Queen’s Speech

Lord Moynihan Excerpts

Monday 16th May 2022 Lords Chamber

[Lord Moynihan (Con)]

My Lords, I look forward to debating the forthcoming energy Bill. Once again, it looks set to be a Christmas tree Bill on which your Lordships will be able to hang many policy favourites of their own. In parenthesis, I am not sure why this has become common practice in major Bills recently. It is one area where government Whips can understandably influence the Long Titles of Bills to minimise manifold amendments. That said, it will provide many of your Lordships with the opportunity to recommend strong support from government to ensure that the North Sea Transition Authority is well armed to encourage inward investment into our gas reserves. Only by consistent and long-term policy support will we encourage the absolutely vital inward investment necessary to maximise upstream production during the transition—which, in turn, will necessarily last until well into the 2030s, at the earliest.

Noble Lords should be under no illusion. Gas will play a crucial role in delivering net zero for many years to come, particularly given the nature of renewables, which are intermittent in a market requiring a consistent, uninterrupted, resilient source of supply. Let us put this in perspective. After 20 years and nearly $5 trillion of investment, the world has only 15 million barrels of oil equivalent in wind and solar, against the 237 million barrels of oil equivalent required every day. We will have to bolster the country’s energy resilience. Our love affair with the idea of green energy has left us exposed to high international energy prices. Had we had a more resilient transition 10 years ago, we would have seen far higher gas production in the North Sea. We have simply not optimised production of gas in the interests of energy security and resilience. Gas must become—and is becoming—increasingly green. Every year sees a reduction in production emissions and a reduction in routine flaring. By 2030, we will have halved our production emissions and eliminated routine flaring.

So, what can the Government do? Ministers can work with the Treasury to improve access arrangements to gathering platforms that inhibit the optimal development of marginal and mature fields, which rely on the gathering platforms usually owned by the large operators to secure onshore delivery. Ministers can show caution about calls for a windfall tax when we need to encourage investment in marginal fields, where the global market is highly competitive for the marginal investment dollar. We need to introduce measures to build investor confidence, not destroy it. Yes, the industry is making extraordinary profits with today’s oil price at $110, but how will it increase investment in renewables when it is paying out those investment funds to government through a spike or profits tax?

If the Government are to follow through with this route, they must include fiscal incentives for the industry to invest in renewables without deterring investment in gas. As BlackRock has realised in its approach to proxy balance, we need more short-term investment in traditional fuel production to boost energy security. It is time to move away from forcing upstream gas companies to decommission assets or setting absolute targets for companies to reduce emissions in their supply chains.

But this Bill will go further. I finish by asking the Minister a number of questions. Does he believe that 24 gigawatts of nuclear will happen—and, if so, by when? Can the market structures enable sufficient investment in the grid to match the hoped-for electricity use in transport, heating and industrial applications when only modest growth is anticipated over the next five years? How realistic are the expectations about hydrogen, given its apparent lack of cost competitiveness today, and where are the end users who will adopt hydrogen at scale?

Lastly, I mention possibly the most important point, which is that a clear business case is needed by government for a credible energy efficiency rollout. There is a clear absence of energy efficiency at the heart of our energy policy, which in turn is sadly absent as a key plank in the Loyal Address.