by the early 2030s.
In addition to investment in SMRs, the Government plan to invest in the advanced modular reactor research, development and demonstration programme, which aims to enable an AMR demonstration by the early 2030s. Based on our own analysis as well as other public reports, the focus of the programme is on high-temperature gas reactors, which I announced at the Nuclear Industry Association’s conference in November. In addition to low-carbon electricity generation, HTGRs have the potential to produce very high-temperature heat, which could be used for increasingly efficient production of low-carbon hydrogen—as has already been referred to by various Members—to help decarbonise industrial processed heat, or even for synthetic fuel production.
Furthermore, the Government have recently launched the £120 million future nuclear enabling fund, which has already been referred to, as virtually everything else has, by my hon. Friend the Member for Ynys Môn. She is so on top of nuclear—so well versed—that I sometimes worry about my own job: my hon. Friend knows as much about nuclear as I do. The FNEF aims to address barriers to future new nuclear and help companies to reduce project risks, so that they are better positioned for future investment decisions.
In answer to my hon. Friend’s question about allowing the licensing and siting of the Rolls-Royce SMR to proceed in parallel, while there are some steps that logically must be completed before others can begin in a nuclear deployment project, companies are not, of course, prevented by law or policy from—for example—applying for a nuclear site licence and development consent order in parallel. Those are commercial decisions, as companies are best placed to decide how and when to enter regulatory projects to best support their project.
I was pleased that Parliament voted to back the Nuclear Energy (Financing) Bill last week. As my hon. Friend has pointed out, classifying nuclear as green investment in the UK taxonomy would allow billions to flow into this essential technology. That is the basis behind the Nuclear Energy (Financing) Bill—to bring in private sector institutional financing. As the Prime Minister set out to the CBI, we intend to consult on including nuclear in the draft technical standards for our own UK green taxonomy. Further details will be released when the consultation is published.
To conclude, the Government fully support the development of small modular reactors and the exciting opportunities, both in terms of energy security and of reaching net zero, that new nuclear can offer the UK. We have demonstrated our serious interest in building nuclear capacity in the UK, and over the past year we have made decisions that boost investors’ and businesses’ confidence in investing in UK nuclear. From the energy White Paper to our landmark net zero strategy and funding for small modular reactors, we have shown our dedication to net zero and nuclear. I once again congratulate my hon. Friend the Member for Ynys Môn on an excellent debate.
Question put and agreed to.
Gas and Electricity Costs
Greg Hands Excerpts(2 years, 10 months ago)
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This information is provided by Parallel Parliament and does not comprise part of the offical record
The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
I congratulate the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) on securing this important debate. We have heard from across the United Kingdom, from all nations, of constituents’ concerns about this issue, and rightly so, because this is of huge concern to all our constituents.
The recent rise in energy prices has been driven by the global increase in the price of wholesale gas, and the demand for gas that has grown as we and other nations recover from the covid-19 pandemic. Consequently, higher wholesale gas prices have been observed internationally throughout 2021 and into this year. In addition, greater liquified natural gas demand in Asia, upstream gas production, maintenance affecting supply and capacity during last summer, increased demand for gas in electricity generation, as we phase out coal, particularly in Europe, have also contributed to rising prices.
The first point I want to make is that that has not had an impact on our energy security, a point raised by my hon. Friend the Member for South Thanet (Craig Mackinlay) and others. The Government continue to work closely with Ofgem, the National Grid and other key industry organisations to monitor energy supply and demand. We remain confident that Great Britain’s energy security will be maintained. National Grid’s gas and electricity winter outlooks, published in October, indicate that there will be sufficient gas and electricity supply in all of its modelled supply and demand scenarios.
The first part is all about delivering renewables—
Angus Brendan MacNeil
On the point about domestic security, the Minister will be aware that 5.6 % of the UK’s energy need, according to the GridCarbon app, comes from overseas. Does the Minister not think that, in the next round of CfDs, it should be paramount that the projects that could have happened over the past number of years, particularly in the Scottish islands, actually get under way, so that there is less reliance on the continent and Scandinavia for some of that energy?
Greg Hands
That is exactly what we are doing. The new contract for difference auction that was launched in September is as big as the previous three auctions, when it comes to renewables. Our dependence on foreign gas is less than 20%. Our dependence on gas from Russia within that is less than 3% or 4%. That is action that we have already taken.
Our long-term strategy is about finding effective replacements for fossil fuels, which are reliable and do not expose us to the volatility of international commodity markets. We already have the world’s largest capacity in offshore wind, but we are not resting on our laurels, because we are going to quadruple that over the course of the next decade. That is all a major step towards delivering the Government’s increased ambition on renewables.
In answer to the hon. Member for Strangford (Jim Shannon) on new technology, it is both renewables and nuclear, to which I will turn briefly, which is a key plank in the Prime Minister’s 10-point plan in the energy White Paper and the legislation that is passing through the House of Commons. I will return in a moment to the comments from the hon. Member for Kilmarnock and Loudoun (Alan Brown).
In the brief time of six minutes available to me, I will answer some of the points raised. The hon. Member for Caithness, Sutherland and Easter Ross referred to his constituent, the businessman Andrew Mackay. I am happy to engage with the hon. Member on behalf of his constituent. Business bills tend to be set on long-term contracts, which give a certain insulation from volatile prices, at least until the point where the contract comes up for renewal.
