Energy Bill [Lords]

Debate between Lord Lilley and Callum McCaig

Monday 18th January 2016 Commons Chamber

[Callum McCaig]

The oil industry is going through a difficult period, but there is a fair degree of resilience and optimism in these difficult times. A concerted effort is being made to show that it is not a sunset industry, and that it will work through what needs to be done. As was clear in the quote that I cited, the industry is making efforts to reduce costs. We in this Chamber can do nothing about the price of oil, but we can do something about the investment climate, which I think would be significantly enhanced with changes to the fiscal regime. Aberdeen is seeing job losses on a fairly sizeable scale, but it is probably still performing above average, and I certainly hope that it continues to do so.

The issue of tax revenues is not only about the supplementary charge in corporation tax or the petroleum revenue tax, because the full range of tax revenues needs to be factored in, including income tax, national insurance and the corporation tax paid by the supply companies. This is a major sector, and if we can invest in the skills and ensure that we bridge over what everyone agrees will be a temporary downturn in the oil price—how temporary is a matter on which I shall not speculate, because that could end up with my looking daft—that support will help.

Changing the tax regime would send a very powerful message to those looking at investment. If investment is not made in the UK continental shelf, because of the nature of the business the investment will be made in west Africa, Kazakhstan, Brazil or the gulf of Mexico. It is not a zero-sum game. Precisely because very little tax is being paid—unusually so—the Treasury is not banking on North sea oil to deal with what it needs to pay for, so it can afford to make the changes. The revenue forecasts for the next few years are low, and changing the regime now would make that viable. It would also send the clear message that this is a basin that is worth investing in. If there is investment, there are jobs, the skill base is maintained, and the supply chain is supported in a way that ensures that it can invest in and develop products not only for the North sea but for the global oil and gas industry, into which the United Kingdom supply chain—particularly around Aberdeen—is making great efforts to diversify.

I am very much in favour of the OGA’s establishment as an independent regulator. I am sure that, as we enter the next stage, there will be discussions about the nuts and bolts, but we want it to happen, and happen very soon.

Let me now move on to the closure of the renewables obligation. [Interruption.] Excuse me?

[Mr Peter Lilley (Hitchin and Harpenden) (Con)]

We thought that the hon. Gentleman was moving on to the closure of his speech.

[Callum McCaig]

I am sorry to disappoint the right hon. Gentleman. I will be brief, to a degree. I do not need to rehash the arguments about the closure of the renewables obligation, which is disproportionately affecting Scotland, because 70% of the wind farms that are in the pipeline would be there. I know that the Government have said that they want to try to reintroduce the closure in order to meet a manifesto commitment, but I urge them not to do so. If they do, we shall oppose the move.

Paris Climate Change Conference

Debate between Lord Lilley and Callum McCaig

Thursday 19th November 2015 Commons Chamber

[Callum McCaig (Aberdeen South) (SNP)]

I add my thanks to the hon. Member for Bishop Auckland (Helen Goodman) and the Backbench Business Committee for allowing this debate to happen, in incredibly timeous circumstances. The debate has been very enlightening and well-conducted. The importance of the COP21 meeting should not be understated. The Prime Minister said on Tuesday that he was confident that a deal would be struck; the issue was whether we got a good deal or not. I wish to talk a little about what that good deal should look like.

As we have heard, the UN has analysed the INDCs submitted by 90% of the countries on Earth, suggesting that if they are met, we will get down to a 2.7° increase in temperatures. That represents huge progress from the 4° to 5° that we would have with no change, but it is still not enough. An increase of 2° C is the Rubicon that we must strive not to cross, as the impact on life on this planet if we get things wrong almost does not bear thinking about. As we have heard from a number of hon. Members, the impact will be harshest on the poor. As my hon. Friend the Member for Glasgow North (Patrick Grady) has said, those who have contributed least to global warming stand to lose by far the most. As one of the planet’s earliest industrialised nations, and as a major producer and exploiter of carbon dioxide in terms of fossil fuels, we have a moral responsibility here.

