Energy Bill [HL]
Lord Oxburgh Excerpts(9 years, 1 month ago)
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Lord Oxburgh
“Carbon capture and storage strategy
(1) It is the duty of the Secretary of State to—
(a) develop, promote and implement a comprehensive national strategy for carbon capture and storage (CCS) to deliver the emissions reductions required to meet the fifth, and subsequent, carbon budgets at the scale and pace required;(b) develop that strategy in consultation with HM Treasury, the Department for Business, Innovation and Skills, the Oil and Gas Authority and other relevant stakeholders including the CCS industry; and(c) have that strategy in place by June 2017 and report to Parliament on the progress of its implementation every three years thereafter.(2) The strategy provided for by subsection (1) shall, amongst other things, include—
(a) the development of infrastructure for carbon dioxide transport and storage;(b) a funding strategy for implementation including provision of market signals sufficient to build confidence for private investment in the CCS industry;(c) priorities for such action in the immediate future as may be necessary to allow the orderly and timely development and deployment of CCS after 2020;(d) promotion of cost-effective innovation in CCS; and(e) clarification of the responsibilities of government departments with respect to the implementation of the strategy.”
Lord Oxburgh (CB)
My Lords, I, too, would like to pay tribute to the Minister himself for the courtesy and patience which he has displayed in dealing with the myriad matters that have been raised. I join the other speakers in expressing my gratitude to him. Equally I would like to offer my best wishes to the noble Baroness, Lady Worthington. She will certainly be missed. Her wisdom and her comments—sharp and to the point—will be missed as well.
The issues to which Amendment 3 is addressed remain important, but it is a tribute to the Minister’s persuasive legal tongue that in the time between Report and now he has persuaded me that the same objectives can be substantially achieved by a different route. Although I prefer the approach that was proposed in the amendment, I will be happy to withdraw it.
Baroness Maddock (LD)
My Lords, I also add my thanks to the Minister for the way in which he has dealt with us all through some tricky times, as is always the case with energy Bills in my experience. I also pass on my best wishes to the noble Baroness, Lady Worthington. We will certainly miss her knowledge and her boundless enthusiasm, whatever time of night we are here. We will certainly miss that.
I am really pleased, having heard the opening comments of the Minister, and the comments of the noble Lord, Lord Oxburgh, that the Government are taking seriously the issue of carbon capture and storage. I am not sure that we felt that that was the case when we began this Bill, so I am very pleased that the Minister has been able to move other minds as well on this. I hope that we will hear in due course very good outcomes from the proposals he has made.
Lord Oxburgh
My Lords, I had not expected this amendment to give rise to the little discussion that we have had. It has of course reminded me that I ought, once again, to have declared my interest as president of the Carbon Capture and Storage Association.
I respectfully remind the noble Lord, Lord Howell, with whom I so commonly agree on these matters, that CCS is expensive, but if we turn our thoughts back to the report of my noble friend Lord Stern, the sum which is committed to CCS is a tiny fraction of the sums that will be at risk if we do not. It is not nice to have to spend money, but it is the lesser of two evils.
I conclude by thanking noble Lords on all sides for the kind remarks that they have made and by endorsing the comments of the noble Baroness, Lady Worthington. It is essential that we be seen in Europe and, more widely, abroad to have embraced the low-carbon agenda, and that we are not being dragged, screaming and kicking, into that area, because we will have much more influence in that case. Indeed, it will be much better for British industry, for which there will be many opportunities if we get this technology right, and get it right quickly.
A succession of Governments has not been, shall I say, all that dextrous in handling CCS in this country. I think that, had things been handled a little differently, not just by the previous Government but by the Government before that, we would not be in this situation today. However, we are where we are, and so we must press on with enthusiasm and good grace. I beg leave to withdraw the amendment.
Energy Bill [HL]
Lord Oxburgh Excerpts(9 years, 2 months ago)
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Lord Bourne of Aberystwyth
My Lords, I will now speak to government Amendments 12, 16 and 17, which relate to the matters to which the OGA must have regard when exercising its functions. There has been informative and reasoned debate throughout the passage of this Bill about the role of the OGA in relation to CCS. I am glad that we have had the opportunity to discuss these matters more fully with many noble Lords since then. These amendments, along with others that we will be considering later today, are designed to ensure that the OGA’s important functions in relation to carbon storage, which support the Government’s overarching strategy for the decarbonisation of the economy, are at the forefront of the Bill.
