Carbon Budget Order 2011
Debate between Lord Moynihan and Lord Marland
Lord Marland
My Lords, I offer my appreciation for the contributions of those who have spoken on these orders, even though I do not necessarily agree with all of them. At one point my noble friend Lord Reay was a soothsayer but at another point a prophet of doom. He was very emphatic that there is no global warming, that the Green Deal is unattractive to the consumer and that the CCS is a rash punt. We shall see what happens. I do not agree with him and I am very happy that in the cities I have visited recently there is serious intent to take up the Green Deal. It will be of great value. I do not agree that it is unattractive to the consumer.
I pick up on a very good point made by the noble Lord, Lord Teverson. He always makes good points on these matters, although I was disappointed that he did not agree with everything I said, which does not go down too well. He said that it is all about demand management. The Green Deal will produce more effective demand management and will, we hope, be a way of reducing the amount of energy we use.
I congratulate the noble Baroness, Lady Worthington, on her first contribution on this subject. I am extremely wary of engaging with someone of such great knowledge but I welcome her to the debate. She made the point that we are the world leaders in this legislation due to her efforts and those of the noble Lord, Lord Prescott. I was about to call him my noble friend, given some of the nice things that he said. The noble Baroness made the point that at times we have ignored the advice of the Committee on Climate Change. Believe it or not, the Government do not always do what everyone tells them. We get advice and then determine whether it is applicable to the world that we live in. We must be seen as a pragmatic Government, and pragmatic is what we fully intend to be. That does not mean that we will not show leadership on this subject. Putting down the marker of a 30 per cent reduction in carbon to Europe shows genuine leadership and that we are moving forward while other countries in Europe are moving backwards. However, as the noble Lord, Lord Turnbull, said, we cannot walk out of tune with Europe. We have to exist within Europe and we are bound by European legislation, as the noble Lord, Lord Prescott, knows because he was very much part of it at the time.
We are on target for our credits. Having those credits is only a contingency. The noble Duke, the Duke of Montrose, was close; it is a 3 per cent, rather than a 5 per cent, contingency. There are great brains behind me, calculating every word I say. It is only a 3 per cent contingency, so it is not very large. We are committed to reviewing it in 2014. It is right that we should review these things. It is not right for us to commit this country to long-term things when we live in a fast-changing world.
The noble Lord, Lord Turnbull, was, I suggest, slightly sceptical about what we are embarking on. He looks at these things wearing a Treasury hat. My goodness, in government we quake at the thought of the Treasury hat. It is based on pragmatic and often cynical views on some of our inspirational plans. However, we recognise that the noble Lord comes from a pragmatic position and welcome his views. However, he would not deny that in government one has to show leadership. That is the way the previous Government and the current Government have determined the course and we intend to show leadership. I would take issue with him on the subject of green jobs or investment. We have to invest, as the noble Lord, Lord Teverson said, £10 billion in the infrastructure of this economy—not just low-carbon economy, but the economy. With investment—and even the Treasury and great officials from the Treasury would admit this—generally comes jobs.
I was surprised that the noble Lord, Lord Prescott, who has more experience in this field than I have in my little finger, asked about consideration. As he well knows, the Climate Change Act allows us to reconsider our position. It was actually set in stone by the previous Government. We are saying only what was laid down in the Act—that we do intend to reconsider our position.
The noble Lord, Lord Grantchester, quite rightly invited us to comment on whether the EU ETS trading platform is fit for purpose. We know that in certain parts of Europe the platforms were not right. We have shown leadership in this area because we have a robust platform—that does not mean we are being complacent—which must be tightened up but can show leadership to Europe of how this platform should operate. The noble Lord asked me a number of questions about ROCs and other things which, with all due respect, I will not debate now because I do not think them relevant to these orders. I also know that noble Lords are looking forward to a drink and something to eat so we will get on. However, the fundamental point he makes and wants me to answer is on the energy-intensive industries. We cannot just ignore them. As he rightly says, we have to work in co-operation with them and show them the pathway to improving their business. However, in the mean time, we must not destroy them because we are looking at very substantial employers who, for many years, have been the backbone of the country. We need to work with them. We must also recognise the role of the consumer and that everything we do is for the consumer’s benefit. With that, my Lords, I commend these orders to the House.
