Offshore Petroleum Licensing Bill

Debate between Baroness Winterton of Doncaster and Lord Sharma

Committee of the whole House
Tuesday 20th February 2024 Commons Chamber

[Sir Alok Sharma (Reading West) (Con)]

I beg to move amendment 12, page 1, line 3, at end insert—

“(1ZA) The OGA must not invite any new seaward area production application licences until the Secretary of State has by regulations brought into effect a ban on flaring and venting relating to new offshore installations other than that required in an emergency.

(1ZB) The Secretary of State must by regulation make such provision so that the OGA is only permitted to invite seaward area production application licences after 2030 once a prohibition is in place on routine flaring and venting for all offshore installations operating in UK waters.

(1ZC) A statutory instrument containing regulations under subsections (1ZA) and (1ZB) is subject to annulment in pursuance of a resolution of either House of Parliament.

(1ZD) In subsection (1ZA) and (1ZB)—

‘flaring’ means the burning of hydrocarbons produced during oil and gas extraction;

‘venting’ means the release of un-combusted hydrocarbons directly into the atmosphere.”

This amendment prevents the invitation of new seaward area production application licences until the Secretary of State has introduced a ban on flaring and venting by new offshore installations. It also requires the Secretary of State to prevent licensing rounds from 2030 if a wider ban is not in place.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Amendment 15, page 1, line 3, at end insert—

“(1ZA) The OGA must not invite any new seaward area production application licences until the Secretary of State has by regulations brought into effect a requirement that—

(a) all new seaward area production application licences require a specific field commitment of a net zero carbon footprint reached through developing the Carbon Capture Utilisation and Storage network or such other means as deemed appropriate; and

(b) a percentage, to be specified in regulations but not less than 30 per cent, of all new seaward area production application licences specifically align petroleum extraction with the refining of petroleum at the Grangemouth oil refinery.

(1ZB) A statutory instrument containing regulations under subsections (1ZA) is subject to annulment in pursuance of a resolution of either House of Parliament.”

Amendment 7, page 1, line 4, leave out “in each relevant year” and insert “on a case-by-case basis”.

Amendment 2, page 1, line 6, at end insert—

“(aa) the climate test (see section 4ZD)”

This paving amendment, together with amendment 3, sets out the climate test to be applied by the Oil and Gas Authority before inviting applications for seaward new production licences.

Amendment 8, page 1, line 6, at end insert—

“(aa) the energy and job security test (see section 4ZD)”

This paving amendment, together with Amendment 9, introduces a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 10, page 1, line 6, at end insert—

“(aa) the just transition test (see section 4ZD)”

This paving amendment, together with Amendment 11, introduces a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 13, page 1, line 6, at end insert—

“(aa) the just transition plans test (see section 4ZD)”

This paving amendment, together with Amendment 14, introduces a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 17, page 1, line 6, at end insert—

“(aa) the climate change test (see section 4ZD)”

This paving amendment, together with Amendment 18, sets out the climate change test to be applied by the Oil and Gas Authority before inviting applications for seaward new production licences.

Amendment 22, page 1, line 6, at end insert —

“(aa) the home energy efficiency test (see section 4ZD).”

This paving amendment, together with Amendment 24, introduces a home energy efficiency test to be applied by the OGA before inviting applications for seaward area production licences.

Amendment 23, page 1, line 6, at end insert—

“(aa) the Energy Charter test (see section 4ZD).”

This paving amendment, together with Amendment 25, introduces an Energy Charter test to be applied by the OGA before inviting applications for seaward area production licences.

Amendment 19, page 2, line 1, after “of” leave out “liquefied”.

This amendment, together with Amendment 20, would require the carbon intensity of domestic natural gas to be assessed against the carbon intensity of all natural gas imported into the UK.

Amendment 20, page 2, line 7, leave out “liquefied”.

This amendment, together with Amendment 19, would require the carbon intensity of domestic natural gas to be assessed against the carbon intensity of all natural gas imported into the UK.

Amendment 21, page 2, line 24, at end insert—

“(4A) Within six months of the commencement of this Act, the Secretary of State must produce and lay before Parliament a report on the effect of amending the definition of “carbon intensity” as set out in subsection (4) according to section 93 of the Climate Change Act 2008.”

This amendment requires the Secretary of State to report how the carbon intensity test is affected if the definition of carbon intensity were amended to include emissions of gases other than carbon dioxide in line with the carbon dioxide equivalent measure in section 93 of the 2008 Climate Change Act.

Amendment 3, page 3, line 23, at end insert—

“4ZD The climate test mentioned in s 4ZA

The climate test is met in relation to a relevant year if the Intergovernmental Panel on Climate Change finds that current global fossil infrastructure will not emit more greenhouse gases than is compatible with limiting global heating to 1.5 degrees Celsius.”

