Offshore Petroleum Licensing Bill

Debate between Lord Lilley and Baroness Hayman

2nd reading
Tuesday 26th March 2024 Lords Chamber

[Lord Lilley (Con)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Hayman, and the noble Lord, Lord Lennie, both of whom seem to be against the Bill because the positives are small. One is normally against things because they are negative. The only negative the noble Baroness, Lady Hayman, came up with was that it sends out the wrong messages. I have observed a general rule in politics, that when the only argument anyone has against something is that it sends out the wrong messages, they do not really have an argument against it at all.

The question that faces us is whether this Bill is compatible with our commitment to reach net zero by 2050. It is a huge challenge: a huge engineering challenge that, according to the former chief scientific adviser to the Department for Environment and professor of engineering at Cambridge, Professor Kelly, is impossible to achieve; let us hope he is wrong. It is a huge economic challenge that, according to a former economist at the World Bank and now professor of energy economics at Edinburgh University, is economically impossible to achieve; let us hope that he too is wrong. Let us assume for the purposes of this debate that these objectives are achievable. What we cannot do is add problems, even small ones, to those mammoth engineering and economics problems by doing things that add to emissions, rather than reduce them; that add to costs, rather than reduce them; and that reduce, albeit by a small amount, our own GDP and tax revenues, which we will need to pay for the transition to net zero.

The sensible path to net zero that we, like other like- minded countries, have adopted is to phase out demand for fossil fuels, not their supply. If energy companies choose to invest in more fossil fuel capacity than is needed, they will lose money; that should not be our primary concern, except for those who happen to have a financial interest in the oil industry. If the UK unilaterally stops producing fossil fuels, which would be a bizarre thing to do if we do not ban their import, others will step in and supply the fossil fuels that we failed to produce but could have. They will also replace any fossil fuels that we provided to the rest of the world. If the whole world were to try to reduce the supply of fossil fuels, as well as phasing out demand, that would have no effect if we did not phase out the supply as rapidly as we reduced the demand. Or, if we phased out the supply more rapidly than we reduced the demand, it would create shortages, massive price rises and huge profits for the oil industry. It would do to ourselves and the world exactly what Putin did to us when he invaded Ukraine and reduced supplies. Is that what the opponents of this Bill want to achieve? Or are they solely interested in the UK stopping the production of oil and gas, rather than the rest of the world stopping it?

Even if our fossil fuels did not involve fewer emissions in extraction and transport, or, in the case of gas, additional emissions over and above that in liquefaction and regasification, there would still be a very sensible case for us to keep producing such oil and gas as is available in the North Sea. Remember, the UK plans to reduce emissions not just by reducing demand for and use of fossil fuels, but by employing carbon capture and storage. That is a sensible thing to do because, according to the Climate Change Committee, our estimates and those of others suggest that without resort to carbon capture and storage, the cost of meeting the 2050 targets would be twice as high. We will use carbon capture and storage, which means we will continue to use oil and gas up to and after 2050—unless, of course, people on the other side want to double the cost of meeting the net-zero commitment.

I got the impression from the noble Lord, Lord Lennie, that the Labour Party’s approach to this is based on the assumption that there is a choice between continuing to produce new oil and gas fields in the North Sea and developing renewables in the North Sea and elsewhere. There is no such alternative. We can do both, we are doing both and we should continue to do so. He also argued, as did the noble Baroness, that all the benefits of producing oil and gas in the North Sea are small ones: there will be only a small benefit in emissions reductions; there will be only a small benefit to the economy; there will be only a small benefit in extra tax revenues; and there will be only a small benefit in saving jobs and energy security. Well, small benefits are better than none, and we should pocket them if we can. The noble Baroness quoted Global Witness evidence that the claim that the oil and gas industry employs 200,000 jobs is wrong. She said— and I have no reason to doubt her or Global Witness—that the real figure is 27,600. Global Witness says that this does not matter, but it still seems a lot of jobs. It is pretty heartless to say to those 27,600 people, who are largely in Scotland, that their jobs do not matter and they can probably find a job in the renewables industry, if they are lucky, because they have transferable skills, notwithstanding the disruption and the need to move.

The other argument—

[Baroness Hayman (CB)]

I am grateful to the noble Lord for giving way. He quoted me; otherwise, I would not interrupt him on Second Reading. I did not quote the Global Witness figures—which I do have—because they are complicated and quite difficult to discern. I quoted the ONS figures, which state that, over the period to which they refer, renewable roles increased by 70%, whereas in hard numbers, there were nearly 48,000 roles in renewable energy, which is considerably more than the 30,000 direct roles remaining in oil and gas. I did not talk about the 200,000 figure; I gave simply the ONS figures showing that there are more jobs in renewables than in oil and gas, and they are growing faster.

