Offshore Petroleum Licensing Bill

Alan Whitehead Excerpts

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

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

Order. We are in Committee, so I remind Members that the Chair should be addressed by name or as “Chair” or “Madam Chair”, as Sir Alok Sharma did, and not as “Mr Deputy Speaker” or “Madam Deputy Speaker”.

Before I call the shadow Minister, I want to make it clear that I will be calling those who have amendments down first and I will then move on to others, going from side to side.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I would like to speak to our amendments 17, 18, 19 and 20, to comment on other amendments before us today and then to place all this into the context of the Bill as a whole by way of what will effectively be a stand-part contribution. This Bill remains an ill-advised, pointless piece of political posturing—

[Barry Gardiner (Brent North) (Lab)]

Don’t pull any punches!

[Dr Whitehead]

That was the mild version.

As the right hon. Member for Reading West (Sir Alok Sharma) has informed us, the Bill legislates for something that happens anyway. It will make no difference to bills, according to the Secretary of State. It will make no difference to our energy security, according to the former chair of BP. It will undermine the independence of the North Sea Transition Authority, according to the NSTA’s own board, and it and will reinforce the perception around the world that the UK is rowing back from climate action, according to the former COP President, the right hon. Member for Reading West. We regret that this insubstantial and damaging Bill has proceeded this far, and we will vote against it on Third Reading.

We do not need this one-clause Bill. We need instead a strategy for managing the North sea that supports our energy security, meets our climate commitments and secures the economic and jobs benefits of the transition to a low-carbon economy. We would have liked to debate a new clause setting out a new principal objective for the North Sea Transition Authority that would have put such a strategy into effect. However, because the Bill is so short and tightly drawn around the narrow issue of mandatory licensing rounds, amendments to put a more sensible strategy into place are regrettably not in order. We must therefore take the Bill on its own terms, even if that means treating it with significantly more respect than the drafters have treated this House with in presenting such a trivial and nakedly political proposal.

We have in the Bill at present two tests that should be passed if the Oil and Gas Authority is to proceed with mandatory licence issuance, and we know that the two tests cannot be failed. It is a fact that if properly drafted—we might come to that in a moment—liquefied natural gas will always be more greenhouse gas-intensive in production than UK natural gas and we will always be in a position where gas and oil produced in the UK and in a declining North sea field will not meet our total demand for gas and oil.

I learned in my first year at university—as I think the Minister did, because he did a similar degree to me—that a proposition that cannot be falsified cannot stand as a valid proposition. Here we have two completely non-valid propositions in the Bill. They are bogus and cynically contrived to give the appearance that something has to be achieved before mandatory licencing takes place. At the very least we need a test or tests that can be failed and that produce a proper level of judgment into the advisability of proceeding with such mandatory licences. The best test surely has to be whether such action is compatible with our climate change goals. The Government had previously introduced climate change compatibility tests into production generally. It is strange that these appear nowhere in the Bill.

[John Redwood]

The shadow Minister has said that getting more of our own gas out of the North sea would help our security of supply and reduce CO₂ because it would displace imported LNG, so why does he not support that proposition?

[Dr Whitehead]

The proposition before us today is for mandatory licence rounds in a declining North sea field, which would make no difference in the long term to the total amount of gas that we get out of the North sea, as everybody knows. It would instead put us firmly on the back foot as far as international climate change discussions are concerned. That is the key issue that we need to address this afternoon.

[David Duguid (Banff and Buchan) (Con)]

Following on from the question from my right hon. Friend the Member for Wokingham (John Redwood), is it therefore Labour’s position not to allow any new oil and gas licences in the future, if Labour were to come into power?

[Dr Whitehead]

It is Labour’s position that we do not wish to see new energy exploration licences issued for the future, but that does not mean that the North sea will not continue in production over a long period of time and provide a substantial amount of oil and gas for our domestic market.

Our first amendments, 17 and 18, would introduce a new test that would safeguard the legally binding commitments that the UK and all other nations made in the Paris agreement and have reaffirmed ever since. Every credible independent analysis—the Intergovernmental Panel on Climate Change, the International Energy Agency, the Climate Change Committee—shows that new exploration licences are not compatible with limiting warming and avoiding the worst of the devastating impact that climate change will have, and is having, around the world and here in the UK.

The test that we have put in amendments 17 and 18 is possible if we have achieved or are achieving our climate change goals internationally. Amendment 18 states:

“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.”

No one who is serious about this can take that to mean that existing fields will not continue to produce for years to come—of course they will—but anyone who argues that business as usual and a few new licenses are the route to good, long-term jobs and energy security is frankly peddling a myth.

We must accelerate the transition to new opportunities for North sea workers in the low-carbon economy, including through carbon capture, usage and storage, through hydrogen and through floating offshore wind. We do not believe that tests are the best route to achieving that goal. We need a holistic strategy, but within the framework set out in this Bill, the climate change test we propose is the only way to achieve a policy that is consistent with being a responsible and leading actor on the world stage in the fight against climate change, with managing our existing North sea assets carefully and for the long-term, and with maximising the low-carbon economic potential of the North sea.

The other two amendments I will speak to highlight the extent to which the Bill fails even on the narrow terms it has set out. Amendments 19 and 20 would address the glaring deficiencies in the bogus carbon intensity test set out by the Government. Currently, the test compares UK gas production carbon emissions only against an aggregate of liquefied natural gas production emissions, ignoring pipeline-delivered gas, which makes up most of our imports, as the right hon. Member for Reading West reminded us. This amendment would correct that. As it stands, the test is designed to be impossible to fail, so it is barely worthy of the name. Including only LNG is a serious logical flaw. Before the Minister jumps to his feet, it is not true to say that every marginal unit of imported gas must be LNG. Indeed, we support substantial amounts of natural gas coming into the UK via the pipeline from Norway. The production of that gas is substantially cleaner than that of UK natural gas.

Apart from anything else, the Bill takes no account of the UK’s likely future gas demand profile. Demand for gas will decline as we rapidly decarbonise our power sector and electrify more and more of our economy. Indeed, this decline in demand, not just supply, is at the heart of a successful net zero transition.

Approving new exploration licences for fields that will take years to come online, on the assumption that the alternative must otherwise be LNG, without taking any account of future demand, is absurd. A fairer test would consider gas imports in the round.

[David Duguid]

I take on board the hon. Gentleman’s comment that, overall, 30% of our gas comes from Norway. Yes, that is the majority of our imports, but it is still 30% overall. Nobody in this House has authority over Norway’s future oil and gas prospects, but would he be in favour of the Norwegian Government exploring for new oil and gas to supply to us?

[Dr Whitehead]

No, in line with the IEA and the IPCC, I am not in favour of new exploration licences. The point is that, in a declining market, Norwegian supply will continue to be very substantial, even if no new exploration licences are granted in Norway.

The figure cited by the hon. Gentleman is almost right —the actual figure is 34%. The United Kingdom supplies 38% of its own gas, with the United States supplying 14%, Qatar supplying 9% and other countries supplying smaller amounts. Norway already occupies a very substantial position in our present gas supplies, and I am sure it will continue to do so.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the hon. Gentleman agree that it might be useful to remind Conservative Members that, according to the UN production gap report, Governments are already planning for their existing developments to produce more than double the amount of fossil fuels in 2030 than is consistent with keeping global heating to 1.5°C or below? The idea that anyone can have vast new developments is not compatible with keeping below our climate target.

[Dr Whitehead]

The hon. Lady is absolutely right. New licences are an international issue. If we had new exploration licences around the world, we would simply produce far more oil and gas than is compatible with the 1.5° climate target. We should just keep it in the ground.

Finally, amendment 21 would go some way towards correcting another element of the carbon intensity test. As currently drafted—the Minister will want to listen to this bit—the test will not take account of methane emissions, which is a serious flaw. The whole case for comparing UK-based natural gas with LNG is based only on production emissions. The emission of methane at various stages of the production and transportation of LNG is, in aggregate, worse than the emissions of UK-produced and piped natural gas, but they are not carbon dioxide emissions, which is what the Bill says should be measured.

LNG’s potential carbon dioxide emissions upon burning are roughly the same as, or perhaps slightly greater than, the carbon dioxide emissions from UK natural gas. As the right hon. Member for Reading West said, that is elevated by the current UK practice of flaring surplus gas, which can be measured in carbon dioxide emissions.

Methane is a much more potent greenhouse gas than carbon dioxide over 20-year and 100-year timeframes. Its lifetime in the atmosphere is shorter than the lifetime of CO₂, but its impact is far more significant. The Climate Change Act 2008 is quite specific on how this should be measured. Section 93, which the Bill mentions but does not act on, states that

“greenhouse gas emissions…and removals of greenhouse gas from the atmosphere shall be measured or calculated in tonnes of carbon dioxide equivalent.”