Lord Moynihan
Before the Minister sits down, I wish to pursue the point made by the noble Lord, Lord Prescott, in recognition of the Climate Change Act. In the Explanatory Memorandum, it states that Government must, in making decisions on carbon budgets, take into account the estimated reportable emissions from international aviation and shipping emissions. It further states that international aviation and shipping are not currently included in the scope of carbon budgets but they may be included in the future. I wonder whether my noble friend the Minister could give the House his wisdom and say when the Government intend that to happen, if at all.
Lord Marland
I have just been told by my noble friend that if I pan this answer out for another two minutes, we will not have to adjourn during pleasure for another two minutes. I will try my best but the noble Lord has asked such a very straightforward question. The straight answer is 2012. I am sorry but I cannot carry this answer forward.
Lord Marland
It is wonderful to hear such harmony and I am very grateful for this scientific question. I think we are now down to half a minute. What was the question that the noble Lord, Lord Moynihan, asked?
Lord Moynihan
My noble friend the Minister gave an extraordinarily perceptive and astute answer to my question. In the context of that answer, it is important that it enables the Minister to state clearly whether that decision will enable us to be consistent with a pathway to the 2050 target set out in the Act.
Lord Marland
The short answer is that we will be reviewing this in 2012. I want to thank noble Lords for this very entertaining and engaging debate. It has been a real pleasure and privilege being present tonight. Shall we go to the other place?
Energy Bill [HL]
Debate between Lord Moynihan and Lord Marland(13 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Lord Marland
My Lords, I thank my noble friend Lord Jenkin for raising this issue and, in particular, for this canter through the gas situation as it is today. When I was shadowing my current role during the Labour Government and spoke on a number of occasions about gas storage, they reassured me that we had enough storage and that we were in very good shape. Indeed, now that I have got to the position that I am now in, I largely agree with them. That does not mean that we should be complacent or should not press hard for greater gas storage. But the facts are as follows: we have 16 days of storage available and we have under construction another 25 per cent. Maths is not my strongest suit, but as the noble Lord, Lord Moynihan, can tell us—because maths is his strongest suit, along with running and jumping and other things—that gives us just over 20 days’ storage.
Lord Marland
The noble Lord has such talent in one body. So we have 20 days’ storage. The noble Lord, Lord Hannay, said quite reasonably that we should compare ourselves to other countries. Obviously, Germany and France have more than that, but they do not have their own gas supply. They are entirely reliant on what used to be called the old Iron Curtain countries for their supply. I would be concerned about the security of supply in the light of some of the endeavours that they have been through. We in this country still produce 50 per cent of our own gas and we are still finding more gas, which will not, admittedly, stop the supply being eroded, but will decelerate the erosion. We have a secure contract. The noble Lord, Lord O’Neill, suggested that we must have good long-term contracts; we probably have as good a long-term contract as any country in the world with Norway, from whom we receive 20 per cent of our supply, managed by Shell, the former company of the noble Lord, Lord Oxburgh—and a marvellous job it does as well. My own view is that we have a very significant secure supply.
Let us look at the matter of storage. Yes, we have given planning permission to various endeavours, but at the moment the cost of storing gas is significantly higher than the price of storing oil, so not unsurprisingly people are giving due consideration to the commercial viability of this project. Of course, part of the thing that we must do in government is to weigh up the pros and cons and absolutely ensure that the nation has security of supply, which is fundamental to all Governments, and to be able to gauge that. We have not had a greater opportunity to gauge that than the unfortunate months of November and December last year, which were beyond record for bad weather, when we came through with flying colours. There were certain countries—and we shall not mention the names—that did not do so. Given the tests that we have had, we have come through with flying colours.
We should not be complacent, of course. That is why we have acted swiftly to engage in planning permission and to make it much easier for big infrastructure projects to be authorised quickly. But we cannot sit in government and insist that certain things are going to be carried out unless they have gone through proper consultation. In many ways, the noble Lord, Lord Jenkin, gave me the answer to the question posed by his excellent amendment. Ofgem is already considering our requirements and carrying out a significant code review consultation, which will be produced at the end of February, on the resilience of our gas energy supply. It would be right for us to take on board what Ofgem has to say, to review it and then carry out what powers are necessary to ensure that, if there are areas that need to be dealt, the Government deal with them.