I have spoken about the OGA’s role within the Government’s broader strategy to support decarbonisation. Within that context, I will now speak to government Amendment 12, which inserts an additional subsection into Clause 4. This requires the OGA, in the exercise of its functions, to have regard to the development and use of carbon storage facilities and of anything else needed in connection with the development and use of such facilities. This will create a duty upon the OGA when exercising any of its functions, so far as relevant, to give due consideration to not just the development and use of such facilities but to other necessary aspects of the carbon storage chain. Those functions include statutory functions relating to oil and gas, such as the OGA’s statutory activities on decommissioning, which we will discuss more fully elsewhere. When scrutinising an abandonment programme, which is submitted prior to decommissioning, the OGA will have a statutory duty to consider alternatives to decommissioning at every stage of a proposed decommissioning planning process. This amendment will crystallise and strengthen the need for the OGA to have regard, in particular, to the development of carbon storage facilities through its role on decommissioning.
Such duties will also read across to the OGA’s role in relation to the stewardship of upstream petroleum infrastructure, including upstream pipelines, which are important for the transportation of carbon dioxide and for the commercial viability of CCS projects more broadly. Part 2 of the Bill will give the OGA new regulatory powers that apply to owners of upstream petroleum infrastructure, including powers to attend key industry meetings. These regulatory powers will provide the OGA with a much greater insight into the asset stewardship of upstream petroleum infrastructure, and this amendment to Clause 4 will help to ensure that the OGA makes strategic links to the viability of such infrastructure for the transport and storage of carbon dioxide at an early stage.
This amendment will also read across to the OGA’s functions regarding information and samples. For example, when consenting to plans for the preservation of information and samples, the OGA will consider how such materials could be of interest to the development of CCS.
The amendment will also apply to the OGA’s non-statutory functions—for example, where the OGA is developing important sector strategies to support the oil and gas industry. This amendment will help to ensure that CCS will also form an important element of the OGA’s technology and decommissioning sector strategies, which I know are already under development. In producing these strategies, the OGA will consult the CCS industry to ensure that synergies between the industries are identified and exploited wherever possible.
The amendment will also have importance at an organisational level, and the OGA has already been examining how CCS fits into the operations of all of its directorates and has identified a key contact point for CCS at director level.
Furthermore, to make explicit the link between the OGA’s carbon storage functions and the Government’s priorities regarding decarbonisation, the OGA must consider how its work to develop carbon storage may assist the Secretary of State to meet the target in Section 1 of the Climate Change Act 2008.
Government Amendment 16 is intended to place beyond doubt that the OGA’s functions include functions in respect of the storage of carbon dioxide. It does so by expanding the definition of “function” as provided under Clauses 4 and 5 to include functions exercised under Chapter 3 of Part 1 of the Energy Act 2008, which comprise the OGA’s statutory functions in respect of carbon dioxide storage licensing. Amendment 17 simply ensures that the definition of “relevant functions” does not extend to any activity carried out by the OGA under an agreement made with the Welsh Ministers under Clause 3.
Amendments 12 and 16 are intended to formalise in the OGA’s functions objectives to support the development of carbon storage, and I have outlined the effect this will have. In many cases, this reflects work already under way and which I expect to develop further as the OGA builds capacity.
I know that many noble Lords met members of the OGA leadership team following the Committee debates. I hope they will agree that the organisation recognises and understands the benefits of CCS and will work to ensure that carbon dioxide storage is properly integrated into the OGA’s functions. Through these amendments, I have sought to place clear obligations on the OGA to support that approach. Moreover, I am tabling separate amendments to ensure that these matters will be continuously reviewed by government and scrutinised by Parliament—a point that we will discuss separately in more detail.
Government Amendments 34 to 40 seek to amend provisions on information and sanctions in Chapter 3 of the Bill to put beyond doubt that information and samples relevant to carbon dioxide storage licensees are within the scope of that chapter. Amendment 34 seeks to amend the definition of “petroleum-related information and samples”, which is used throughout Chapter 3, to explicitly include information and samples which are relevant to activities carried out under a carbon dioxide storage licence. This applies through each of the clauses within Chapter 3 and ensures that information and samples that would be relevant to carbon dioxide storage licensees can be required to be retained, dealt with as part of an information and samples plan, and later published or made public.
Clause 29(1) sets out a non-exhaustive list of what an information and samples plan may provide for. Amendment 35 seeks to include within this list an explicit provision stating that petroleum-related information and samples may be transferred to a carbon dioxide storage licensee as part of an information and samples plan. “Carbon dioxide storage licence” is defined by Amendment 38.