Proposed new section 4ZB(1) of the Petroleum Act 1998 mentions the carbon intensity of natural gas, but proposed new subsection (3) defines “carbon intensity” as

“the carbon dioxide emissions attributable to its production”.

But carbon dioxide emissions in production are not the principal concern here, as the gas has not been burned at that point. Indeed, I can conceive of smart climate lawyers challenging the test’s validity on precisely that point. The Minister might therefore see amendment 21 as providing a vital lifeline to the integrity of his Bill. To that extent, the amendment might be seen as helpful, but I somehow doubt that he will take it up. To coin a phrase, “It’s the methane, stupid.” The Bill should say so.

Proposed new section 4ZB(4) already gives the Secretary of State the power to amend the carbon intensity test to include emissions other than carbon dioxide. Perhaps the Secretary of State or the Minister will shortly take that up to save the test. We can anticipate a fairly amusing statutory instrument debate when he tries to do that.

Amendment 21 would simply require the Government to produce a report analysing what the impact of that change will be. In the spirit of trying to improve a Bill that, by design, is fairly resistant to improvement, we welcome the amendments tabled by the right hon. Member for Reading West and the hon. Member for North Devon (Selaine Saxby).

The Climate Change Committee and the Environmental Audit Committee have called for a ban on routine flaring and venting, and such a ban is long overdue. A marine spatial prioritisation policy would help to organise and plan an optimal long-term, low-carbon economic strategy for the North sea.

There is clearly significant strength of feeling across the Committee that this is an inadequate Bill, and some of the proposed tests could undoubtedly make a bad Bill a little better, although some of those tests have internal problems. We would not want to vote against those tests, but the only comprehensive climate change and net zero compatible test is the one that we and, in principle, the hon. Member for Brighton, Pavilion (Caroline Lucas) have set out. It is the best available route, within a severely constrained process, to align this deeply flawed Bill with our essential energy security and climate change priorities.

[Selaine Saxby (North Devon) (Con)]

I rise to speak to new clause 2 on spatial prioritisation. The competing pressures on sea space mean there is essentially a spatial squeeze. I fully understand the Bill’s importance, as we all know that the oil and gas industry will have a key role as the UK transitions towards cleaner energy. The Bill will provide reassurance to the industry.

I am grateful that the Government have stated that each annual licensing round will take place only if key emissions tests are met, to support the transition to net zero. I thank the Minister and his team for their ongoing engagement on this issue but, as we seek to turn to renewables and clean energy, we need to ensure that we have the space and infrastructure to carry this forward, otherwise the energy transition will never come to fruition.

I brought up this issue directly with the Minister for Food, Farming and Fisheries, my right hon. Friend the Member for Sherwood (Mark Spencer), at the Environment, Food and Rural Affairs Committee, as my concerns extend beyond just oil and gas. I am also concerned about how floating offshore wind and fishing can cohabit the same ocean space, and I am also concerned about marine protected areas. There is clearly a balance to strike.

It was good to hear the Fisheries Minister’s response about cross-departmental work to ensure that our fishermen have a future in the light of our need to expand our renewable energy sources, but there is an opportunity in this Bill to ensure that we do not repeat these conversations as other energy sources compete for space in the precious waters around our coast. This will help not only the UK’s energy security but our push towards renewable energy, which will support our fishing fleets and retain a simultaneous focus on biodiversity and improving the condition of marine protected areas.

As a coastal MP, all these points are especially important to me. Being an eternal optimist, I think we can do all these things simultaneously if we can plan strategically where we have the opportunity.

--- Later in debate ---

[Dr Whitehead]

It is customary on Third Reading to start with thanks, and I would like to thank two groups of people. First, I thank the civil servants who held their noses to write this pile of rubbish for the House’s consideration. Secondly, I thank the Government for introducing the Bill, because as a number of people will know, it has led directly to the election of a new Labour Member of Parliament for Kingswood, following the resignation of the former Government climate tsar, who wrote the net zero report and had this to say about the Bill:

“This bill would in effect allow more frequent new oil and gas licences and the increased production of new fossil fuels in the North Sea… I can also no longer condone nor continue to support a government that is committed to a course of action that I know is wrong and will cause future harm.”

He then resigned, and the rest is history. Thank you, Minister, for increasing Labour’s representation in this Chamber by one seat. Although we hope to have a lot more seats in the very near future, that is progress.

The Minister has form on this. He was the Minister in the Adjournment debate on fracking some while ago—

[Graham Stuart]

It was not an Adjournment debate—get it right!

[Dr Whitehead]

Sorry; the Opposition day debate on fracking, which effectively brought down the Truss Government as a result of the various prevarications at the time. I thank the Minister for that.

What I do not thank the Minister for is the completely misleading and almost erroneous way in which he has characterised the future under the Bill. On licences, the Bill will do things that are already done, and it will not make any change. It will not suddenly increase confidence across the sector, because the sector knows that the Bill is just a piece of performative theatre; and it will do nothing—contrary to what the Minister and others have claimed—to cut energy bills, tackle the cost of living or improve our energy security.

At a time when people across this country have suffered two years of crushing energy costs and an inflationary crisis driven in large part by our significant exposure to gas prices—which, as we all know by now, are set internationally—the Bill offers no solutions. The Secretary of State herself admitted that it would not cut bills, and Lord Browne, the former chief executive officer of British Petroleum, said that it was

“not going to not make any difference”

to energy security. The board of the North Sea Transition Authority, which is responsible for giving out licences, unanimously agreed that the Bill is unnecessary and would challenge its independence. However, even though the Bill will achieve none of its stated aims, it is far from consequence-free.

[Graham Stuart]

Offshore Energies UK has said that if Labour’s policy was implemented, it could cost this country 42,000 jobs and £26 billion of economic value. Perhaps the shadow Minister will respond to that consequence.

[Dr Whitehead]

We are talking about what the Government are doing through this policy—that is what we are concentrating on today. I hope we will have another much wider debate about the effect that a comprehensive transition policy for the whole North sea field would have, with associated arrangements for the transition of investment, energy security and worker and job security, in the context of future jobs and future energy security. Many people in the industry have already said that that is exactly what we need to secure the future of the North sea. It is a declining basin; its output will not change greatly as a result of the measures that the Government are proposing. On the other hand, unless urgent action is taken to secure a holistic transition for the North sea, it certainly will not have the investment and the future that so many of us want to see. We need to put that overall consideration alongside some people’s shorter-term concerns about what will happen to the oil and gas industry right this minute.

[Douglas Ross]

This has been an extremely crucial issue in the north-east of Scotland, particularly this week. Does the shadow Minister think it is a small, short-term problem that 42,000 highly skilled workers in that area could lose their jobs under Labour’s plans?

[Dr Whitehead]

They will not. I have tried to make it very clear, against what is, frankly, misinformed scaremongering by Government Members, that under Labour’s plans the North sea will, of course, continue to produce efficiently and effectively over a very long period of time. We know that the North sea is a very mature field and is in decline, and all authorities have said that the Government’s proposals would make no difference to that overall pattern.

We are looking at how to make sure that the North sea continues to produce well and efficiently the oil and gas we will need for the future in declining amounts, while at the same time transforming that economy to produce new forms of energy for the future and maintaining security of production. That will be the big task for the future Labour Government—I am pleased that the hon. Member for Moray (Douglas Ross) is envisaging what the new Labour Government will shortly have to do. The long-term task in the North sea is not to pump every last drop of oil and gas it contains, but to give it a new lease of life. New industries can come into the North sea alongside the infrastructure that already exists, making it a new energy powerhouse for the UK in the future.

[Douglas Ross]

I cannot let that go unchallenged. This letter from the Aberdeen and Grampian chamber of commerce to the Leader of the Opposition—the leader of the Labour party in the UK—says that

“if North Sea production is to cease prematurely—a certain outcome of this”

Labour

“policy—then our entire energy transition is undermined.”

This has massive consequences, and I have to say that the reaction of the shadow Minister is quite telling.

--- Later in debate ---

[Dr Whitehead]

The hon. Member rather gives himself away by the first sentence he read out:

“if North Sea production is to cease”.

North sea production will not cease—

[Douglas Ross]

It is

“a certain outcome of this policy”.

[Dr Whitehead]

North sea production will not cease over a long period of time, and Labour is committed to making sure that that production continues at the appropriate level for the maturity of the North sea basin. That is something that all sensible people understand to be the case, although it is unfortunate that certain Conservative Members pretend it is not the case for their own political purposes.

