Energy Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Monday 12th December 2022 Grand Committee

Moved by

[Baroness Bloomfield of Hinton Waldrist]

105: Clause 86, page 78, line 12, at end insert—
“(b) whether to make a certification under subsection (3)(b).”Member's explanatory statement
This amendment requires the Secretary of State to consult with the Oil and Gas Authority before making a certification of the kind mentioned in Lord Callanan’s amendment at line 78, line 37.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, Amendments 105 to 109 amend Clause 86 on the availability of change of use relief for pipelines. Clause 86 mirrors Clause 85, the principal difference being that its application is to pipelines rather than to installations. As such, these amendments also mirror those covered in the previous group.

As was the case for Amendment 97, Amendment 106 makes clear what conditions must be satisfied for a pipeline that has already been designated as eligible for change of use relief by the Secretary of State to qualify for change of use relief. To recap, the first is that the Secretary of State has issued a carbon capture and storage-related abandonment notice, under Section 29 of the Petroleum Act 1998, on a person for that pipeline. The second is that the trigger event has been satisfied.

Amendment 107 describes the trigger event that must occur for the relief to take effect, in the same way as Amendment 98 did for Clause 85. First, a decommissioning fund must have been established for the relevant asset. Secondly, an appropriate amount must have been paid into this fund to reflect the decommissioning liability that the previous owner is being relieved of. The amendment would also give the Secretary of State a power to make regulations on the required amount that must be paid into the decommissioning fund, and who may make such a payment, in order to qualify for change of use relief.

As was the case for Clause 85, the Secretary of State must also approve that the amount being paid into the fund in relation to pipelines is sufficient. In the same way as Amendment 96 does, Amendment 105 imposes a requirement on the Secretary of State to consult the Oil and Gas Authority before certifying that the amount is sufficient.

Amendments 108 and 109 make consequential changes to definitions and cross-references in response to previously proposed amendments.

Amendments 110 and 111 make changes to Clause 87. Amendment 110 updates the heading to reflect better the content of that section. Amendment 111 proposes to omit a subsection of Section 105 of the Energy Act 2008. This subsection is no longer necessary as a result of the simplified mechanism proposed in this Bill for designating an asset as eligible for change of use relief.

The repurposing of pipelines, alongside installations, has the potential to deliver great benefits in the deployment of carbon capture, usage and storage. These can be environmental through greater resource efficiency and the reduction in disturbing sea beds. There are also economic benefits in reducing capital expenditure and potentially speeding up the deployment of CCUS.

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[Baroness Blake of Leeds (Lab)]

I too welcome the return of the Bill. It is quite interesting to reflect back to the first and second days in Committee, when we were recording the hottest temperatures that we had ever experienced in this country and were making full use of that experience. We were also in the midst of the leadership contest and questioning the commitment of the candidates; we had no way of knowing, of course, that both of them would take their turn in No. 10 and have the ability to demonstrate their commitment.

We are really pleased to see the return of the Bill. We were concerned that there would be changes and, as we said on the first two days in Committee, there are some measures in this Bill that are urgent and that we need to get a move on with in order to address the challenges that we face in this space.

I do not have an enormous amount to add to the Minister’s very full comments. I just seek clarification. When I see an amendment on consultation, I am always slightly concerned to know who exactly would come into the sphere of consultation and make sure that it is as full as it could be. The issues around making sure that the fund remains sufficient are very practical and necessary. With that plea for clarification on consultation, I am happy to leave it there.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Lord, Lord Teverson, and the noble Baroness, Lady Blake, for their remarks. I will start with the noble Baroness’s final question. As set out in the Government’s response to that consultation, it is expected that the owners of the asset will submit their assessment of the decommissioning liability to the Offshore Petroleum Regulator for Environment and Decommissioning for verification. This verification will include consultation with the North Sea Transition Authority, which will be able to compare the assessment against its extensive benchmarking data. OPRED will also be able to engage third parties to provide its own assessment if necessary. Once OPRED is satisfied that the assessment is accurate, it will advise the Secretary of State on approving the amount. That is the advice route that the Secretary of State would take.

In response to the question from the noble Lord, Lord Teverson, transport and storage companies will hold the decommissioning funds, but will be overseen by the economic and operational regulators. Funds to cover decommissioning costs will be included in the allowed revenue paid to the transport and storage company. The proportion of revenue to be paid into the decommissioning fund will be determined by the economic regulator once the decommissioning liability has been calculated. I hope that that deals with that satisfactorily—clearly not.

