North Sea Oil and Gas Producers: Investment Allowances

Lord Deben Excerpts

Tuesday 7th June 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, the Government’s position on not having fossil fuel subsidies remains the same, and we use the IEA’s definition of subsidies in assessing that. Of course, the investment allowance is part of the energy profits levy, an additional levy on oil and gas producers which are experiencing extraordinary profits at this time. In terms of investment in North Sea oil, we have set out in our energy security strategy that the North Sea will still be a foundation of our energy security. It is right that we continue to encourage investment in oil and gas; this is consistent with our transition to net zero. The noble Lord will know that we have gone the furthest and fastest so far in the G7 on decarbonising our economy; I am sure that this is a record on which we will continue to build.

[Lord Deben (Con)]

I declare my interest as chair of the Climate Change Committee. Will my noble friend the Minister accept that there is considerable misunderstanding about this matter and that the Government must be very clear about it? Will she also accept that this will not lower the price of gas? The only way to lower the price of energy is to have more of the cheapest form of generation, which is offshore wind, onshore wind and photovoltaics. Will she also accept that we ought to have a ring main so that we can bring the offshore wind onshore, and not put vast quantities of pylons across some of the most beautiful countryside in Britain?

[Baroness Penn (Con)]

I absolutely agree with my noble friend that this measure will not lower the price of gas. In fact, it is by that measure that it is not a subsidy to fossil fuels, but it will provide us with part of the funding to ensure that households across Britain which cannot cope with the extraordinary increase in energy costs at the moment get more support. I also agree with my noble friend that our investment in renewables so far has allowed us to have some cheaper forms of electricity—something we need to continue to build on.