[Sammy Wilson (East Antrim) (DUP)]

Will the hon. Gentleman give way?

[Dr Whitehead]

I will make some progress.

The Bill, as I have said, will achieve none of its stated aims, but it is far from consequence-free. The consequence is that it makes a mockery of our country’s commitments to take serious and responsible action on climate change. That is exactly the point the former right hon. Member for Kingswood, Chris Skidmore, made in his resignation letter to the Prime Minister. That point should not be a partisan point. Indeed, it has not been a partisan point, because a number of Members on all sides of the House, including a number of Conservative Members, can see the direction in which this short-sighted Prime Minister and Government are going, and want no part of it.

Some Members are trying to make changes to the Bill. As I have said, one has resigned, and a number are working hard to turn around the direction of this Government in resiling from our country’s climate change commitments—commitments they so recently signed up to, at the recent COP—on moving away from oil and gas. Regrettably, the Prime Minister and the Government, including this Minister, are not having any part of that. I am particularly disappointed that the Minister is not having any part of it, because of his long and honourable commitment to these matters on the international stage over such a long time.

The right hon. Member for Reading West (Sir Alok Sharma), the man who led this country’s climate negotiations at COP26 in Glasgow, has called the Bill “smoke and mirrors”, and a “distraction” that will

“reinforce the unfortunate perception of the UK’s rowing back from climate action”.—[Official Report, 22 January 2024; Vol. 744, c. 52.]

The right hon. Member for Maidenhead (Mrs May), the former Prime Minister—she signed this country’s net zero commitment into law and understood, as the current Prime Minister sadly does not, the value of cross-party consensus on the science of climate change—has said that she takes a different view from the Government on oil and gas licences, and that they will not provide for our energy security. Away from this Chamber, every credible independent expert has taken a dim view of the Bill. Lord Stern, one of the UK’s foremost experts on climate change, whose work has shaped how the world understands the costs of inaction, has called the Bill a “deeply damaging mistake”.

The reality is that the cost of living crisis we are in is to a large extent caused by our country’s deep exposure to the volatile international price of gas. The International Monetary Fund has said that this exposure meant the UK was harder hit by the crisis than any other western nation. Just today, the Energy and Climate Intelligence Unit has found that this country has spent an additional—in addition to normal spending—£75 billion on gas since the energy crisis began. Four extra days of gas supply by 2050 cannot possibly make the slightest bit of difference to this price. As I have highlighted, the Secretary of State herself conceded that point on the very day the Bill was announced.

The supposed arguments on energy security and jobs are similarly flimsy. The reality is that, as we have begun to discuss this afternoon, the North sea is an extremely mature and declining basin. Gas production will fall by 95% by 2050, even with new licences. The notion that this is a firm basis on which to build our energy security or protect jobs is clearly absurd. As I have outlined, we need a fair and balanced transition for North sea oil and gas workers that recognises the essential role they will continue to play in operating existing fields, which no one disputes will remain a vital part of our energy mix, and puts them at the heart of our clean energy future.

To safeguard the jobs, skills and livelihoods of the communities that have been the backbone of our energy system for decades, we need a Government with a proper industrial strategy to maximise the low-carbon economic potential of the North sea. Labour will create a national wealth fund to invest in low-carbon industries, it will launch a British jobs bonus to ensure that the supply chain benefits of renewable investment finally come to our shores, and it will create a new publicly owned energy company, GB Energy, headquartered in Scotland, to invest in home-grown clean energy and give us real energy independence. That is the answer that the country needs and that the communities who have served as the backbone of our energy systems for decades need. Political theatre, whether in Westminster or Holyrood, helps no one and does a disservice to the people looking to us for answers to the very real challenges we all face.

The final argument that the Government have made in favour of the Bill is that it is somehow, as we have begun to unwrap, a climate-positive piece of legislation. This argument rests on a series of partial and deliberately gameable tests, as we discussed in Committee, with skewed conditions that look only at a narrow band of emissions, ignoring methane for example; that look only at production emissions, ignoring the impact of actually burning the fuels we are extracting; and that look only at liquefied natural gas, ignoring the fact that the majority of our imports are pipeline-delivered. It includes no test whatsoever for oil, which makes up the majority of remaining reserves. That is why I have sympathy for the civil servants who wrote the Bill, who had to squeeze various things into it such as ignoring gas that was coming into pipeline, only having tests against liquefied gas and ignoring the methane emissions in the various versions of the arrangements in place for measuring emissions from production. I was very disappointed that the Minister gave no reaction at all this afternoon to that particular point on methane.

[Graham Stuart]

The data simply does not exist, as I think I set out. It does not exist and we cannot make a comparison if the data does not exist. We are world-leading in having that data; others do not have it. On the methane comparison, we are already below the internationally set goal; we have very low methane emissions in the North sea. On the comparison with LNG— which is the buffer fuel, which is why it is the true comparator, rather than Norwegian gas, which the hon. Gentleman is failing to admit—methane is emitted as it is shipped, so the methane story would make it even worse for LNG versus domestically produced fuel. Perhaps the hon. Gentleman would put that into his argument.

[Dr Whitehead]

I would not put it into my argument, but I am a little puzzled under those circumstances that the North Sea Transition Authority recently published a factsheet on precisely this point about the relative emissions of various contributors to gas and oil into the UK, which looked at the contribution from various countries and at the various emissions levels of those contributions, and set out how those contributions arise. I do not know whether the Minister is quite up to date with what his own North Sea Transition Authority is doing, but perhaps he ought to have a little look at that because he would see that actually the data is there. It does exist, and we can draw the sort of conclusions I drew this afternoon from it, and indeed from a number of other international data sources that are coming in.

The argument that the marginal unit of gas must always be LNG is simply not correct, because the Bill makes no provision whatsoever for the shape of UK gas demand at the point at which the gas is extracted and used. It effectively assumes that our national demand for gas will remain unchanged in perpetuity. When we are in a crisis caused by our reliance on fossil fuels and committed to a net zero transition, that assumption is patently wrong.

[Graham Stuart]

I hesitate to intervene again, but to suggest that this Bill has the assumption that our gas demand remains the same is absolute nonsense. Of course it is coming right down. We are on a net zero pathway. We are leading the world in that and our demand is falling fast; it is just that our production will fall even faster. The hon. Gentleman should not mislead the House, and I am sure he would not want to do so.

[Dr Whitehead]

I think I have already indicated that gas production is predicted to fall by 95% by 2050. The addition of one or two licences will not make any difference at all to that precipitous fall in practice, as it will be four days more of gas over the period. That is the basis for why we say that the Government’s commitment to net zero transition while producing large amounts of additional gas and oil is patently wrong. We should be sprinting towards clean energy. We should be investing in renewables, rather than banning them, as the Conservatives have done with onshore wind. We should be saving the country billions by moving to decarbonise power systems by 2030 and making far greater efforts to insulate homes and reduce gas demand there.

On climate change, on energy security, on jobs and on bills, this Bill has nothing to offer but false promises that frankly insult the public’s intelligence. To support this Bill, we would need to believe that we can double down on the causes of the cost of living crisis and still solve it; that we can somehow defy geology in the North sea and change the fundamental nature of international energy markets; and that we can ignore all the science and credible experts on climate change and still meet our commitments, including our commitment to transition away from fossil fuels made by the Minister at COP28 a few short months ago. It is clearly nonsense, but it is emblematic of a Government who have run out of ideas and run out of road—a Government who can see the many real challenges our country faces, but have no answer to them beyond confected political drama. In their misguided pursuit of a political dividing line, they have shrunk our country on the international stage, made us hypocrites in the eyes of the world and opened the door in this country to a new divisive politics on climate change that I sincerely believe the Ministers sitting opposite me today are not comfortable with, do not want as their legacy and will come to regret profoundly. This Bill will deliver nothing, but it threatens much. For that reason, I urge the House to vote against it.

Offshore Petroleum Licensing Bill

Alan Whitehead Excerpts

2nd reading
Monday 22nd January 2024 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

We have had an excellent and pointed debate this evening. Certainly, Opposition Members have together pointed out the deficiencies in the Bill, pointed out what a specious and potentially damaging Bill it is and, indeed, questioned why the Bill was brought to the House in the first place. All that is what I very much want to do.

My hon. Friend the Member for Rotherham (Sarah Champion) called this Bill “illogical and damaging” and pointed out that it could put marine protected areas at risk. My hon. Friend the Member for Llanelli (Dame Nia Griffith) pointed out that it makes us look ridiculous on the world stage. My hon. Friend the Member for Brent North (Barry Gardiner) pointed out that the Bill itself was based on a series of lies and, indeed, quoted the UN Secretary-General stating that “the truly dangerous radicals” are the countries that are increasing their oil and gas output.