Amendment 9, page 3, line 23, at end insert—

“4ZD The energy and job security test mentioned in s 4ZA

The energy and job security test is met in relation to a relevant year if the OGA assesses that new licences will—

(a) lower energy bills for households;

(b) deliver energy security and reduce reliance on imported fuel sources for domestic consumption;

(c) enhance sustained job security for the oil and gas workforce in areas of the UK economically reliant on the oil and gas sector;

(d) guarantee funding for domestic refineries to increase capacity to process sustainable fuel sources; and

(e) help the oil and gas sector meet commitments set out in the North Sea Transition Deal.”

This amendment sets out a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 11, page 3, line 23, at end insert—

“4ZD The just transition test mentioned in s 4ZA

The just transition test is met in relation to a relevant year if the OGA assesses that—

(a) new licences will support the delivery of the North Sea Transition Deal’s greenhouse gas emission reduction targets of 10% by 2025, 25% by 2027 and 50% by 2030 against a 2018 baseline, to meet the sector’s aim of a net zero basin by 2050; and

(b) the Secretary of State has provided funding to support the development of the renewable energy sector, in areas of the UK economically dependent on the oil and gas sector, equivalent to tax revenues collected from UK oil and gas production.”

This amendment sets out a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 14, page 3, line 23, at end insert—

“4ZD The just transition plans test mentioned in s 4ZA

(1) The just transition plans test is met in relation to a relevant year if the OGA assesses that all existing seaward area production licence holders have published just transition plans for their workforce that are compatible with limiting global heating to 1.5 degrees Celsius.

(2) For the purposes of this section—

“just transition plans” refer to plans agreed through formalised collective agreements with unions in the workplace for consultation on policy;

“workforce” includes workers, directly and indirectly (sub-contracted or agency) employed, or engaged through day-rate or self-employed contract models.”

Amendment 18, page 3, line 23, insert—

“4ZD The climate change test mentioned in 4ZA

The climate change test is met in relation to a relevant year if the latest reports of the Intergovernmental Panel on Climate Change on the mitigation of climate change find that the granting of additional seaward area production licences is consistent with limiting warming to 1.5°C.”

This amendment sets out a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 24, page 3, line 23, at end insert—

“4ZD The home energy efficiency test mentioned in s 4ZA

The home energy efficiency test is met if the median rating in current Energy Performance Certificates in the United Kingdom falls within or above Band B.”

This amendment sets out the home energy efficiency test to be applied by the OGA before inviting applications for seaward area production licences.

Amendment 25, page 3, line 23, at end insert—

“4ZD The Energy Charter test mentioned in s 4ZA

The Energy Charter Treaty test is met if the United Kingdom has made arrangements to withdraw from the Energy Charter Treaty.”

This amendment sets out the Energy Charter test to be applied by the OGA before inviting applications for seaward area production licences.

Clause stand part.

Clause 2 stand part.

New clause 2—Duty to introduce spatial prioritisation policy—

“After section 4 of the Petroleum Act 1998 insert—

‘4ZAA Duty to introduce spatial prioritisation policy

(1) Before the OGA invites applications for seaward area production licences under this Act the Secretary of State must publish a marine spatial prioritisation policy.

(2) The marine spatial prioritisation policy must establish a process for prioritising offshore renewables, marine protection, fishing activities, oil and gas licensing, and the achievement of relevant targets under the Climate Change Act 2008 and the Environment Act 2021 in any relevant decisions relating to the marine environment made by a body undertaking public functions.

(3) The OGA must comply with the marine spatial prioritisation policy set out in subsection (1) when deciding applications relating to new seaward area production licences.’”

This new clause requires the Secretary of State to publish a marine spatial prioritisation policy, taking into account relevant targets under the Climate Change Act 2008 and the Environment Act 2021.

[Sir Alok Sharma]

I refer the House to my entry in the Register of Members’ Financial Interests.

On Second Reading, I said that this Bill was something of a distraction and not necessary on the basis that the North Sea Transition Authority can already grant licences annually or, indeed, whenever it considers it necessary. That will not change with the Bill. I also noted at the time that the two statutory tests in the Bill have been designed in such a way that the computer always says yes to new oil and gas licences, but I also said that I would work with other like-minded colleagues to improve the Bill and bring in further tests that need to be met before any new oil and gas production licences are granted. That is what I and other Members have sought to do.

Amendment 12 seeks to do two things. First, it would stop the invitation of new production application licences until the Secretary of State has introduced a ban on the flaring and venting of methane by new offshore installations. Secondly, it would require the Secretary of State to prevent licensing rounds from 2030 if a wider ban on flaring and venting is not in place. Along with other Members who have signed up to the amendment, I argue that this is an entirely reasonable ask that the Government and all Members should be able to get behind, given that all it modestly seeks to do is put into statute existing guidance on flaring and venting that was issued by the North Sea Transition Authority.

Let me set out the precise wording of the principles that the NSTA expects industry to follow in relation to flaring and venting across all UK continental shelf areas. First,

“flaring and venting and associated emissions should be at the lowest possible levels in the circumstances”.

Secondly, there should be

“zero routine flaring and venting for all by 2030”.

Thirdly,

“all new developments should be planned and developed on the basis of zero routine flaring and venting.”

That is a set of NSTA principles with which amendment 12 in entirely consistent.