Offshore Petroleum Licensing Bill

Baroness Blake of Leeds Excerpts

2nd reading
Tuesday 26th March 2024 Lords Chamber

[Baroness Blake of Leeds (Lab)]

I thank noble Lords for their constructive comments this afternoon, despite repeated concerns from around the House that the Bill is far from benign and could have damaging consequences, as was eloquently outlined by the noble Baronesses, Lady Young, Lady Willis and Lady Hayman, and others. The noble Lord, Lord Bruce, reflected the conclusions from the other place that the Bill is a distraction from the serious challenges facing us on our path to net zero. It is clear, I have to be honest, that the Bill will not be scrapped, despite the opposition to it, so all of us have a responsibility to limit any potential damage that it might cause, especially as the noble Baroness, Lady Boycott, outlined.

As we heard—although this has not been emphasised enough—the Bill will bring in a duty for the North Sea Transition Authority to run annual licensing rounds for oil and gas extraction in the UK by amending the Petroleum Act 1998. It outlines the two tests that have to be met and, as we have heard repeatedly, it is clear that, as they stand, it is virtually impossible for these tests to fail. The question we need to ask is: why are we being asked to legislate for something that happens anyway?

The stated aim of the Bill is to boost the UK economy, strengthen the UK’s energy security and assist the transition to net zero, while enhancing investor and industry confidence. We have heard excellent contributions explaining why these laudable objectives will not be achieved. The Bill will make no difference to the staggering household bills individuals have to pay, which, frankly, is undermining the economy. As we heard, the Secretary of State has made this absolutely apparent. As my noble friend Lord Lennie said, our dependency on gas has been fuelling these staggering price rises. Households are currently in a record amount of debt, estimated to be £3.1 billion, to energy suppliers. Debt levels have doubled since 2020. Surely this should focus all our minds on the challenges facing us.

This will also not make a difference to our energy security, according to the former chair of BP, the noble Lord, Lord Browne. It will undermine the independence of the NSTA, according to its own board minutes. Also, unforgivably—we have to keep mentioning this point—it will continue the reputational damage to the UK on the global stage in moving towards net zero. I need do no more than ask everyone to look at the speech by the former MP Chris Skidmore and his reasons for resigning. That was an extraordinary action to take, and it was taken because of his serious disappointment with and anxiety about the proposed legislation and the message this is sending across the world. Many noble Lords expressed this concern, and we have repeatedly tried to impress upon the Government that this damage is serious and is affecting our reputation and, therefore, investment in the important work on renewables outlined today.

It is a false premise to present tests that cannot be failed. It feels like manipulation: it is disingenuous, and it needs calling out. Surely the best test would be to demonstrate that a particular action is compatible with our climate change goals. Where is the reference to this legitimate demand in the Bill? The current climate compatibility checkpoint does not have a legislative basis. I make it absolutely clear that Labour recognises that oil and gas will be produced at existing sites in the North Sea over the coming years; to suggest otherwise is wrong and is designed to cause mischief. What needs to be recognised is that such production will taper, as the Minister outlined, to make way for the switch to low-carbon energy sources, coupled with demand reduction through investing in retrofitting our buildings and, in particular, our housing stock. Suggesting that the few new licences that the Bill might deliver are essential to our long-term objective of a transition to clean energy is misleading and provocative. We need a strategy to deliver for those North Sea workers new opportunities that will be enhanced by transitioning to floating offshore wind, carbon capture usage and storage, and hydrogen. We need a clear plan to deliver these opportunities.

Another serious flaw in the Bill is that there is no reference to methane emissions. I am grateful to noble Lords who highlighted this, and, for the sake of time, I will not go into the details. The Bill talks about measuring carbon dioxide emissions, but it therefore focuses on production emissions and does not take on board that methane emissions at different stages of production and transportation of LNG are, in aggregate terms, worse than the emissions of UK-produced and piped natural gas.

I listened with interest to the debate in the other place. It was clear that the right honourable Alok Sharma was concerned about the whole issue of methane. He looked to the debates in the House of Lords to come up with some answers to the amendment that he put forward. Can the Minister enlighten us on where the Government have got to in these discussions? Will there be movement? If not, I am sure this subject will come up in Committee. There have already been demands for a ban on flaring from the CCC and the Environmental Audit Committee.