My hon. Friend the Member for Coventry South (Zarah Sultana) pointed out strongly that this Bill, contrary to its claims, is not about energy security. My hon. Friend the Member for Warwick and Leamington (Matt Western), who reminded us of the real effects of climate change right now, pointed out that the future is largely electric and this Bill is a “great deception”. The hon. Member for Bath (Wera Hobhouse) called it stupid, unnecessary and dangerous—she did not mince her words very much. My hon. Friend the Member for Nottingham East (Nadia Whittome) laid many of the myths of the Bill to rest and questioned why the Government are pushing it in the first place. The hon. Member for Brighton, Pavilion (Caroline Lucas) pointed out the “political theatre” behind the Bill and why it is completely incompatible with our climate change commitments.

This really is a reprehensible Bill. It is a Bill based on a number of myths and, frankly, lies, which require people to believe that there are people around really saying that oil and gas is going to be stopped immediately and will not continue to play a substantial role, as it will in the energy economy up to 2050. No one is saying that oil and gas will not continue up to a period of time and no one is saying that the existing fields in the UK will not continue to produce and contribute their products in the future. There will be jobs in that continuing North sea oil operation.

However, this is a one-clause Bill with effectively two sections in it. The first section ostentatiously requires the Oil and Gas Authority to do what it is already doing; indeed, both the hon. Member for Angus (Dave Doogan) and the hon. Member for Brighton, Pavilion reminded us that the Oil and Gas Authority has been carrying out regular licensing rounds every 18 months since 2016. It is required to do so because it is bound by the maximum economic extraction requirement. All that is already in legislation and the Oil and Gas Authority is already doing it.

The second section sets out an entirely bogus climate test, which by definition cannot be failed. That is achieved by skewing the test conditions to test UK gas production emissions only against aggregate liquefied natural gas imports, which are overall likely to be dirtier in production than UK gas, and not against pipeline-delivered gas that, in the case of our main importer Norway, is half as dirty in production as gas in the UK.

There is no emissions test for oil, despite its constituting 70% of North sea fossil reserves—80% of which, as we have heard, is shipped and refined overseas. For oil there is a “net importer” test, which requires the OGA to issue licences if the demand for oil and gas products in the UK is greater than the production—when that has been the case in the North sea for 20 years, with no prospect of reversal. It is a Bill built on completely bogus premises.

[Graham Stuart]

The hon. Gentleman is talking about bogus premises, but he just suggested that we could get more pipeline gas from Norway. Does he not recognise that if we do not produce as much gas here, it will not be gas from Norway that we can access but will inevitably be LNG with higher emissions? Will he please, for the benefit of the House, step up and be honest? We do not have the option to get massively more gas from Norway—if we did, we would have done it already.

[Dr Whitehead]

I think I am going to get injury time for that intervention. If the Minister had been listening to what I was saying, he would know that I was stating that the Bill, in a very bogus way, has deliberately sidestepped the fact that there is gas available for import that is much cleaner than ours in its production. We should use that as a test, but the only test carried out was on LNG which, conveniently, is a little bit dirtier than the gas we produce in this country.

The Bill is about not what it says as much as what it does. As the former Energy Minister and author of the Government net zero report, the former right hon. Member for Kingswood, said recently, the Bill goes against everything the UK is saying internationally about moving away from oil and gas, and it has already damaged our international stance by appearing to double down on precisely the thing to which we are saying the opposite on the world stage. The right hon. Member for Reading West (Sir Alok Sharma), the former president of Glasgow COP, said in a courageous and precise speech this evening that the Bill puts into legislation something that already happens under the agency of the OGA. He also stated that its sole purpose is to double down on more oil and that nations around the world will not take that very kindly as far as our commitments are concerned.

The OGA itself emphasised that the Bill was “not necessary”, but

“would significantly challenge one of the tenets of independence for the NSTA, to decide when to run a licensing round.”

Whatever the position in the North sea objectively, the OGA would be forced to scrape up at least a licence a year forever. We know the claim that that would somehow do something for energy security is also bogus. The right hon. Member for Maidenhead (Mrs May) recently said that

“new oil and gas licences only provide for energy security if all that energy is sold into the UK and, actually, it will be sold on the world market”—

a point that a number of Members have made this afternoon.

The whole Bill appears to have come about as a result of a wheeze, cooked up by a couple of strategy advisers over a heavy lunch, to put the Opposition on the wrong foot—or, to put it another way, on the right side of history. Quite honestly, that wheeze should have been put down as soon as the effects of the heavy lunch wore off, but instead it has persisted through the corridors of power and has finally made it to the Floor of the House in the shape of this risible Bill, the contents of which evaporate on the first examination by anybody of its serious purpose.

That says rather more about the state of the Government than anything else. Where were the quality controls on policy making? How did something so evidently content-free and fact-averse as this piece of legislation ever make it so far? How did the present departmental Government Ministers, for whom I have a great deal of respect, allow it to happen on their watch, when they must know it is a load of hokum with no policy merit at all? Now they are forced to go out and try to justify it to the House. It is a very sad reflection of what a tiny, bitter and sad space the Government have retreated into, where serious policy development in the energy sphere—God knows we have enough of that to be working on—is replaced by such ill-advised emptiness. That is what this Bill is, in the end: just empty. If passed, it will linger on the statute book for a short period, make no difference to anything in the meantime and be rapidly overtaken by the reality of the forward march to decarbonisation in energy.

However, the Bill will have one lasting effect, as I have mentioned, because it signals strongly and, I am afraid, potentially lastingly that the UK is not serious about its climate and net zero ambitions and is prepared to say duplicitous things on both an international and a national stage. That is bad news for all the genuine work that has so far been done by the UK on net zero climate leadership. This Bill will not stick, but that charge might. For that reason, if for no other of the many reasons that have been put forward in this debate, it is best that we take this Bill no further than Second Reading and refuse as a House to let it pass to further stages.

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 16th January 2024 Commons Chamber

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call the shadow Minister.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

On 28 November, I asked the Minister how many planning applications for onshore wind had been lodged in England since the alleged loosening of planning restrictions on onshore wind in September. The answer then was zero. Even now that the policy has had more time to bed down, the answer, I am afraid, is still zero, and I predict that it will be zero the next time we meet. In September last year, the Secretary of State said that the changes made in September

“will help speed up the delivery of onshore wind projects”.

Does the Minister think that the Government have succeeded?

[Graham Stuart]

I thank the hon. Gentleman for his question. As he will be aware, in the last contracts for difference round, a great deal of onshore wind was successfully brought forward and it still constitutes the largest single form of renewable energy in the United Kingdom—the Under-Secretary of State for Energy Security and Net Zero, my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie) will correct me if I have got that wrong. I share with the hon. Gentleman a frustration in making sure that we see that pulled forward, so that we see more projects in England as well as in the rest of the UK.

[Dr Whitehead]

I am glad the Minister is frustrated about the complete failure of this alleged policy turnaround, but I am frustrated because if we had not had the absurd ban in the first place, the onshore wind development that would have taken place would have saved each family £180 on their energy bills. All Labour is suggesting is that onshore wind is treated like any other development. How long will it be before the Minister accepts the reality and concludes that he needs to go back and properly repeal the ban?

[Graham Stuart]

I thank the hon. Gentleman for his question and his personal commitment to this area, but he knows as well as anyone the parlous performance of the previous Government, which his right hon. Friend the Member for Doncaster North (Edward Miliband) was a leading figure in. Less than 7% of our electricity came from renewables as recently as 2010. It is this Government that have led the world after a flatlining in carbon emissions from our electricity sector under Labour. We have seen renewables grow and, by October, we will see coal entirely removed from our mix.

Draft Hydrogen Production Revenue Support (Directions, Eligibility and Counterparty) Regulations 2023

Alan Whitehead Excerpts

Tuesday 12th December 2023 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Gray. You chaired a substantial part of the proceedings on the Energy Bill and you will therefore be well aware of the consequences of that labour of Hercules that we undertook between us to get the measure on the statute book. The statutory instrument is one of the first to follow from the 2023 Act.

As the Minister explained succinctly, the regulations cover the process whereby the hydrogen low-carbon business plan is implemented during the initial allocation period of contracts for hydrogen producers in order to achieve our target of 10 GW of hydrogen production. As the Minister also said, qualifying schemes have already been substantially identified through track-1, phase-2 of the cluster process. Schemes will be identified and quality-assured by the Minister, who will then direct the hydrogen counterparty, which is identical in structure to the low-carbon contracts company, to provide contracts for companies that have been deemed eligible. So far, so good. That is absolutely the right thing to do to develop the outline in the Act into some detailed legislation to make the whole thing work, particularly the initial allocation process.