I hope that that sets the scene for the current gas supply situation. I hope that it answers a number of the excellent questions that noble Lords have asked and allows my noble friend Lord Jenkin to withdraw his amendment.
Lord Moynihan
My Lords, I was not going to intervene on this, but I have just watched, at some length, the follow-up proceedings in Congress on the first presidential commission report on the BP Deepwater Horizon disaster, which was published several weeks ago. Most of the cross-examination on this issue highlighted the fact that caution should be the order of the day in assessing the level of cover that an operator would require. Caution is needed because there is a massive difference between the majors and the independents. The representatives of the commission, when cross-examined in the last few days, highlighted the fact that they had not had the opportunity to discuss this issue, which is a valid and important one to raise. I welcome the fact that an amendment has been tabled so that we can consider it. However, the representatives had not had an opportunity to sit down with the insurance industry to look in detail at the exposure—the level of cover required—and the impact on the industry as a whole.
We in this country have a proud and, in my view, wise policy of encouraging independents to come on to licences alongside the majors to add further expertise and bring additional value to the table on safety, drilling expertise and well knowledge. I would be cautious about taking too much of a blanket approach to this at the moment—one which did not take into account the exposure that was being sought by the noble Baroness for different licence-holders and different companies on the same licence. The direction of travel in which she is heading is one that the industry will need to follow. This will inevitably be a major issue as the industry moves forward, both in the United States and elsewhere. It is a subject that will require detailed consideration between government, the industry and the insurers to come up with the best possible method of moving forward to ensure that, on the one hand, there is cover but, on the other, we do not end up with just a handful of majors and lose the independent sector. It has contributed so much to the development of the North Sea and has a commitment to safety that is as great as that of anybody else operating there. That is my only word of caution.
This is a highly complex area, which needs a good deal of further reflection, but I welcome the fact that the noble Baroness has brought this to the Committee. It is an important issue and she knows my interest in the subject. I hope the Minister responds equally positively about the importance of this issue and of continuing discussions between the Government, the insurance industry and the operators—and not just the operators but the drillers—to make sure that there is appropriate cover, but that cover is not required to the point at which we lose a significant section of the industry, which so far has contributed greatly to the development of the North Sea.
Lord Marland
My Lords, this is an excellent amendment and the Government are entirely in agreement with its broad principles. I am grateful to my noble friend Lord Moynihan for his comment as a practitioner in this field. I should preface any remarks that I make with a reminder that, in my former life, I spent most of my time trying to sell insurance to oil companies and to make myself even richer, so I was all in favour of them buying as much insurance as possible. However, in my current role, I see that a balance has to be struck and that I was wrong at the time—or only partly right. My shareholders thought that I was right.
The Government are in full agreement on this. We have seen the Select Committee’s recommendations and we are evaluating them at the moment. The noble Lord, Lord Moynihan, makes the point that we must not rush into this or have knee-jerk reactions. Of course, when the Government issue licences, a fundamental part of that is that the company awarded the licence becomes a member of the Offshore Pollution Liability Association; it has to purchase £250 million of cover and it then goes into a pool that offers greater cover. This pooling arrangement is fairly unique and it gives us a number of solid assurances. There are two imponderables that need evaluation. One is the quality of insurance cover. Obviously, if the insurance provider is not of A-graded quality, particularly with a longer-term liability situation, that would be a concern. That needs looking at rigorously. Then there is the matter of the quantum.
Two things are going on, as the noble Lord, Lord Moynihan, said. The first is the inquiry that is happening in the United States. We would not want to prejudge what is happening in that inquiry, which we want to evaluate. Also, we want to evaluate the Select Committee’s comments, which are valid. I hope that the noble Baroness will understand that the Government take this matter seriously. She has been persuasive in taking an important line. It is very much in the country’s interest that the subject of pollution should be managed very carefully indeed.