Does the Minister have an answer to the concern that more licensing could have a chilling effect on the Government’s offshore wind target of 50 gigawatts by 2030, caused by their failure to publish their spatial plan for the UK seabed? The lack of any consideration of a marine spatial prioritisation test is further increasing alarm over the risk to marine health, especially given the lack of regard for protected marine areas. I pay tribute to my noble friend Lady Young and the noble Baroness, Lady Willis, for their contributions in this important area. I understand that there will be further debate on this in Committee, and I look forward to those discussions and the amendments they will generate.

All of us know that cross-party consensus on the important long-term consequences of climate change has been invaluable over recent years. I believe the Bill undermines that consensus for the expectation of short-term political advantage. This was clearly articulated by my noble friend Lord Lennie, and we will not be silent on this point. We need a collective, serious and responsible approach, not a distraction that will contribute nothing to achieving our climate and energy production goals. We need a serious plan, reflecting energy security concerns, the need to provide new jobs and the transition from the current high-skilled jobs to the new jobs that are being created. We need a functioning industrial strategy, as clearly laid out by Labour in its proposals for the future. I assure everyone that we do not want to see a disastrous repeat of the deindustrialisation policies of the 1980s that laid waste to whole communities, especially in the north, where I come from.

The limitations of the Bill offer us little opportunity to secure improvements. However, I am confident that further discussions will take place in Committee and improvements will be sought through amendments concerning, as we have heard, methane, including leak detection, as well as the protection of marine areas and enhancing new job opportunities, to name but a few. The hope is that we can achieve cross-party agreement to secure at least some benefit from this distracting and frustrating legislation.

--- Later in debate ---

[Lord Callanan (Con)]

If the noble Baroness is asking me if they pay billions in taxes and make billions in profits, then yes, I guess the answer is that the international oil companies do very well out of it. Of course, some of them are also financing renewable infrastructure. Some of the big oil and gas companies are helping to invest in CCUS in this country. We very much hope that they will continue to make profits, because it pays our pension funds and a lot of investors, and a huge amount of money into the UK Exchequer that the Liberal Democrats are normally very keen on spending. The noble Baroness needs to allow that money to be raised in the first place. The companies are responsible for decommissioning their assets.

The Government continue to work with the NSTA and the Health and Safety Executive to ensure that well decommissioning is progressing in line with the relevant safety and environmental regulations and standards. That is exactly the same as has been happening previously. The UK has a very robust decommissioning regime whereby operators are responsible for decommissioning their assets at the end of their useful life. This regime of course includes protections for taxpayers, so that the costs fall on those operators. I hope the noble Baroness is reassured by that.

I was of course also pleased to hear the support of the noble Lord, Lord Bruce, for the jobs in the sector. He has a lot of relevant experience, particularly in north-east Scotland. This is in line with the words of Sir Ian Wood:

“Owing to a world-class oil and gas sector, the North East … is home to the critical mass in skills and expertise that will be crucial to ensuring that we successfully accelerate new and green energies, protecting and creating jobs as we do so”.


I am pleased to have the support of the Labour Party, but we must retain those skilled jobs in the industry, and our firm belief is that this Bill will help us to achieve exactly that.

To conclude, the Bill will give industry the certainty and confidence it needs to continue to invest in the North Sea, strengthening our energy security and supporting the energy transition as we move towards our goal of net zero, through the introduction of annual licensing rounds, subject, of course, to all the appropriate tests being met. I look forward to continuing the scrutiny of the Bill as it progresses through the House, but in the meantime, I beg to move.

[Baroness Blake of Leeds (Lab)]

Before the Minister sits down, could he answer my question about whether discussions are continuing on the issue of methane, as was raised in the other place, and particularly the withdrawal of the amendment from the right honourable Alok Sharma? Can we expect to have some discussion on where those conversations might lead us, if they are indeed taking place?

[Lord Callanan (Con)]

As I always do, I will listen very carefully to the point of view the House expresses in Committee, and, as is normal practice, as a Government we will then consider whether there are any concessions or changes we want to offer in the Bill. I am sure we will want to talk further to the noble Baroness and her colleagues at that point.