Clause 27(4) allows the Oil and Gas Authority, in certain circumstances, to impose on a relevant person an information and samples plan, which may include the transfer of information to others. Amendment 36 restricts this transfer without the consent of the relevant person. This provision is a necessary safeguard to ensure that the relevant person can retain control of their commercially sensitive and commercially valuable information and samples to the extent that they wish to do so.
Amendment 37 amends Clause 29 to clarify that sanctions can be imposed on any person who is party to an information and samples plan and who fails to comply with their obligations under it. This amendment also includes a provision to the effect that an information and samples plan may impose obligations on a person who is not a relevant person, such as a carbon dioxide storage licensee, only with their consent. This ensures that obligations are not imposed without that person’s knowledge or consent, which the original drafting would have allowed for.
Amendments 39 and 40 amend the Oil and Gas Authority’s power to acquire information to ensure that it is able to obtain any information and/or samples for the purposes of carrying out its functions which are relevant not only to the fulfilment of the principal objective but to activities carried out under a carbon dioxide storage licence. The oil and gas industry has a wealth of information and samples that we acknowledge would be of great benefit to CCS licensees. The amendments clarify the scope of the information and samples clauses and firmly set out that it extends to include information and samples that relate to activities carried out under a carbon dioxide storage licence.
I hope that noble Lords will agree that these government amendments address the concerns raised in Committee. I beg to move.
Lord Oxburgh (CB)
My Lords, I remind the House of my non-pecuniary interest in carbon capture and storage.
I both thank the Government and acknowledge the major steps they have taken in the amendments which have been presented. The Minister was clearly listening hard during Committee and now the Bill is much improved.
I do not need to remind the House that the Government have either spent or committed around £1 billion to carbon capture and storage and to get it going in two major projects which are under way. However, those projects were going nowhere unless there was relatively easy access to the continental shelves for the purpose of storing CO2. As other noble Lords have mentioned, it is not clear when and to what degree the extent of this will be required. It is difficult to put a time on it. There is one functioning carbon capture and storage operation in Canada and others are close to it. However, providing in this Bill for access as and when it is required is very important.
There is a second requirement. We need some kind of strategic framework within which private industry can operate in the CCS area. This is the focus of Amendment 72. Had there been more time—as a number of noble Lords have said, for a variety of reasons we have been rushed over this Bill—I would have liked Amendment 72 to have been made the subject of an informal all-party discussion with the Government and officials. I feel there is significant support for this idea both within the House and probably within the Government.
The fundamental requirement is for an overall structure for co-ordination, timing and funding. Carbon capture and storage with the present technology—which may not be the technology we will have in five or so years’ time—requires that you have a process for capture at the source of the CO2; that you have a process for transporting the CO2; and that you have a suitable repository in which it can be contained. Each of these are separate commercial activities requiring different expertise but all have the characteristic that they are relatively capital intensive. Getting these three elements available simultaneously is quite a challenge. You do not want a situation in which two are available but an operation cannot get under way because the third is not. You do not want two assets which are stranded until the third comes along. This would make it inordinately expensive.
There is an overriding and compelling argument for a degree of oversight and co-ordination, a topic which the amendment would make the Secretary of State and the Minister address. Otherwise nothing will happen. There will be a great deal of talk and we will continue, as we are at present, with a glacial rate of progress. We need a framework within which business can operate.
The other question that needs to be addressed is that of funding. In Committee I floated an idea which is very different from anything we have at present and which would effectively take the Government out of the funding loop, a possibility that in many ways must be quite attractive. But that is not the only way. Indeed, I hope that one of the advantages that this amendment might bring about would be a kind of study about other funding groups.
Before I conclude, let me just say that a few weeks ago I came across an anomaly when talking to the leader of a research group in Oxford. He pointed out that at present there is no way of remunerating an organisation which is actually carbon negative. He had tried to attain funding and support from what used to be the Technology Strategy Board and which I think is now Innovate UK, but he was told that there is no market for carbon negativity. That is an anomaly which we ought to do something about. What was presented to me was something that, while not certain, was a plausible way of building power stations that could remove CO2 from the atmosphere by a series of processes while burning natural gas as part of their activity. If this could be made to work, it would be very attractive indeed, but it is something for which it is difficult to find support at present, and is something that the sort of review and organisation I have been talking about could address.
