Oil and Gas: Subsidies and Licensing

Debate between Lord Lilley and Lord Oates

Thursday 20th January 2022 Grand Committee

[Lord Oates (LD)]

My Lords, I apologise to the noble Baroness, Lady Boycott, for stepping in. I welcome the noble Lord, Lord Offord, to his place and look forward to his maiden speech. I cannot help noting, although I am very pleased we heard his point of view, that the noble Lord, Lord Lilley, was allowed to speak having arrived about three minutes late, when only recently in a debate on the nuclear industry, the noble Baroness, Lady Bennett of Manor Castle, was refused the opportunity to speak despite arriving at almost exactly the same time. There cannot be one rule for members of the governing party and another for members of the Opposition. I hope the Government Whips will take note of that. However, I am glad we heard from the noble Lord.

The urgent need for the North Sea industry is not further subsidies or contradictory policy-making by a Government who on the one hand say that they are in favour of net zero and on the other continue to endorse the maximum economic recovery policy. The urgent need for the North Sea industry is transition. If there are tax breaks and subsidies, they must be directed at transitioning that skilled workforce out of the oil and gas industry, because that fossil fuel industry is coming to an end. That is what will happen. It is the reality, and those who think they are standing up for workers in the industry by backing further drilling are simply sending people down a blind alley.

As I mentioned during debate on the Financial Services Bill, the last part of my title—Lord Oates of Denby Grange—is taken from a colliery in Yorkshire where my grandfather and uncles all worked as coal miners. I have great respect for the people who work in the fossil fuel industry; they powered our industry and heated our homes, often working in very dangerous circumstances. However, we know what happened to the coal industry: it came to a dead stop. There was no proper transition and, as a result, communities were stranded and suffered massive social and economic deprivation that remains to this day.

Let us not pretend we are doing any favours if we go down this maximum economic recovery route and keep going until the dead stop happens. It will happen; as the International Energy Agency has stated, we cannot burn all the reserves we have already identified if we are to have any hope of keeping to 1.5 degrees. We cannot do it. The argument of the noble Lord, Lord Lilley, is that we have this stuff so let us burn it. If everybody else takes the same view, we will get nowhere near even 2 degrees but go far beyond it. That is not a problem for the noble Lord, because these things do not matter to him. He thinks the whole net-zero thing is ridiculous and absurd, and he calls anyone who stands against that an eco-fanatic. But, for those of us who care about it, there must be a logical policy.

The Government have set ambitious targets for net zero which the Liberal Democrats welcome. However, it is no good having those targets if your policy tools contradict them. Maximum economic recovery in the North Sea, and the tax subsidies, absolutely do that. The noble Lord, Lord Lilley, said that the reserves in the North Sea should be used for the benefit of the people. The benefit of the people would be to keep those reserves where they are, not to burn them. It would certainly be to the benefit of future generations.

[Lord Lilley (Con)]

How long—or how shortly—does the noble Lord think it will be before we cease to use gas, both to heat homes and as the natural source of power to deal with the intermittency from renewables? Most people think we will still be using it in 30 years’ time.

[Lord Oates (LD)]

We have to transition away from using it by 2050, or at least without abatement of it. Exploiting the North Sea resources when we are trying to lead the world is not going to work. It is rank hypocrisy, and it is deeply damaging.

Let me just pick up on the point that the noble Baroness, Lady Boycott, made about energy costs. It is a complete fallacy that the way to reduce energy costs is by scrapping all the green levies, as the GWPF and other people want to do. If you look at what happened to energy costs between 2010 and 2020, in terms of the bills that people paid, you see that total household expenditure on energy fell. It did not rise. One of the reasons it fell was because the levies funded insulation of properties and measures to reduce consumption. Consumption of gas and electricity fell significantly during that time. In fact, the eco levies save people money.

I understand the position of the noble Lord, Lord Lilley, of not worrying about net zero. I do not understand the Government’s position, because they claim to worry about net zero but take actions that show the exact opposite.