The explanatory notes state that the initial allocation gives way to a competitive tender process later. The directions therefore concern the initial allocation process in the first instance, but they are all to be informed by the centrepiece of the SI—the low-carbon hydrogen standard, which is generally called “the standard” in the regulations. It refers to a detailed document, which sets out the greenhouse gas emissions and sustainability criteria that programmes that apply for an allocation contract should follow.

The document is entitled, “UK Low Carbon Hydrogen Standard” and was published in April. It is interesting to note that the standard rightly provides for stringent qualifying criteria for a project’s eligibility. For example, it requires a project not to exceed a certain level of carbon emissions, and to measure fugitive hydrogen for its duration, the process whereby hydrogen is produced, transport and other things. It is a system-wide standard for the low-carbon nature of the hydrogen.

For a project to get a direction from the Minister to be awarded a contract by the hydrogen counterparty, it must comply with the standard when it receives agreement to proceed. However, as hon. Members will have observed, that standard is evolving. Indeed, the standard to which the SI refers is version 2 of the “UK Low Carbon Hydrogen Standard”. That version has evolved from the initial standard, which was produced immediately after the Act was passed. Version 2 has emerged from consultation and correction of various elements of the initial standard that could have caused difficulties, and has tightened up several matters that were uncertain, difficult or in need of clarification.

The document and the explanatory notes say that it is intended that the standard will evolve. That means that the Department envisages that it will produce further iterations of the standard in future. The low-carbon hydrogen standard as it currently stands may therefore change. That is fair enough given that we want the standard to progress, but a question then arises. If a company or body wishes to get a low-carbon hydrogen contract, what are they signing up for when they apply? Clearly, the companies that sign up want to comply with version 2 of the standard, but they will not necessarily comply with versions 3 or 4. Those companies will presumably want some assurance that they will not be knocked out of their contracts if the standard evolves.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

I am grateful to the hon. Gentleman for his careful rehearsal of the background, but surely the regulations contemplate a series of private law contracts, the circumstances and detail of which will be whatever is agreed under the law. Why is he pressing the Minister on this matter now? Does he believe that the law is defective?

--- Later in debate ---

[Dr Whitehead]

No, I do not think that the law is defective, but, as I have tried to explain, it is evolving as the contracts are given out, possibly into a different form. That is an inevitable consequence of the 2023 Act being distilled into secondary legislation. As the process has gone on, the standard has evolved. My central question is whether the Minister is clear that companies that are compliant with the current standard can safely put in their bids for contracts under that standard, and will not be disadvantaged should it change in the future. I think the regulations contain provisions giving the Minister some discretion in that respect.

Conversely, if the terms are relaxed in a future iteration of the standard—I do not anticipate this happening—and compliance becomes less onerous with regard to carbon emissions, for example, might companies that are already contracted ask to sign up to the new less onerous version and continue their contract? This is evolving and it can go in two ways.

[Jesse Norman]

I am grateful for this clarification, although obviously the Minister will want to speak for herself and for the Government. It does not sound as though the hon. Gentleman opposes the regulations— he may wish to comment on that—but is he not flagging a difference between the evolution of the law, by further amendment in statutory instruments considered in Committee, and evolution of a contractual situation that operates within that process? If it is the latter, any Government can give an indemnity against future changes to the rules if they wish, but it is not unknown for people to sign a contract and then, further down the track, think, “If only I’d struck this contract earlier. I’d’ve got a better deal,” or vice versa. Is that not a matter of private law and negotiation between the parties, and why is it a matter for this Committee?

[Dr Whitehead]

It is a matter for this Committee inasmuch as the standard is the centrepiece of how the regulations will work, but that standard is itself evolving. Contracts are being given as this piece of law is evolving. Obviously, contract law applies to those contracts, which bind the company applying for the contract to a certain standard of operation, which may well put the company to quite a lot of expense and planning. It is a bit like a boxer going into training and having to reach the weight for the upcoming fight, and having reached it, then having to keep to that weight after the fight takes place, because that is the continuing standard for their operation.

What methods of verification, challenge and judgment will be used to determine whether companies are continuing to adhere to the standard, once the standard has been set in the contract? That is my final question for the Minister. Is she satisfied that that will work well? As the low-carbon standard evolves, it may well be a case that a company says, “Well, that’s my hard luck, because I signed up for something that was a bit more onerous than it is now, but I ought to stick to it anyway,” or is the Minister suggesting that companies could relax their adherence to the standard if the standard itself is relaxed? Indeed, the regulations suggest that the Minister can or may—the famous “may”—do that if she so desires.

If the right hon. Member for Hereford and South Herefordshire is in any doubt, I stress that we do not oppose the SI and we want it to succeed. There is a provision, which does not always apply in regulations, that the SI comes into force tomorrow. I am sure that we will all happily agree to that. As soon as we have agreed to the regulations, they will come into force so that the contracts can be pursued.

It is important that we are clear about how the standard works on an evolving basis, but I do not wish to impede the issuing of the contracts or the forward march of hydrogen production and use in future.

--- Later in debate ---

[Amanda Solloway]

I thank right hon. and hon. Members for their valuable contributions. I will try to answer the questions succinctly and appropriately. If anything remains outstanding, I will write, as usual, with further information.

The hon. Member for Southampton, Test talked about the low-carbon hydrogen standard. Projects that seek support under the hydrogen production business model are required to show, as part of their application for revenue support, evidence that they are capable of meeting the UK low-carbon hydrogen standard.

The hon. Gentleman asked about the standard evolving over time. Regulation 2(6) makes clear that once a producer is deemed eligible under the regulations, they will not be subsequently rendered ineligible merely because of the publication of a new version of the low-carbon hydrogen standard. However, a direction issued by the Secretary of State pursuant to section 66(1) of the 2023 Act—

[Dr Whitehead]

I am anticipating the word “may”.

[Amanda Solloway]

Yes! The direction may require a hydrogen production revenue support contract to be offered on terms that require compliance with the later version of the standard.

To provide certainty for investors, we intend any review and updates to the standard to occur in advance of allocation rounds rather than during them. Where it is considered necessary to introduce updates during an allocation round—that is, in the period between the launch of the application window and contracts being awarded—we would aim, as part of the allocation or negotiation process, to provide projects with plenty of notice about any potential changes.

We propose that the review points for the low-carbon hydrogen standard should coincide with future contract awards through the hydrogen production business model. We would not expect any changes to be applied retrospectively to contracts that have already been awarded through these schemes. That means that the hydrogen production business model contract will not require producers to comply with any amendments made to the low-carbon hydrogen standard after the date on which the contract was signed. That will give producers confidence that the rules with which they will need to comply to receive support under the contract will not be changed retrospectively. Subject to the final contract terms and conditions, we expect that producers will be able to follow, where relevant, future changes to the LCHS, should they choose to.

Our ambition for the United Kingdom to have up to 10 GW of low-carbon hydrogen is both stretching and credible, and positions us at the front of the pack internationally. It will help us to realise a hydrogen economy that could potentially support over 12,000 jobs and result in up to £11 billion in private investment in the UK by 2030. Low-carbon hydrogen is considered to be an essential part of our future energy mix, and the hydrogen production business model seeks to address one of the key barriers to deploying low-carbon hydrogen: the higher cost of low-carbon hydrogen relative to high-carbon counterfactual fuels. We intend to launch the second hydrogen allocation round this year, following the announcement of the projects that were successful in the first hydrogen electrolytic allocation round.

The regulations are vital in enabling contracts to be awarded, so that projects can take investment decisions that will kick-start the deployment of low-carbon hydrogen production in the UK. I commend them to the Committee.

Question put and agreed to.

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 28th November 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The Minister is being a little shameless with his figures. We really ought to look at what is continuing to happen in England. In England, industry and other bodies warned that the supposed changes to onshore planning restrictions that were announced in September were far too timid to make any real difference to the dearth of new onshore wind.

I recently visited the site in Leighton Buzzard of the only turbine that has been put in place onshore in England since those supposed restrictions were lifted. It turns out that it has been in the planning process since 2014, and is not on a new site anyway. The Department’s renewable energy planning database shows that there are precisely zero new schemes in the pipeline in England. Should the Minister not go away and reconsider the remaining planning and funding restrictions on onshore wind so that it really can get going again?