Energy Bill [HL]
Lord Oxburgh Excerpts(9 years, 2 months ago)
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Lord Grantchester (Lab)
My Lords, I thank the Minister for explaining these amendments, which reshape disclosure into a separate chapter in the Bill. They all seem reasonable enough, but they give rise to consideration of why they are now being so adjusted. I follow the noble Baroness, Lady Maddock, in her comments about the short notice and the comments made earlier by my noble friend Lady Worthington regarding the future prospects of the OGA and the Government’s intentions regarding it. One wonders whether something has happened. Can the Minister inform the House whether attention has been drawn to them so that they get consolidated? Can the Minister confirm that the Data Protection Act applies to the ODA with regard to information generally and to disclosure? Will he clarify the position and provide some assurances about questions that come to mind in relation to disclosure to third parties? We would support sharing information with other government departments and agencies, including the devolved Administrations, for the purposes of their functions, as the OGA will need to be able to work collaboratively with the different departments and the department itself.
In relation to third parties and foreign Governments, care certainly needs to be exercised and precautions taken with regard to possible unintended consequences. Will anything appear in the public domain regarding the nature and frequency of the sharing of information with foreign Governments? The Minister will be aware that there could be many agencies, especially regarding the environment, where the Government could come under scrutiny in how they handle sensitive information, and where any secrecy between Governments could be misconstrued.
On another point, is the Minister satisfied on the question of the Secretary of State undertaking a review into these matters? Will the Secretary of State have any oversight and details of the information shared by the OGA? Would there be any independent oversight of disclosures regarding legal proceedings and foreign Governments? Could the Minister give an example of the information that might be requested and then shared in relation to these amendments? That would certainly help to settle any disquiet that these powers could give rise to. Meanwhile, the amendments seem well balanced and reasonable.
Lord Oxburgh (CB)
I thank the Minister for his comment earlier on Amendment 72. I have a specific question on Amendment 64. It relates to Clause 31(3)(b), which says that disclosures may be made to the National Environment Research Council,
“or any other similar body carrying out geological activities”.
My question is simply what those other similar bodies might be. For example, would they be universities carrying out geological activities?
Lord Bourne of Aberystwyth
I am grateful to noble Lords who have participated in the debate on this part of the Bill. I acknowledge the point, as I think I did previously, about the technical nature of these late amendments. I understand the point made forcefully and correctly by the noble Baroness, Lady Maddock. On the general point about consolidation, I think there is general welcome for that, to try to ensure that everything is all in one place.
There were then some specific questions about the sharing of information with foreign Governments. I think that the legislation will be subject to the Data Protection Act; that is quite true. My understanding is that disclosure to third parties is not appropriate. If there is a body that the information is being shared with, whether domestically or with an overseas Government, that is the limit of it for the function concerned, unless, for example, the treaty were to provide otherwise. I am trying to think of the type of information that might be shared. The examples that I gave of Norway, Ireland, the Netherlands and so on are probably in relation to interconnectors. There may be a need to share information about where pipelines are at the moment, and so on. That is the sort of thing, rather than anything of an operational nature; I do not anticipate there being anything in any way sinister about this. I will write to the noble Lord, Lord Grantchester, about the oversight of the Secretary of State. I think that she would have oversight of this, but I will check that point. I shall also check whether there is to be publication of the information concerned. I cannot see why not, in all honesty; as I say, this is a functional managerial thing rather than anything else.
The noble Lord, Lord Oxburgh, raised a point about Clause 31(3)(b) regarding the National Environment Research Council or other similar bodies. I anticipate that that would include universities. The other eventuality covered here is if for any reason the council were to cease to exist and something else were to take over its functions—it is most unlikely—that would then qualify as a similar body. I hope that that deals with the points that were made.
Noble Lords will be interested to know that arrangements exist in treaties to ensure that the Secretary of State is satisfied that adequate protection is in place. An example is the showing of protection measurement systems and production measurement for joint fields of exploration in the North Sea. In relation to the point made about consolidation, for which I think we have general support, it was parliamentary counsel’s advice to consolidate those disclosure provisions. That is not an attempt to take the credit for what we all think is a very good idea, but it is to give credit to the parliamentary counsel for that. I hope that helps.
Energy Bill [HL]
Lord Oxburgh Excerpts(9 years, 3 months ago)
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Lord Oxburgh
“Carbon capture and storage
Within one year of the coming into force of this Act, the Government shall undertake a consultation on measures requiring extractors and importers of petroleum to contribute to the development of carbon capture and storage.”