On rural support, 15% of the energy company obligation—ECO3—must be delivered to households in rural areas. We consulted in the summer of last year on its successor scheme—ECO4—for delivering energy efficiency heating measures in off-grid homes in Scotland and Wales. We are already extending the warm home discount from about 2 million to 3 million households, from £140 to £150. It is worth pointing out, as the hon. Member for Kilmarnock and Loudoun knows well, that the warm home discount is not a zero-cost option. There are people who have to pay additional money on their bills to support recipients of the warm home discount, so it is not something that we can just take action on with the stroke of a pen, like the Labour motion last week—the trebling—without considering the consequences.
The hon. Member for Newton Abbot (Anne Marie Morris) is absolutely right on cost-of-living issues, but let us look at a lot of what is happening in this country. We have record figures for those in employment. We have the national living wage increase. We have beneficial changes in the universal credit taper rate and so on. All these things are providing support for people facing cost-of-living issues. I totally appreciate and am totally with the hon. Lady on the impact that energy bills may be having and will be having later this year. On levies and on the heat and buildings strategy, we said that we would publish a fairness and affordability call for evidence, which will set out the options to help rebalance electricity and gas prices and to support green choices, with a view to taking decisions in this year—2022.
The hon. Member for Bath (Wera Hobhouse) said that we are scrapping the ECO scheme. No—as I have already pointed out, we are moving from the ECO3 scheme to the ECO4 scheme. I guess, Sir Edward, technically you may describe that as scrapping it, but we see it as improving it and building on it. The hon. Lady called for a windfall tax. She praised German energy company E.ON for doing a great job, and it does do a great job, but she and other Members have to be careful when they call for a windfall tax while also praising those investing in the energy sector. She has to be mindful of what impact any windfall tax would have on those investment rates.
The hon. Member for Makerfield (Yvonne Fovargue) made a very moving speech about the situation for low-income households and prepayment customers. There are 4 million prepayment customers. Ofgem obviously put in place licensing conditions to protect prepayment customers at risk—particularly of self-disconnection—including dedicated helplines for prepayment meter customers. There is a lot of support in place, but the issue of PPM customers is something that we keep a very, very close eye on in the Department for Business, Energy and Industrial Strategy, and I know Ofgem does as well.
The hon. Member for Strangford (Jim Shannon) wanted an indication of what the Government are doing to help. We are doing a lot. We have in place winter fuel payments of between £100 and £300. I have already discussed the warm home discount. There are the cold weather payments. There is the £421 million household support fund. There is a lot of support. I say that while recognising Northern Ireland’s particular status as regards electricity. Obviously, a lot of that is devolved to the Northern Ireland Executive.
The hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) called for a VAT reduction. That is obviously, as she rightly pointed out, a matter for Her Majesty’s Treasury. It is not a very targeted way of supporting vulnerable customers. We heard from the hon. Member for North Ayrshire and Arran (Patricia Gibson). I do not think this is really the right place for a Brexit debate, but she said that leaving the EU allows us to cut VAT on domestic fuel. Her policy of rejoining the EU would surely negate that policy.
Greg Hands
No. I have only two minutes left. The hon. Lady asked a question about storage, and I repeat that the current issue is not a question of supply. Storage helps if there are supply issues, but we have an issue relating to price. Storage does not protect, generally, from price shocks if the supply is secure, and I have already said that our supply is secure.
The hon. Member for Oxford West and Abingdon (Layla Moran) made an extraordinary speech, in which she said, I think, a windfall tax would be a powerful message to Moscow. I thought the intervention by the hon. Member for Kilmarnock and Loudoun slightly exposed that. If the hon. Member for Oxford West and Abingdon can show me how to design a windfall tax that would clobber Gazprom, I am all ears. Bearing in mind that our imports of gas from Russia are almost entirely liquefied natural gas and only less than a handful of percentage points, if the hon. Lady can show me how her Robin Hood tax would have an impact on Gazprom, I am all ears. We are not dependent on—she said “rogue states”. More than half of our gas imports come from Norway. I do not think anything she is proposing is going to protect us from rogue states.
The hon. Member for Kilmarnock and Loudoun made a number of familiar points on supplier of last resort costs. SoLR is there to protect customers when their energy supplier ceases to trade, so that they can transfer their account.
Sir Edward Leigh (in the Chair)
Order. Minister, do you want to give Jamie a few seconds?
Greg Hands
Okay, I will give him a few seconds, Sir Edward. On oil and gas and nuclear, I am constantly baffled by the SNP’s policy. It is anti-oil and gas. It is anti-nuclear. It is hard to know what it is actually in favour of in Scotland when it comes to supporting Scotland’s energy customers and energy suppliers. Finally, I note that we have not heard anything about Labour energy policy in the week since the party’s disastrous four-page, convoluted student union motion in the main Chamber last Tuesday. I thank everyone for participating in the debate, and I look forward to further engagement.
Sir Edward Leigh (in the Chair)
Order. We have to move to the next debate, I am afraid. There is a strict time limit.
Motion lapsed (Standing Order No. 10(6)).