[Graham Stuart]

As I have said, I share the enthusiasm on both sides of the House for onshore wind. The Government have set regulations that require onshore wind developers to consult communities in advance of submitting a planning application, as well as having it consulted on post-submission. We make no apology for rolling out this transformation in renewable technologies in concert with communities, rather than seeking to ride roughshod over them.

Energy Social Tariffs

Alan Whitehead Excerpts

Thursday 23rd November 2023 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I will not go into great detail this afternoon on behalf of the Opposition on the background and the need for a social tariff, or a similar instrument, because the hon. Members who have taken part in the debate have made the case for one excellently. I congratulate the hon. Member for Motherwell and Wishaw (Marion Fellows), who introduced the debate, not only on the debate, but on the comprehensive way in which she presented the case for social tariffs and urged the action that needs to be taken.

I very much commend the contribution—thoughtful, as always—from the hon. Member for Waveney (Peter Aldous). On other occasions, I have said that he is virtually an hon. Friend on these issues. I commend him for the forthright and detailed way in which he not only made the case for social tariffs, but also talked about what we ought to be talking about this afternoon, which is what happens after we have concluded that this is the right thing to do. He covered the fact that the onus is on the Government to take action and what considerations we have to undertake to secure not just a sticking-plaster solution for perhaps one winter, but something that applies long term and targets the right people in society, giving them the help that they need to keep their energy bills affordable.

I also very much commend the contribution of my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe), my actual hon. Friend. Among other things, he set out the groups of people involved. In particular, he talked about those in very difficult circumstances that have not just arisen from the energy price shock that we had a little while ago, but that affect their daily living requirements on a longer-term basis. They are the people who would very much be eligible and we should think very seriously about ensuring that those people have that long-term social tariff support.

That point is very much underlined by Ofgem’s very recent announcement on the energy price cap. The announcement underlines—if underlining were necessary —just what a difficult situation the people we are talking about continue to find themselves in. The price cap comes to just under £2,000 for a dual fuel tariff. Of course, that is not the actual bill that anyone will pay; it is an average of the sort of bill that people can expect to pay under the price cap. A lot of people—particularly those in disadvantaged and difficult situations—will pay a huge amount more, either because of their need for constant heat, because of their circumstances, or because they have other issues such as a combination of difficult living circumstances, inadequately insulated homes and high heating bills all at the same time. The price cap is the very least indication of where a lot of those people will be. Not only that, but we know from projections that the cap will be something like that for a very long time to come.

The price cap is not a way station in the downward curve of energy bills for the future. All the projections we have, particularly from Cornwall Insight, are that it is likely to remain at the same level, certainly throughout 2024 and probably going into 2025, and that they will not dip much below about £2,000 on average. As recently as April 2021, the price cap was precisely half that amount.

The people we are talking about are faced with the prospect of paying twice as much as they were as recently as two years ago for the next two or three years, with all the affordability issues that that will continue to bring into play. That underlines the point made by hon. Members this afternoon. It would be great if we had a social tariff this winter that could effectively continue the price support that has been applied previously, but that energy price support is coming to an end. After this winter, at the latest, it is not being replaced. That underlines the fact that a social tariff should not just be for Christmas—it needs to endure in providing assistance and help for those groups in society.

That is the problem with the other key point that has been mentioned this afternoon—namely, where is the consultation? It is not that the Government have said that a social tariff is a terrible idea that will never be done by Government ever. It is difficult to remember exactly which Minister of State for Energy it was, because they keep changing, but in January the Minister said:

“we will look at a social tariff and at how vulnerable people are looked after, but we have to look at it in a considered manner.”—[Official Report, 25 January 2023; Vol. 726, c. 1031.]

On 18 April, the then Secretary of State for Energy Security and Net Zero said:

“We do think that things like a social tariff could be very helpful”.—[Official Report, 18 April 2023; Vol. 731, c. 111.]

Then, in May, the Government stated, in response to a petition:

“The Government is considering potential approaches to consumer energy protection post-April 2024. The Government intends to consult on options in summer 2023…Government officials are considering potential options, including discounted tariffs, for a new approach to consumer protection in energy markets that will apply from April 2024”.

They have said all these things. They have said that there will be a consultation. What has not actually happened is a consultation.

It is difficult for us in this Chamber to home in on what a social tariff might look like, because the Government have not said anything about the sort of area that the social tariff would fall into as part of any consultation. We do not need just a consultation; we need to see the substance of that consultation and what the Government are minded to do about the commitments they have already made. That is completely lacking at the moment.

We can speculate to some extent on why there has been no consultation. Personally, I think the Government were rather hoping that this energy price crisis would be completely a thing of the past by now, and that instead of the energy price trajectory going down and flattening out, there would be a more straightforward downward price trajectory so that we would return to the position in 2021, when prices were about £1,000. Then the Government could say, “Well, actually, we don’t need a social tariff because it is much more affordable for everybody now, and we can tweak various other forms of assistance to make sure that life is good.” That has not happened. The data from just the past few days shows that it has not happened and will not happen in the near future, which should concentrate minds about what solutions need to be proposed.

This may be a little bit of speculation, but perhaps the Government are thinking, “Well, maybe we do need a social tariff.” But as hon. Members have mentioned, where will that be funded from? Will it be smeared across customer bills? Will it come from general taxation or some other arrangement? Of course, because there is no consultation, we do not know what the Government are thinking.

I could see the Government thinking, “Ooh, we’ve spent all this money on price support during the height of the crisis. Do we want to commit ourselves to another fairly substantial amount of taxpayer support for energy bills for the future?” Many of us would say the answer is yes, they should. But the Government may have other views and, indeed, there may even have been tension between Departments on the enactment and funding of that policy. I do not know, but that could have been the case.

There are ways of establishing a social tariff—the hon. Member for Waveney alluded to this—that do not actually cost the amount of money that the Government perhaps think it will. They involve changes in how the energy retail market works, but can deliver very solid back-up arrangements for social tariffs on a sustainable basis, which is what we all want, without that necessary and apparently large chunk of money coming from the Treasury. Again, as was the case for the hon. Member for Waveney, it would be inappropriate to expatiate on that at great length this afternoon, but I think that there are interesting ways we can examine it.

[Steve McCabe]

I am extremely grateful to my hon. Friend, who is making a very valuable point. It would be very helpful if the Minister could tell us what discussions the Government have already had with the energy suppliers and the director of Ofgem, since they have both indicated that they are in favour of a social tariff. Some of the work referred to by my hon. Friend must have been done—we just need to hear what has been discussed.

--- Later in debate ---

[Dr Whitehead]

My hon. Friend is absolutely right. Basically, what we need on the table now is—as they say about homework—for the Government to show their workings. That is why I emphasised that we need not just the promise of a consultation, but a consultation with some substance in the consultation document. We need to see how the thinking process has emerged and what propositions there might be. I agree that getting a social tariff right is quite a long way further on from deciding that there should be one.

It is absolutely right to undertake that process, but we have virtually no information. The Government have certainly not conveyed anything to me about their workings. All I know, along with everybody else, is that there is no consultation. It appears that no action is taking place at all. I would certainly be happy to talk to the Minister about ways to establish a decent social tariff without placing a substantial burden on the taxpayer in order to bring it into being over time. That is an open offer, but we will see whether it is taken up.

To conclude, the onus is on the Minister to stand up this afternoon to say that first, yes, there will be a consultation; secondly, that although we have missed out on help that could have come forward this winter, we will urgently consider what can be done in the meantime to help stabilise some of those bills in light of the new price cap for this winter; and, thirdly, that the Government, as my hon. Friend the Member for Birmingham, Selly Oak has said, will lay their workings on the table at a very early date so that we can collectively take part in the debate as to how we get a social tariff that works in the long term and that protects the people and makes their energy affordable in the way that we all want.

Draft Green Gas Support Scheme (Amendment) Regulations 2023

Alan Whitehead Excerpts

Wednesday 22nd November 2023 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Murray; we seem to be meeting rather frequently today, but that is always a pleasure.

The SI concerns the green gas support scheme, which is a scheme that I advocated for a very long time. I was delighted when it came in in 2021, and it has proved very successful in bringing about substantial advances in biomethane production and substantial increases in the amount of biomethane injected into the grid, thereby decarbonising the gas grid to a considerable degree. I hope it continues to be successful. We have to be careful that people who are in favour of sustainable aviation fuel do not seek to pinch that biomethane in the not-too-distant future, but that is perhaps a debate for another day.

As the Minister outlined, the instrument makes some very minor changes that streamline and make more efficient the operation of the scheme. Those are unexceptional changes, which we certainly support. I have two very brief questions—or rather, one brief question and a suggestion—as far as the changes are concerned. I would be grateful if the Minister could respond, and I am sure he will do so very briefly and succinctly when we get to that in a moment.