[Lord Lilley (Con)]

I am grateful to the noble Baroness for that clarification. Somebody used the 200,000 figure—it must have been the noble Lord, Lord Lennie. Anyway, it does not matter.

[Lord Lilley (Con)]

The Minister did. The noble Baroness has acknowledged that the figure is about 30,000, rather than 27,600; I do not really see the difference, frankly. The point is not which figure is bigger. Why should we sacrifice 30,000 jobs?

[Baroness Hayman (CB)]

We are not sacrificing them.

[Lord Lilley (Con)]

The proposal is to sacrifice them if we phase out that industry more rapidly than would otherwise occur. I give way to the noble Baroness if she has some alternative.

[Baroness Hayman (CB)]

I think I quoted the Minister correctly. He talked about the invaluable skills of people in the oil and gas industry, and how those could be transferred into our own industries and not lost to foreign competitors. When I went to a wind farm, the guy who was helping us to go right to the top of the wind turbine told me that he used to work on the oil rigs in the North Sea. He had seen the way the wind was blowing—if that is the correct term—and he took a job in renewable energy, so I am not in the business of sacrificing anybody’s jobs.

[Lord Lilley (Con)]

I mentioned the possibility that people were claiming they could move across, and some of them will, but it will mean disruption. We should not unnecessarily require people to give up a job and —hopefully—take on another one. As the noble Baroness said, these jobs already exist and will go on increasing in number if we increase investment in renewables. I have not argued against that at all. The two types of job are perfectly compatible. Both can exist side by side, instead of there being only one lot of jobs.

The other argument is that 80% of our oil is sent overseas to be refined, and so production of our own crude oil does not result in any security. I used to be an oil analyst in the City, examining how these things work. If, in a crisis, a country has supplies of crude, it can trade it for other types of crude that work in its own refineries. This is how the market works. It does give you security because you can say, “We will send you that and, in return, we want products or the equivalent amount of crude that we can refine ourselves”. It gives greater security—not a huge amount because we do not have a huge amount of oil and gas, but a bit of security is better than none.

The arguments used by the noble Baroness and the noble Lord, Lord Lennie, and in most of the briefing notes that I have seen, are all about how small the advantages from the Bill will be. The Climate Change Committee—the Government’s official independent adviser—has come out against this Bill and the Government’s decision to continue licensing new fields in the North Sea. I put the arguments I have made so far to its outgoing chairman, the noble Lord, Lord Deben, who is a colleague and my old friend, when he appeared before the Environment and Climate Change Committee. I asked him whether he wanted the whole world to phase out oil and gas, or just the UK. He said, in effect, “Just the UK”. He said:

“The world is producing oil sufficient to meet our needs … There are many countries in the world that will still be producing oil and have no intention of reducing that. There are other countries that could produce oil and gas and have to make a choice between going down that route and going down the route of renewables. We have a duty to try to get them to make the right decision because otherwise we will destroy our world and ourselves … We have to get other countries to do the right thing … If you say to a country that does not have oil, ‘You have a chance to produce oil and your future will be with oil’, I am afraid it will not go for renewables, even though this is the real answer … We have to set an example”.


I find that argument absolutely pathetic and incredible. The idea that phasing out production in the North Sea more rapidly than need be is going to persuade some African country which finds oil not to produce its oil but to go down the route of producing renewables is just ludicrous. It could, of course, do both. We should recognise that this is the only argument that the Government’s own independent advisers have against the Bill.

We should recognise that, in law, the Climate Change Committee has no role in advising about the supply of oil and gas. Its role is about phasing out emissions, so it is acting ultra vires even in coming out with its recommendations against this Bill. That is as maybe.

Other arguments suggest that it would be bad for the environment—that dolphins and other wildlife would be disturbed by offshore oilfields. Of course, they would be equally disturbed by offshore wind farms. This does not seem a wholly credible argument.

Most people argue as if allowing petroleum licences and producing renewables are alternatives. The Bill will not stop renewables at all. In so far as it boosts the economy and tax revenues, it will help fund the transition. There is no time limit on speeches. In my view, by the same logic that applies to the Bill, we should also allow the production of oil and gas on shore. We should license onshore exploration and drilling for shale gas, subject to a local referendum in the area where it occurs, and to allowing the companies that wish to drill to offer incentives to those in that area. I have been told that they are prepared to pay £1,000 per head and subsequently to offer cheap gas if they find it.

Why do we not do this? I know enough about the oil industry to know that everything is uncertain, but there is a lot down there. I do not know whether or not we can get it out of the shale. If we can, all the arguments that there is only a small amount disappear because the potential quantities are very large.

I hope that we will not be carried away by those who object to producing oil and gas. It is a luxury belief. They can oppose production because it has no direct effect on them, but it will marginally impoverish the rest of us. This is not something to which we should give in.