[Lord Teverson (LD)]

I thank the Minister for that very useful answer. Let me get that correct: the funds are being held by the commercial companies that are putting this money aside. Is that ring-fenced? If they go bankrupt, is that lost? How does it work?

[Baroness Bloomfield of Hinton Waldrist (Con)]

It could be a commercial company. It depends who gets the contract for the funds. Then they will be invested.

[Lord Lennie (Lab)]

Are the funds held in escrow so that they cannot be used for anything else, or can they be used as part of the normal purposes?

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I do not think we have a detailed enough answer, so perhaps we should follow up in writing.

[Lord Teverson (LD)]

I have a concern about this area and I think it is important that this is clarified.

[Baroness Bloomfield of Hinton Waldrist (Con)]

We will clarify that point in writing before the next stage.

Amendment 105 agreed.

Moved by

[Baroness Bloomfield of Hinton Waldrist]

106: Clause 86, page 78, line 13, leave out subsections (6) and (7) and insert—
“(6) For subsection (2) substitute—“(2) An eligible carbon storage network pipeline qualifies for change of use relief if—(a) the Secretary of State has given a CCS-related abandonment programme notice to a person in relation to the abandonment of the pipeline, and(b) the trigger event has occurred in relation to the pipeline.(2A) In subsection (2) “CCS-related abandonment programme notice” means an abandonment programme notice under section 29 of the 1998 Act given at a time when the pipeline is used, or is to be used wholly or mainly—(a) for the purpose of disposing of carbon dioxide by way of geological storage, or(b) as a licensable means of transportation.””Member's explanatory statement
This amendment changes the conditions for change of use relief under section 30B of the Energy Act 2008.

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Moved by

[Baroness Bloomfield of Hinton Waldrist]

110: Clause 87, page 80, line 3, leave out “information” and insert “supplementary”
Member's explanatory statement
This amendment is consequential on Lord Callanan’s amendment of Clause 87 at page 80, line 30.

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[Baroness Blake of Leeds (Lab)]

This has become a very rich debate. I thank the noble Baroness, Lady Randerson, for putting her amendments forward to enable us to have these broader discussions. We have said from the start that the difficulty with this Bill is the things that are not in it; this is one area we can all learn from and hopefully move forward on.

I also thank the noble Baroness, Lady Worthington, for the explanation of her Amendments 130A and 130B. I am sure that we would all welcome more clarity in these areas, and indeed a strategy so that we can bring confidence and certainty to the sector in the way that she described.

I will focus most on Amendment 124A in the name of the noble Baroness, Lady Randerson, in my comments and, in particular, the notion of adding local carbon transport schemes to the section on low-carbon heat schemes—indeed, to run alongside them.

As many will know, this was last looked at under the last Labour Government, with the 2009 report Low Carbon Transport: A Greener Future, which, interestingly, was published by the DfT. It made recommendations on supporting a shift to new technologies and fuels, promoting lower-carbon choices, and using market mechanisms to encourage a shift to lower-carbon transport. Of course we have moved on in many ways, but these principles should not be overlooked and we should continue to put in our full effort.

Specifically on hydrogen vehicles, we believe there is merit in looking at potential in the HGV sector. The discussions about shipping were interesting as well, but we feel that so much more focus needs to be put on alternatives, certainly in the short-term. Electric is obviously being looked at.

It is important to debate this at this point because, with the global situation regarding gas supplies, we are focusing our attention on domestic energy in particular, for obvious reasons—the cost of living crisis, security issues and all that goes with it—but we have to bear in mind that transport is one of the biggest sources of carbon emissions in the UK. In 2019, it accounted for 34% of the UK’s total carbon emissions. Its emissions have remained largely unchanged since the 1990s, which we cannot say about the energy supply generally. We have to ask why transport is such a poor performer.

We need to be concerned about where we get the electricity from if we continue with our ambition. If we are to reach our target of net-zero emissions by 2050, the decision to ban new petrol and diesel cars from 2030 will help, but there are so many other areas that we should focus on: alternative modes of transport, cycling and walking, and shared travel options. From my point of view, we have this enormous disconnect between transport policy and the policy we are discussing. We need to pick it up and take it seriously.