The first issue is that, as hon. Members will have seen, the interest that accrued in Ofgem’s account from the levy was, from the beginning of the scheme, added to, rather than deducted from, the levy collection target. Of course, that does not make much sense unless it was a mistake when it was first introduced in the framework. This instrument changes that addition to a deduction. My question is, what has happened to what appears to be an over-collection into the levy from gas suppliers, which are levied for the purpose of the support scheme? I am not a great advocate of handing back money that has been collected to make a scheme work, but has the Minister ever received any complaint or concern from the gas industry that it was being over-levied and would like its money back? I would imagine that, otherwise, it would stay in the support scheme and therefore make the MLA more appropriate to enabling the scheme to last longer.

The other point, which the Minister has mentioned, is that the maximum levy amount in the scheme is designed to, among other things, cope with the maximum point at which the levy is likely to be called on. It is a sensible change to make that maximum point rather more flexible on the decision of the Secretary of State. We want the levy to remain sufficiently flexible to finance the green gas support scheme after 2028-29, because we hope it will go on considerably longer than that.

Although the change is positive, it seems to me a little clunky. It is a fixed rate which requires the Secretary of State to take a decision on it. At that distance in the future, it is quite likely that inflation will begin to eat into the MLA seam. It might have been a better idea to index the MLA against inflation over the periods, leaving the Minister to take a decision only in the event that matters proved adverse to the passage of inflation over a period of time, rather than having to take a decision should things need adjusting even within that parameter.

Those are my only two comments on the scheme. I am sure the Minister will be delighted to know that I am going to stop very shortly.

[Graham Stuart]

Promises, promises!

[Dr Whitehead]

Those two clarifications would be very helpful to understand exactly where the changes to the scheme can best go, and whether we need to do any more work to make sure these amendments to the scheme stick as well as they are clearly intended to.

Draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2023

Alan Whitehead Excerpts

Tuesday 21st November 2023 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Gary. Like the Minister, I commend the Committee for the huge turnout this afternoon to consider the SI. I am sure that is because everyone wants to hear at some length the Minister’s comments and, indeed, some of mine, but in case anyone is here because they think there might be a Division, I can assure them—I hope they do not leave now—that there will be no Division. Broadly speaking, we very much agree with these changes to the operation of the ETS. However, I have a number of questions about the detail of those changes, and I would like to put the SI in a bit of context. I am disappointed that that context is not better represented in the SI.

The context is not just that the UK ETS is up and running and requires minor amendments, but that it is rapidly diverging from the EU ETS. The divergence is such that, in October prices, the permit cost per tonne is £87 in the EU ETS, but £40 in the UK ETS. The EU-UK trade and co-operation agreement, which the UK freely signed, states:

“The Parties shall cooperate on carbon pricing. They shall give serious consideration to linking their respective carbon pricing systems in a way that preserves the integrity of these systems and provides for the possibility to increase their effectiveness.”

No action has been taken so far—[Interruption.]

[Shailesh Vara]

Apologies, Sir Gary.

[Dr Whitehead]

That was a particularly stirring ringtone.

[Graham Stuart]

Bringing uniquely to a conclusion the hon. Gentleman’s words.

[Dr Whitehead]

I am afraid not. I distinctly detect that that was part of an overture, not a final movement.

As I said, the agreement states that

“the Parties shall cooperate on carbon pricing”,

but there is no evidence of such co-operation. Not only that, but the two systems are diverging significantly. Hon. Members may ask whether that matters. It matters a lot in view of what is happening in the EU on the development of carbon border adjustment mechanisms.

[Graham Stuart]

None of which is covered by the order.

[The Chair]

Order. Minister, sedentary interventions are never helpful. May I just ensure that we are talking about the order that the Committee is considering and not the issue generally?

[Dr Whitehead]

Yes indeed, Sir Gary.

[The Chair]

I am reassured. Thank you.

[Dr Whitehead]

The carbon border adjustment mechanism, which is in its first month of operation in the EU, is in danger of pricing our materials—iron, steel, aluminium, fertiliser, electricity, hydrogen and so on—as if they were outside it and should therefore be penalised, unless there is some convergence between the EU ETS and the UK ETS in future. That is a real issue. What plans has the Minister to seek greater convergence between the UK and EU schemes? That is important in the context of the SI.

[The Chair]

Are you making the point that those changes should be in the SI, but are not?

[Dr Whitehead]

I am making the point that there should be some mention of those particular circumstances in the order. For example, the substantial divergence between UK prices and EU prices will potentially have a real effect over time on aviation in Europe and the UK. The order ought therefore to be looked at in that light.

As the Minister has said and paragraph 7.4 of the explanatory memorandum explains, at 2021 prices, the free allowances set out for aviation represented 127% of the allowances that ought to have been made. In those circumstances, aviation has had something of a windfall. It has been able to take those free allowances, sell off the difference between 100% and 127% and make the actors in the industry between £50 million and £100 million. I welcome the fact that the allowances are to be capped at 100%, but I worry a little about whether the divergence between UK and EU ETS prices might lead the aviation industry to come back to us in the not too distant future and ask for some of those over-allowances back. We have to work together on the arrangements between boundaries for the UK ETS and EU ETS.

Was the over-allocation by accident or design? If it was by accident, are there any measures under way to try to restore some of the profits that have been made by aviation as it has put those substantial over-allowances into its pockets through trading, or is the Minister content to say that because it is now 100%, it is okay for the future and we will write off the past?

There is a similar issue of potential misallocation in the reclassification of companies that have not exported electricity for quite a while. As the Minister said, they continue to be classified as exporters even if they might not have exported electricity for quite a long time. Clearly, some long-term issues related to that misallocation will effectively be brushed over by the order, but I would like to know whether that has also resulted in free allocations being misapplied to the industry and whether the companies that have halted electricity exports but have been classified as exporters for quite a long time have benefited in an inappropriate way from that misclassification. If so, to what degree?

Although Labour supports getting the classifications right in the order, questions remain about why and how the misclassifications occurred and what action, retrospective or otherwise, the Government will take to ensure that the harm or benefit of them is as small as possible.

Having posed those three questions for the Minister, I confirm that we will not oppose the SI. Indeed, we welcome its clarification of how the UK ETS will move forward.

--- Later in debate ---

[Graham Stuart]

I thank hon. Members for their contributions to this debate on pretty technical adjustments to the ETS.

By capping aviation free allocation, we are ensuring that it is distributed appropriately until full auctioning in 2026. The current situation is not deliberate; the policy did not intend for aircraft operators to receive more allowances than their verified emissions. It is noteworthy, though, that those allowances meant that operators were doubly encouraged to invest in cleaner operations, since they were incentivised not only by any savings from investment in more fuel-efficient aircraft, for instance, but by the credits that they received within the ETS. The Government have no plans to claw any of that back.

On the overall position of the UK carbon market, the UK ETS is of course a market mechanism. The price of carbon allowances in the UK ETS is set by the market. In line with the net zero cap we announced in July, the supply of emissions allowances entering the market will fall significantly every year from 2024. We are committed to continuing to deliver on these changes, as we have shown, by legislating to amend the supply of allowances over the coming years and publishing an auction calendar.

The hon. Member for Walthamstow mentioned the CBAM. We are closely following developments on the EU CBAM and engaging with the Commission on technical considerations that are relevant to UK manufacturers. As the hon. Lady will know, EU CBAM charging does not start until 2026.

I am nervous of opening up wider matters, although you have been generous, Sir Gary, in allowing discussion of issues that are broader than the technical amendments that the SI makes. If Members want a broad debate on the ETS and its interaction with Europe, there are many opportunities in the parliamentary calendar to do exactly that.

[Dr Whitehead]

Given that the Minister has mentioned the CBAM in response to the inquiry of my hon. Friend the Member for Walthamstow, I want briefly to record that iron and steel are in the first phase of the EU CBAM, and that that may affect UK iron and steel negatively. They could be treated as if they were imports to the EU, similar to iron and steel from India or other parts of the world. That should give substantial pause for thought about how we proceed with the UK ETS.

[Graham Stuart]

The hon. Gentleman is right about that being a substantial prompt for thought, but not on the particular order that the Committee is considering. As hon. Members will know, we ran a consultation earlier this year on domestic measures to mitigate carbon leakage, including consulting on a potential UK CBAM and mandatory product standards.

In answer to the point that the hon. Member for Walthamstow made, our commitment to the UK steel sector is clear. We continue to work closely with industry, including British Steel, to secure a sustainable and competitive future for the sector and its workers. We will continue to fulfil that commitment.