Lord Oxburgh (CB)
My Lords, Amendment 34A seeks to impose certain open discussion on the possibility of imposing on importers or extractors of fossil fuels certain obligations with respect to managing the emissions associated with them. To backtrack for a moment, we are building up towards the Conference of the Parties in Paris later this year. One cannot avoid the feeling that there is something in the air, including President Obama’s initiatives on climate change in the United States, the new undertakings offered by China and the letter from half a dozen major oil companies to the United Nations urging for a high carbon price in order to manage global emissions. There is a general recognition that, unless something changes, business as usual will mean an inexorable march towards a 4-degree world. I do not think that anyone really wants that.
There is no single silver bullet to avoiding this but, having said that, I do not think that there is any credible solution to the problem of global emissions that does not involve carbon capture and storage. The Minister has already made reference to that. Despite the Government having made a continuing and substantial effort, one of the difficulties with CCS is that progress has been glacially slow. The discussion about carbon capture and storage has now been going on for more than 10 years. Perhaps I may remind the House that that was the time from the beginning of the space race to putting a man on the moon. What we are talking about is not space technology, but something much more readily tractable. It is a matter of getting the will and the institutions to get something done in time.
There are various reasons why we have not made progress. It was expected that the Emissions Trading Scheme would be successful, but it has failed to achieve a sufficiently high carbon price to promote carbon capture and storage and to drive substantial change. One of the problems is that many parties—I do not mean in the political sense, but the many interest groups and stakeholders—support carbon capture and storage but none can make the business case for urgent action or commit substantial resources, whether they be coal companies, oil and gas companies, electricity generating companies or cement companies. All have an interest in carbon capture and storage, but it is not the specific responsibility of any of them. In that sense, CCS is an orphan technology. It has numerous well-meaning aunts and uncles, but no parents who will really acknowledge it. Therefore, there is no one to take driving and fundamental responsibility for pushing it forward.
The amendment provides an opportunity to discuss a proposal that has its origins primarily in the universities of Edinburgh and Oxford, but which has support from a number of others. For those who might want to look at this proposal, which I have to say is immature in a number of ways, it can be found on the website of Scottish Carbon Capture and Storage in its third working paper for 2015. I am told that that reference is now in place. The amendment, which I will describe in a minute, would provide carbon capture and storage with very clear parents with a very strong interest in ensuring that the offspring thrived. Basically, what is proposed is a regulatory requirement,
“on producers and importers of fossil fuels to sequester, or pay for the sequestration of, a small but rising fraction of the carbon content of the fossil fuels they extract or import into the United Kingdom”.
This would be a major change in the way that CCS activity is supported. It would involve no call on the public purse. The call would be on the purses of the importers or extractors. Carbon capture and storage would be driven by what is exclusively a market mechanism. That is how the attention of these major corporations would be very securely obtained. They would find a way to do this as efficiently as possible.
This mechanism is relatively easy to implement. It would attack a number of problems that are currently major stalling blocks for carbon capture and storage. One of the big problems is how you get the infrastructure in place in the North Sea: who will take responsibility for it? If CO2 is captured on land, who will pay for a pipeline or for the storage? It would be absolutely clear who had to do this if this way of supporting CCS was introduced. We would find that the major corporations that operate in the North Sea would simply continue the kinds of co-operation that they have at present to make joint use and maintenance of pipelines et cetera where that is appropriate.
As this kind of mechanism is phased in, the other carbon levies, of which there are several, could be phased out. Nothing desperately urgent is proposed but these things could be merged. Costs are obviously important. The estimate of the groups in Edinburgh and Oxford is that if a mechanism like this were introduced gradually, at the very first stage there would be, for example, some tiny fraction of a penny increase on the cost of petrol. Rising over 10 years as the fraction of emissions for which the companies were responsible increased, it could go up to 2p, but it is not big and could be introduced gradually. The big point to bear in mind is that we could do carbon capture and storage for all our CO2, even on the more extravagant estimates, for a tiny fraction of the change in value which we have seen in the oil and gas markets. We are talking about something very small here by comparison with the fluctuations which we have seen over the last 12 months.
Lord Oxburgh
My Lords, I thank all noble Lords who have participated in our lively and interesting set of exchanges, which are too numerous to answer all in detail. However, the noble Lord, Lord Howell, asked about the implications for the North Sea. I probably did not make my submission too clearly, but one of the reasons that CCS is creeping along glacially is that no one can make a business case and there is no investor confidence. A regulation of this kind would plan a clear way forward for industry and CCS would become much more investable for the private sector—and there would be much less dependence on government.