Energy Bill [HL]
Debate between Lord Moynihan and Lord Marland(13 years, 11 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Lord Marland
I totally agree with my noble friend Lord Jenkin. There is always an argument for keeping everything as low as possible. However, we are not at the stage of the Bill where we should be able to predict or prescribe how additional fees are charged. I think I have spoken to that; I hope that my noble friend feels that I have. We have a lot of discussion, dialogue and consultation to have with the financial institutions who may well be providing that finance.
Lord Moynihan
To assist the Minister on this, can he clarify to the Committee that the Government intend for there to be the flexibility that my noble friend is looking for?
Lord Marland
I am grateful to my noble friend Lord Moynihan for assisting me in this regard. Absolutely—we have to allow the framework to take its course and we have to be open to consultation and views to find the best method of dealing with this.
Electricity Market Reform
Debate between Lord Moynihan and Lord Marland
Lord Marland
On the last point, the Energy Bill clears the way for offshore wind to link into the grid and to facilitate that. I shall comment on that further when we discuss the Energy Bill. The noble Lord is right that it is fundamental that we have the reserve capacity to cope with peaks, such as the well-known “Coronation Street” kettle peak, or with very cold periods. Therefore, we are developing a capacity payment to encourage people to create facilities for providing capacity at peak storage times. The development of storage technology for wind farms is also fundamental. We will drive forward very hard to ensure that that technology advances quickly.
Lord Moynihan
My Lords, in declaring an interest as chair of Pelamis Wave Power, I welcome the Statement. I join noble Lords who have underscored the importance that the Government attach to the all-important issue of creating greater investor certainty in the electricity market. Can the Minister comment on the importance of consulting on the construction of the necessary electricity upgrades and new infrastructure to bring offshore gas and renewables onshore at increasingly competitive prices, including third-party access to pipelines in the gas market? Will he confirm that his department still believes that security of supply is best achieved through diversity of supply?
Gulf of Mexico Oil Spill
Debate between Lord Moynihan and Lord Marland
Lord Marland
This morning I met Iain Conn, the chief executive of refining and marketing for BP, who is on the board of BP. He gave me a very clear picture, which has been developing over time. Seven safeguards failed, so it was a most exceptional accident. As the noble Lord rightly said, the concrete casing and the blow-out preventer failed, but another five things should have locked in to prevent that happening. It is remarkable that all those safeguards should have failed. Clearly, the finger of blame will be pointed in all sorts of directions but I do not think that that will help to solve the current problem. We will doubtless be left with the presidential inquiry, which will take place afterwards. Our own OSPRAG group will review that and ensure that lessons are strongly learnt.
Lord Moynihan
My Lords, first, I declare my interest as a non-executive director of Rowan Drilling, a US-based shallow-water jack-up drilling company. I was one of the Energy Ministers responsible for implementing the recommendations emanating from the Piper Alpha disaster, and I congratulate the Minister on immediately undertaking a review of the UKCS operating and drilling activity. Will he ensure that the safety case regime is at the heart of that review? Will he also reflect that the response by the British Government to the Piper Alpha disaster was measured and constructive, without emotive political rhetoric from either side of the House, and underwritten by seamless, calm and reasoned collaboration between the British Government, their agencies and the American operators in the North Sea? Does he agree that that is the most effective response, however tragic the human and environmental consequences?
Lord Marland
I thank my noble friend Lord Moynihan for his comments; again, it is very useful to have the input of someone who has experience in this field. I well remember the Piper Alpha incident and the horrific pictures surrounding it, and I was deeply involved in the insurance loss. What was vivid in my mind—and I hope that it will be vivid in our minds at the end of all this—was the incredible effort made by people such as Red Adair in dealing with that dreadful disaster, as noble Lords will probably remember. All efforts were made from both sides of the Atlantic to ensure that the problem was solved, and that, I am reliably informed, is what is happening now in the US. BP is not alone in this; it has the full support of the oil industry companies, and that, I think, will be obvious as time passes by.
Safety is at the heart of this and must be in the future. We need to ensure that an accident such as this one or Piper Alpha does not happen again on our shores. I do not have the statistics with me but let us remember that more than 4,000 deep-water wells have been dug since 1980. Therefore, to date this has been a very satisfactory and productive development. It is dreadful that this accident has happened but one hopes that it is a freak event.