UK Oil and Gas Industry

Alan Brown Excerpts

Tuesday 25th February 2020 Westminster Hall

[Andrew Bowie]

I was not aware that no major companies were involved in the project; I think it is important that they should be. If we are to try to engage Government and get governmental support, the industry must lead the way, to show that it has confidence in the technology first.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Far be it from me to override what the hon. Member for Stockton North (Alex Cunningham) says, but I have just come from a breakfast briefing on carbon capture and storage, and BP is involved in the Teesside cluster. Hopefully that addresses that concern.

On the vital need to develop carbon capture and storage, does the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) agree that the UK Government cannot pick just one project? At least a few clusters must be given the go-ahead in the forthcoming couple of years.

[Andrew Bowie]

I thank the hon. Gentleman for his intervention and for enlightening Members about BP’s involvement in the Teesside carbon capture and storage project. I agree with him. He has foresight, because what he said was exactly where I was going next in my speech. We need at least five projects across the UK if we are going to come anywhere near reaching our target in the next few years.

--- Later in debate ---

[The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)]

It is a real pleasure to take part in this debate under your chairmanship, Mr Robertson. I thank my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie) for securing it. I was surprised to hear that we had not debated these issues since April 2018.

[Alan Brown]

Far be it from me to try to correct the record again, but there was a debate in this Chamber in October 2018, which was secured by my hon. Friend the Member for Falkirk (John Mc Nally). I spoke in that debate as well.

[Kwasi Kwarteng]

I am glad to hear we have debated these issues more recently. Certainly in my recollection, we have discussed this issue many times in this forum and in the main Chamber. The sector is vitally important. It has been for many decades now, and the Government take it extremely seriously.

My hon. Friend the Member for West Aberdeenshire and Kincardine used a phrase that struck me: “quick-changing expectations”. That is clearly what has happened. Where we are today is very different from where we were when we had the debate in April 2018 and where we were even last year. Some people have kindly observed that we have a new Government. We had a general election at the end of 2019, and we now have a new Government with a new mandate who are very much concerned with this issue.

Oil and gas is an important sector not only for energy security but, crucially, for the economy and jobs. It has contributed something like £340 billion in production taxes over the past six decades, and it has added £570 billion of gross value added to the economy since 1990. Many speakers in the debate observed that in excess of 250,000 jobs across the UK are dependent on the sector, so there is no question but that the oil and gas sector is vital.

However, we have to deal with the conditions that we find ourselves in. As the hon. Member for Southampton, Test (Dr Whitehead) pointed out, the UK continental shelf is now a highly mature basin. We are looking to reduce our fossil fuel use, which is inevitable, given that in June 2019 we made the very significant commitment to achieve net zero carbon by 2050. It is important to stress that, as of today, we are the only nation in the world—certainly among the advanced economies—that has enshrined that aspiration in law, meaning that it is no longer an aspiration but the law of the land to reach that target by 2050.

One very useful phrase that came out of the debate and that we need to think about was from my hon. Friend the Member for Waveney (Peter Aldous), who suggested that the oil and gas industry could act as “a bridge” to a low-carbon future. That is exactly the right sentiment and expresses succinctly how the Government think about the sector and our future as a low-carbon economy.

[Alan Brown]

One of the key themes in the Just Transition Commission and the moves towards net zero has been carbon capture development. There have been requests that the Government support far more than one cluster. The suggestion from the Member for West Aberdeenshire and Kincardine (Andrew Bowie) was for five clusters. Can the Minister outline where the Government are going on that issue?

[Kwasi Kwarteng]

With permission, Mr Robertson, I will address carbon capture later in my speech. There is plenty of food for thought and actual policy that I would like to address, but I want to talk about the transition. It is important, as the hon. Member for Southampton Test suggested, that we get the message out that we do not see the end of the oil and gas industry in this energy transition. Oil and gas has a crucial part to play in that transition, not least because of some of the carbon capture issues I want to address later.

Let us be clear where we are today. Currently, 70% of primary energy demand in the UK is met by oil or gas. Some 85% of houses—I suspect this includes the houses, apartments and dwellings of most people in this room—rely on gas central heating. The Committee on Climate Change has said that there will be a continued need for oil and gas as we make our transition to net zero emissions. That is extremely important, and on that basis I would like to talk about some of the announcements we have made, particularly in regard to carbon capture, usage and storage.

We made a public commitment in the Conservative manifesto to invest £800 million in carbon capture, usage and storage. It could not be clearer than that. I am very hopeful that we will be able to make a significant announcement along those lines in the Budget, to honour our manifesto commitment. It is important for my Department. However, Members will appreciate that I am not the Chancellor of the Exchequer, and that the Budget is a matter for him and the Treasury. In a former capacity, I served as the parliamentary private secretary to the Chancellor of the Exchequer for 18 months, which in the context of the political climate was a very long time.