The noble Lord, Lord Teverson, commented on the large scale and expensive nature of CCS. We do not really know what it costs. We know what the operation in Canada has cost, and it is a lot of money. However, there is a hockey stick curve for all these things; they are expensive at first but prices come down. All new technologies and new ways in which to capture carbon would be explored and invigorated with a clear drive from government, and there would be responsibility on companies to find a cheap way of doing this.
The noble Viscount, Lord Ridley, made a number of points, including on the carbon floor price. I am indeed worried about the delay. He commented on the overseas implications. I agree that among the things that we would have to tease out would be the implications for the UK of doing this by itself. What would be the implications for our position more widely? Might we be able to persuade other EU countries to come in on this? For a lot of people, this kind of approach is a no-brainer; it is the obvious, “polluter pays” way forward. I say to the noble Viscount that I never believe the figures on climate projections. He will have noted that, although I mentioned 4 degrees, I did not say when. What is beyond doubt is the direction of change, and cutting down our emissions and putting them out of the way as quickly as possible is a sensible precaution to take.
I thank the Minister for his words.
Baroness Worthington
I should like to respond to one question about how this matter relates to the Bill and the North Sea. I want to offer this fact to Members of the Committee: over its time, the North Sea has produced 42 billion barrels of oil. It has been of great benefit to us as a country; however, those barrels have contributed 18 billion tonnes of CO2 to the atmosphere. There is a definite link to not only the North Sea’s inevitable economic benefits for us but the environmental consequences of that. I should also say, for information, that buying CO2 commercially as a feedstock at the moment costs £100. We must be able to sort something out whereby the producers of CO2 and those who buy it at £100 can be brought closer together, so we can begin to see the development of an industry in getting CO2 safely out of the atmosphere.
Lord Oxburgh
I thank the noble Baroness for her intervention and remind myself that I should have thanked her for her support of the amendment. There are few people in the House, if anyone, whose knowledge of the industry is as deep and authoritative as hers. I beg leave to withdraw the amendment.
Energy Bill [HL]
Lord Oxburgh Excerpts(9 years, 3 months ago)
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Lord Oxburgh (CB)
My Lords, I shall speak to Amendments 7, 22 and 23 in this group. The main purpose of the Bill is the more efficient and effective management of the remaining resources in the North Sea, and it seems sensibly directed towards that end. However, it is important to remember, as others have touched on, that the Bill has enormous implications for the fledgling CCS industry. CCS is able to use the same infrastructure that was used for production and the same subsurface analysis, and it is important that it has access to those.
Before I go any further I should declare an interest as president of the Carbon Capture & Storage Association. Perhaps it is worth pointing out that I helped to establish this association around 10 years ago, just as I retired from Shell, because I saw no alternative to CCS—no other way of managing the emissions that were going to be produced by the continuing use of hydrocarbons over the coming decades, and avoiding the damaging climate change associated with those, unless we had something like CCS. For that reason, it is important that we bear this in mind today.
I hope that the Government will regard the amendments as helpful; they are certainly intended to be. Their main aim is to ensure that CCS is not inadvertently inhibited or prevented through the application of regulations and procedures that were not designed for those purposes. The Bill is based around the pre-existing Energy Act, by which CCS was not envisaged.
Amendment 7 is designed to remind the OGA that, over time, its priorities may change. The OGA is primarily staffed by people whose backgrounds are in a variety of aspects of hydrocarbon exploration, production, management and regulation. It is not beyond the realms of possibility that CCS is not at the forefront of their thinking. It is quite important that this should be made clear, and that is what the amendment of the noble Baroness, Lady Worthington, does.
Amendments 22 and 23 are both intended to ensure that practitioners of CCS have the appropriate standing and access in order to operate efficiently and effectively when doing their business. It is apparent from the amendments tabled by the noble Baroness, Lady Worthington, and other noble Lords that this concern is fairly widely held. Had this debate not been held today there might have been much more opportunity for Members with such concerns to consult with each other, with officials and with Ministers and we might well have ended up with fewer and more coherent amendments. We are where we are, but this is a real concern.
Given that CCS is a central plank in the Government’s energy strategy I hope that they will view these amendments positively. The amendments can certainly be improved and if the same objectives can be achieved in a more efficient way, I and, I am sure, others would be very happy to discuss this matter with Ministers and officials.