One really encouraging sign, which has been touched on in this debate, is that there has been a decoupling of growth and carbon emissions. According to the International Energy Agency, at the global level we have 3% growth, with flatlined emissions. From the UK perspective, we are talking about 2.8% growth, with an 8.4% reduction. The comments about not offshoring are pertinent, but if we are having 3% growth globally with no increase, the suggestion is that it is possible to achieve growth and prosperity, which is required, but without the detrimental effects on our planet and the ensuing impact on populations—and then the knock-on effect on our economic prosperity.

What do we require? The commitments to seeking five-yearly reviews are fundamental. Whatever deal we get cannot be seen as enough in and of itself; it will have to be reviewed and improved upon, which will require concerted effort from Governments across the Earth. We also need the commitment to finding the money that is required—$100 billion has been suggested in order for us to feed in the required changes. That money needs at least in part—we hope it will be a considerable part—to be new money, because if it is a redistribution of existing aid, we will not meet the dual aims. We have heard about the sustainable development goals, which are fundamental. These things go hand in hand, and we cannot be seen to be taking money from sustainable development, in terms of some aspects of eradicating poverty, and putting it into climate change. There must be a combination of moneys and a concerted effort to ensure that we do this.

The action we will take in Paris, the words we will use and the power that we will exert—the soft power, in the form of diplomatic pressure on the rest of the world to take a lead—must be backed with action at home. The Secretary of State’s announcement yesterday on coal can be welcomed by most of us. I do not think that commitment should be understated—it is hugely important—but it should not be overstated either. It needs to be taken in consideration with some of the other things the Government have been doing, which we have heard about and which are damaging to our attempts to meet our climate change commitments. Mention has been made of the changes on onshore wind and solar, the removal of the climate change levy from green energy production, the scrapping of the commitment to zero-carbon homes—in England and Wales, I assume—and the decision to privatise the Green Investment Bank. That headline of scrapping coal will be the thing that many in the world will see, and it does provide a certain legitimacy to the Secretary of State and to the UK Government in arguing for change, but let us hope that people do not scrape too far beneath the service, because if they analyse this Government’s action in depth they will find that the world-class rhetoric is not borne out by action here.

As we have heard, the change on coal and its replacement with gas can make a significant contribution, but it will also lock in change, potentially for 30, 40 or 50 years. I have this ask of the Secretary of State: when we are looking at that new generation of gas-fired power stations, can we consider how we can use them, or at least make them ready to be adapted, should CCS be commercially deployable? If they are built ready to adapt to that technology, it will mitigate the amount of carbon that we cannot afford to have released.

I hope that in the autumn statement and the comprehensive spending review next week, the commitment to the funding of CCS is still there. That is essential, and we back the go-ahead of both Peterhead and White Rose. I agree with the Climate Change Committee’s assessment that we need at least another two projects coming out of this Parliament. That is probably the easiest way to adapt to a low carbon economy, but it requires support. Being at the forefront of that technology could allow us to benefit financially as well as ecologically.

I support the calls for a reconsideration of the policies around renewable energy. Again, we need to look at the economic case. I come back to the IEA, which has suggested that, in the coming years, 60% of all money that is spent on energy infrastructure will be on renewables. That is hugely important. The Secretary of State is very keen on offshore wind, and she will know that we have the potential to become a world leader in that area. We also need to see what more can be done with solar energy and onshore wind. I welcome her suggestion this morning that there is an open mind to the possibility of subsidy-free onshore wind, and a willingness to engage with the industry to make that happen.

We heard from my hon. Friend the Member for Glasgow North about Scotland’s climate change legislation. We are on track to meet our agenda. It is ambitious—moderately more so than the UK agenda as a whole. We are uniquely placed to contribute to the UK’s carbon reduction and to take more than a fair share of global reductions.

[Mr Lilley]

Subsidies!

[Callum McCaig]

The right hon. Gentleman mentions subsidies from a sedentary position. In her speech yesterday, the Secretary of State acknowledged that no form of new generation will be built without subsidies. That is the reality of the energy climate in which we work today. Whether we like it or not, subsidies are required. If we take in carbon costs, the area that is most likely to be developed without subsidy is onshore wind, which, ironically, is the one that has been ruled out.

I welcome the fact that Scotland will be able to play its part in the UK delegation. Our story, as part of the UK story, is compelling, and I look forward to the UK, with Scotland playing a leading role, taking this matter forward, showing true global leadership and ensuring that we get a deal that is worth its name.