As I said, the UK ETS is a market mechanism, and the price of carbon allowances is set by the market. That continues to be our position.

The UK ETS is a cornerstone of UK climate policy. It is worth noting, to look momentarily at the bigger picture, that since 1990, the UK has cut its emissions by more than any other major economy on the planet. The Government put net zero into law for the first time, and the former Conservative leader, now the Foreign Secretary, was the first leader of a major party to call for a climate Act, which was introduced in 2008. I was proud to serve on the Joint Committee on the Draft Climate Change Bill under the excellent chairmanship of Lord Puttnam.

[Dr Whitehead]

We were both members of that Committee.

Energy Bill [Lords]

Alan Whitehead Excerpts

Consideration of Lords message
Wednesday 18th October 2023 Commons Chamber

[Madam Deputy Speaker]

I call the Opposition spokesman.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

That was a disappointing and specious defence by the Minister of his intention not to proceed with these proposals from the other place. He knows perfectly well what the barriers to developing community energy are; we have debated them at length during the passage of the Bill. So I am not sure it is going to take a forensic panel of inquiry to find out what those details are before the Government can act on any of these things.

We are on the last lap of the Energy Bill and it is particularly disappointing that we are hearing what we are hearing today about this Lords amendment. The Bill, which has been with us in both Houses for well over a year now, puts into place many of the essential tools that will enable energy to progress towards a low-carbon, net zero future. The Opposition have consistently supported the Bill, while endeavouring during its passage to strengthen it in its low carbon mission. We have tried to place into the Bill further elements to make it the best it can be in pursuit of its low-carbon mission, and there have been some junctures during its passage when the Minister has endeavoured to take on board those suggestions for strengthening it, in some instances by drafting a Government amendment that meets the purport of our amendments. I am grateful to the Minister for those changes to the Bill and for the collegiate way in which the Bill has been debated and decided upon.

However, there are exceptions to that, one of which is in front of us today. As the Minister states, it relates to community and local energy, which I am sure Members will agree is and will be an important part of the future low carbon energy landscape. It has the potential to make a serious contribution to our local carbon arsenal of plant, while being funded and supported by the community in which that plant is situated, making it easier to develop and able to restore the benefits of its operation to the community itself.

Labour has committed to providing strong support for community energy, including the assistance of Great British Energy, the company we propose to set up to support the development of local low carbon plant with community energy schemes. The potential for such schemes to contribute to the overall installation of low carbon systems in the UK is immense, with perhaps 8 GW of install capacity added to the national stock through such local schemes. I remind the House that that is getting on towards the equivalent capacity of three nuclear power stations such as Hinkley Point C.

--- Later in debate ---

[John Redwood (Wokingham) (Con)]

One of the barriers will be the shortage of grid and cable capacity to link into. Is the hon. Gentleman envisaging some kind of privileged access or some solution to the grid shortage?

[Dr Whitehead]

That is not quite the subject of our debate, but the right hon. Member can see that we envisage an energetic and far-reaching proposal to develop the grid in such a way that those grid shortages are overcome, so that the grid is able to service the low carbon economy in the way we would all want it to do. In the context of what we are discussing, I remind the right hon. Member that this would be about distributed grids at a local level, rather than the national high-level grids. We need to take further action to strengthen and sort out grids at that level.

The Lords clearly continue to feel strongly about this issue; as we can see, they have sent back to us today a modified version of the original amendment, requiring the Government to consult on changes to assist community energy and, importantly, to set a timeline for proposals to be brought forward to remove barriers to the development of community energy.

Of course, there are others in this House who feel strongly about this issue. The proposals that the Lords have now twice tried to have inserted into the Bill are essentially the wording of a group called Power for the People, which suggested wording for a community energy enabling Bill for which it campaigned to secure signed-up support from parliamentarians. It did indeed secure substantial support from parliamentarians who feel strongly on the issue of community energy. Some 325 Members signed up in support, including 130 Conservative Members and, perhaps most remarkably, 22 members of the Government, including six Treasury Ministers, the present Chancellor and the Minister himself, as I often seek to remind him. There is no lack of support in the House for the principles and practice of community energy.

The Lords amendment seeks to acknowledge and further that support by putting forward very reasonable and, one might have thought, pretty non-contentious wording to add to the Bill. It is inexplicable to me that the Government should seek to resist these proposals in the way they have. Yes, they will say, as the Minister has said, that they have set up a community energy fund of £10 million over two years, which is welcome, and they have verbally indicated that, at some stage, there will be a consultation on barriers to supply, but there are no timelines for that and no commitment to move positively forward from it. That is what this amendment seeks to put right.

As I have said, the Minister appears already to be a signed-up supporter of community energy action, and I would fear for his own emotional wellbeing if he were forced today to perform another policy backflip and acquiesce in yet another Government repudiation of themselves in rejecting this latest Lords amendment. Instead, let us end the extended passage of the Bill on a high note, and all around the House agree on both the importance of community energy and the measures we will need to take to ensure it thrives in the future.

[Chris Skidmore]

I rise in support of the amendment. It is very similar to an amendment that I tabled during the previous stage of the Bill in the Commons. I echo the comments that have been made about the amendment being uncontentious. It calls for additional consultation—if the Government want me to do that, I will do it myself for the community energy groups.

The net zero review held several roundtables with a number of community energy groups across the country. Indeed, they were one of the reasons why pillar 4 in the final report, “Mission Zero: Independent Review of Net Zero”, was

“Net Zero and the Community”.

One of the key findings of the review was that over half of all net zero decisions will need to be taken not by Government or Parliament, but outside this Chamber. We can turbocharge our transition towards net zero if we can empower and support more community energy groups to take the action that needs to be taken.

Indeed, the only single wind turbine that has been built in the United Kingdom in the past year has been delivered through community energy. I am proud that it is in my home city of Bristol. Ambition Lawrence Weston has seen its 4.25 MW turbine built and it will now power 3,500 homes for the community energy project. The £4 million to pay for the project was raised by the group—it did not come cap in hand to Government—and now it will see an economic return of £140,000 a year as a result of the energy that will be sold to the grid. That is just one example of the myriad examples of net zero projects that demonstrate the economic opportunity that net zero can provide.

In Bristol, we also have the Bristol City Leap, which is a result of a £7 million investment from Bristol City Council. There has been £424 million of inward investment from the American company Ameresco Ltd to decarbonise the city’s district heat network. Community energy points the way for demonstrating that net zero is not a cost, despite what some may say, but an opportunity. We must seize that opportunity now, not just to tackle the climate crisis or reach our nationally determined contribution for 2030, because net zero is about 2030 not just about 2050. We cannot keep kicking the can down the road, somehow suggesting we are going to meet our carbon budgets. Meeting them now, today, is absolutely vital to ensure we can meet our climate commitments in future carbon budgets.

Community energy is here and now. We can get on with delivering net zero with the tools and technologies we have, and, above all, with the people we have—individuals and communities across the country. Community Energy England has 220 groups, a third of which would like to build onshore wind turbines, like Ambition Lawrence Weston. They want to get on with it. They are not often being paid to do this; they do it because they recognise what they can return to their communities. As a Conservative who believes in the power of local communities, we as a Government should be supporting local communities to the hilt to deliver on energy action.

When we look at the future of the grid, everything points to the fact that creating flexibilities on the edge of the grid enhances our energy security, allows us to return energy to the grid, frees up energy capacity elsewhere, and frees up our demand on oil and gas elsewhere. This is a no-brainer. I shall support Lords amendment 274B if it is pushed to a vote, although I will not push it to a vote myself. Nevertheless, it is vital that we send a clear message not just that we are committed to the net zero pathway—because it is the right and the economically important thing to do—but that we recognise that, when it comes to net zero, we need a big bang moment. We need to create little platoons of individuals and communities that are going out there writing their own net zero narratives and stories. For that reason, I will be supporting this Lords amendment today.

Oral Answers to Questions

Alan Whitehead Excerpts

Tuesday 19th September 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The Minister will know, although he unaccountably did not tell us, that there was precisely no new onshore wind in England in the recent AR5. The Minister claims that the latest compromised wording, which he alluded to, will lift the ban on onshore wind, but he knows really that that is not so and he knows what the industry has been saying about it and why it will not invest for the future. The result is no new onshore wind getting built in the medium-term, higher bills for families and less energy security for the country. Why will his Department not just face down his luddite Back Benchers, introduce fair planning regulations for onshore wind and get the industry restarted across England?

[Graham Stuart]

As I have just said, we announced changes as recently as 5 September. Like the hon. Gentleman, I look forward to a positive future for onshore wind in England, as well as in the rest of the United Kingdom.