My final point is a trivial one in one sense but not in another. The Bill refers in a number of places to existing legislation—earlier energy Bills. It would be enormously helpful if officials preparing Explanatory Notes, who must have immersed themselves in the existing legislation, were able to include links in the Explanatory Notes to the online sources where that existing legislation can be found. We could all save a great deal of time and probably quite a lot of paper by following such links directly.
Baroness Liddell of Coatdyke (Lab)
My Lords, I will not delay the House long because what I wanted to say has been said much more eloquently by my noble friend Lady Worthington and by the noble Lords, Lord Howell and Lord Oxburgh. To echo the last point made by the noble Lord, Lord Oxburgh, giving us some indication of the reference points in previous energy legislation really would make life a lot easier for all of us.
My primary point is that this is an opportunity for some lateral thinking. For those of us who have been listening to the trailers for Jim Naughtie’s programme about the North Sea over a period of 40 to 50 years of exploration, it is astonishing to recognise the change that has taken place just in the past two to five years, or slightly longer. The major change has been that many of the larger oil companies have reduced their footprint in the North Sea and we have seen the entry of a number of independents. As the Wood report set out the case for setting up a regime of collaboration, it is important to bear in mind that for the independents, who are competitors one with another, it can be harder to get that degree of co-operation at the moment, when the North Sea is becoming more difficult. So would it not make sense to review where we are in a year’s time to make sure that we do not have to have yet another energy Bill before both Houses? The change is phenomenal, and we must be prepared for it at every opportunity.
I greatly admire the work of the noble Lord, Lord Oxburgh, on carbon capture and storage. It is the holy grail for this country, which has so much fossil fuel. I am very concerned about the environmental impact of the continuing use of fossil fuels, but I am also concerned about security of supply issues. The flexibility that fossil fuels can give us when there is a potential security of supply crisis is very important, and we will take a lot of the sting out of the tail if we have operational carbon capture and storage.
This is not a political issue—it should not be a partisan issue across this House. This is a common-sense group of amendments that allows us a bit of lateral thinking and allows us to make legislation at a time when considerable change is still going on, not just in the UK continental shelf but across the energy industry.
Baroness Worthington
My Lords, I thank all noble Lords who have contributed to this debate, which has demonstrated the breadth of opinion and the cross-party consensus on the need for the Bill to be amended to ensure that carbon capture and storage—or certainly the storage and transportation elements of it—is on the face of the Bill, for the avoidance of all doubt. On these Benches, we will not be content for the Bill to leave this House without that issue being addressed. That said, I am grateful to the Minister for his response. I look forward to sitting down and engaging in the discussions he offered with officials and interested parties to see if we can come to an agreement on the review period for the legislation and the objective of the OGA. I understand the points that have been made, but if you create a body that has licensing powers over the storage of CO2, which may well involve itself in meetings in relation to storage and transportation and which may be charging fees, how can this all be possible unless its primary objective includes a reference to that? The potential for judicial reviews or objections from industry would be much wider if we do not make it crystal clear from the outset that this is what we intend the OGA to do. The noble Lord has referenced the fact that this will be self-financing, but government amendments to be tabled today would mean that public money was potentially being given to the OGA. I reiterate that we will not be content unless something appears on the face of the Bill, but I look forward to sitting down with the Minister and his officials and, on that basis, I am happy to withdraw the amendment.
Lord Oxburgh
I join the noble Baroness, Lady Worthington, in thanking those who have participated in the debate and the Minister for his reply. I have one final question for him. Have the officials in his department conducted a study of how the Bill might impact CCS? There are serious questions there: if they have not done that, could they do so? It would be extremely useful as a lead-in to the next stage.
Lord Bourne of Aberystwyth
In answer to the noble Lord, officials have certainly been looking at how CSS fits in and dovetails with the Bill. We will continue to consider that and look at it if we are able to engage in discussions between now and Report. I am grateful for the noble Lord’s comments.
Energy Bill [HL]
Lord Oxburgh Excerpts(9 years, 5 months ago)
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Lord Oxburgh (CB)
My Lords, I see this Bill as something of a curate’s egg: it is good in parts but less good in others. My main concern is less about the details of the Bill and more about the lack of an overall strategic framework for energy into which we can fit it.
The first part of the Bill deals with North Sea oil and gas—and here I should declare an interest as honorary president of the Carbon Capture & Storage Association. The decision to follow the main recommendations of the Wood review is exceedingly welcome. Although the overall demand for oil and gas is likely to decline with increasing use of renewables, that same increase will increase the need for dispatchable energy. Currently, that need is mostly met by gas and it makes sense to reduce our dependence on imports and to make maximum use of our North Sea resource.