I speak with my experience of being a member of Transport for the North. All the schemes we tried to bring in through the integrated rail plan to deliver not only for the travelling public but for the impact on the climate seem to have been left behind. We have discussed this before. We have had Questions in the Chamber about the lack of joined-up thinking from the Government, which needs seriously to be addressed. The noble Baroness, Lady Randerson, referred to it as a lack of leadership and vagueness in the plan, but why are we not cross-referencing within the Bill to the work that needs to be done?

Speaking with my local government hat on, on building new homes, why can we not look at the schemes in Scandinavia in particular, where every new home has solar panels and the excess electricity generated is taken off and fed into personal electric charging points for vehicles? There are so many examples that we should look at.

The amendment has generated an opportunity to discuss this. I look forward to the Minister’s response to the amendments from the noble Baroness, Lady Worthington, but in particular to her explanation as to why there is such a lack of joined-up thinking in these areas, where the potential could be enormous.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank all noble Lords who participated in the debate, particularly those who tabled amendments.

I will speak first to Amendment 124A, tabled by the noble Baroness, Lady Randerson, but I must start by taking issue with the idea that the Government are not showing leadership. I believe that they are showing leadership with low-carbon transport solutions. For example, this year alone we have announced £200 million for the zero-emission road freight demonstrator programme, which includes hydrogen and electrification for HGVs; another £200 million for zero-emission buses, again including both hydrogen and pure electric; £30 million for a fleet of 124 buses in the West Midlands; £206 million for the UK Shipping Office for Reducing Emissions—or UK SHORE—to decarbonise maritime, which includes a mix of different technologies; and up to £12 million until August 2023 and up to £60 million until March 2025 for the second and third rounds of the clean maritime demonstration competition, funding feasibility studies and pre-deployment trials in zero-emission shipping hydrogen technologies for maritime applications. As the noble Baroness will be aware, there is also £20 million for phase 2 of the Tees Valley hydrogen transport hub, with an additional £300,000 put forward to support local skills.

On aviation, the SR21 funding for hydrogen-related aviation activity has not yet been announced but is forthcoming. We have also announced £165 million for the advanced fuels fund to kick-start a sustainable aviation fuel industry in the UK.

All this goes to demonstrate that we are doing a lot of work to show leadership in this area, putting money into research to help us solve some of the problems raised in this debate. Work is already under way in the Department for Transport in close collaboration with BEIS; it is really helpful that the former Secretary of State for Transport is now the Secretary of State for BEIS, so he will be very well versed in some of these issues. I can reassure noble Lords of the continual conversation that happens between the two departments in this regard. In close collaboration with BEIS, as set out in the Government’s transport decarbonisation plan, the Department for Transport is delivering on its comprehensive plan for decarbonising transport, which includes supporting a greater role for hydrogen through schemes such as those I have mentioned.

As we have seen, there is a significant role for hydrogen in heavier transport applications or where things such as refuelling times and infrastructure constraints make it the best choice. However, we do not consider that a new statutory, regulatory regime would add anything new to the work already being done. It is always necessary to consider whether the benefit outweighs the regulatory burden. I hope that the noble Baroness is reassured by the Government’s commitment to this cause, and I ask her to withdraw her amendment.

Amendment 130A seeks to limit the definition of “UK removals” in Section 29 of the Climate Change Act, excluding mechanisms such as financial instruments that do not relate to the physical removal of greenhouse gases in the UK. I reassure the noble Baroness, Lady Worthington, that Clause 111 does not expand the definition of “UK removals” to non-physical processes, but instead to greenhouse gas removals achieved by engineered methods, such as bioenergy with carbon capture and storage. This is to align the definition with current international best practice, including guidelines set out by the United Nations Framework Convention on Climate Change.

I equally reassure the noble Baroness, Lady Jones, that it is the Government’s priority to reduce emissions of greenhouse gases from human activities and to adapt to those climate change impacts that are unavoidable. We are clear that the purpose of greenhouse gas removals is to balance the residual emissions from sectors that are unlikely to achieve full decarbonisation by 2050. It is not a substitute for decisive action across the economy to reduce emissions. Nature-based methods, such as afforestation and habitat restoration, will be essential in removing and storing carbon dioxide at scale while delivering a range of additional environmental benefits, such as biodiversity gain, air quality and soil health.

The Climate Change Act 2008 allows the Government to purchase off-sets or other traded instruments to set towards our emission reduction targets. The Government do not currently intend to purchase off-sets to set towards our carbon budgets, although they have retained the option to do so in future, if appropriate. I can see that I shall never manage to reassure the noble Baroness, Lady Jones.