The proposed OGA arrangements are broadly welcomed by the industry, as several noble Lords said. However, for them to work effectively, as indeed the noble Baroness, Lady Maddock, said, it is essential that the detail is right. As this Bill progresses, we should look at that in much more detail and consider what will be put into secondary legislation. One question that the Minister might be able to clear up today is: how many civil servants and at what level is it intended will be transferred from DECC to the Oil and Gas Authority? Furthermore, what oil and gas expertise will remain within DECC to ensure that the department can provide intelligent and informed oversight of the authority?
I turn now to the part of the Bill that relates to wind energy. The Government must recognise that the two provisions in the Bill, one relating to the closure of the ROC scheme one year earlier than originally advertised and the other relating to planning consents for wind farms, will together be seen as a government cold shoulder for onshore wind. It is hard to see how this is consistent with the declared intention of decarbonising our economy in the least expensive way. I do not know whether the Minister is familiar with the review of onshore wind completed by the Baringa Partners consultancy in April of this year, but even if he is not, his officials will be. Using DECC documentation and assumptions, the review shows that after landfill gas, onshore wind provides potentially lower strike prices than any other renewable technology. This finding led to the conclusion that, “Based on DECC’s assumptions, onshore wind is the cheapest source of renewable generation available to the UK today for deployment at significant scale”. It would be helpful to know whether the department accepts those Baringa conclusions. There may well be good reasons why UK onshore wind capacity should not exceed the 12 gigawatts that the department seems to have in mind, but if so, it would be useful to know what they are.
The onshore wind industry in the UK—as distinct from the offshore industry, about which we have talked a little, and is more capital intensive—is one that owes much of its growth to small companies. Indeed, for several years I was the chairman of such a company. The fact that many of these companies are small makes them particularly vulnerable to abrupt changes in government policy. Delayed or cancelled programmes can result in fatal cash-flow problems, or at best simply increase the cost of capital. For these reasons, can the Minister assure the House that he will consider sympathetically representations made on behalf of smaller firms in respect of significant sunk costs that do not fall within the currently proposed period of grace within which planned projects may proceed? I think that this would be seen as a sympathetic gesture by the industry as a whole.
An even better way to decarbonise than wind is not to use the energy in the first place, but rather to save it, particularly in domestic housing. In that case, does the Minister not feel that the decarbonising efforts of his department are being undermined by the Government’s decision to countermand the previously advertised new regulations for low-carbon building that were due to come into force this year? As he will know, there are now companies in the UK that offer to build new, low-cost, near zero-carbon housing at the same price or better than conventional housing. I find this decision particularly odd in the light of a remark made yesterday by the Secretary of State to a Select Committee in the other place: “I am particularly ambitious in the area of energy efficiency”. The decision adds to the impression that there is no cross-government cohesion on energy policy.
The noble Lord, Lord Howell, referred to the massive impact of the commissioning of coal-fired power stations in India and China, and he is absolutely right. Unless the environmental effects of those are brought under control, what we do in Europe really will not have a great effect. What we are doing in this country, which is of considerable importance, is pushing ahead with carbon capture and storage. The main aim of our policy has to be to drive down the costs of CCS to a level at which the technology can be applied—in many cases retrospectively—to coal-fired power stations, particularly in developing countries, but also in other parts of the world. Cost will be the crucial factor.
Turning now to the broader policy context within which this Bill is presented, it is general knowledge that the Government have energy problems. It will be very difficult to keep costs within the arbitrary cap of the levy control framework. It was, and remains, difficult to predict how the EMR would work in detail, how fossil fuel prices will change and how new technologies and other variables will affect us. However, there is a wide perception, particularly in the investment community, that the Government’s support for decarbonisation in general and renewables in particular is incoherent, unconvinced and half-hearted. I am not saying that this is truly the case, but it is widely believed to be so.
Abrupt changes in previously announced policies to save relatively small sums make the Government appear penny wise and pound foolish, and it saps confidence. As long as that remains the case, decarbonisation industries will struggle to find investors. I conclude by pointing out that in a survey of its members published in June this year by the Energy Institute, the professional body for the energy industry, energy policy was identified as the greatest concern. If the Minister can help dispel these doubts and uncertainties, he will do a great service both to the country and to an important part of British industry.