Callum McCaig
Main Page: Callum McCaig (Scottish National Party - Aberdeen South)
Callum McCaig (Aberdeen South) (SNP)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
Amendment 24, in clause 79, page 46, line 20, leave out “31 March 2016” and insert “1 March 2017”.
This amendment and amendments 25, 26, 40, 41, 42, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38 and 39 have the effect of closing the Renewables Obligation for onshore wind a month earlier than the original date set out in the Statutory Instrument: Renewables Obligation Closure Order 2014: 2388, rather than a year earlier, as the Bill does in its present form.
Amendment 25, page 46, line 25, leave out “31 March 2016” and insert “1 March 2017”.
Amendment 22, page 47, line 22, leave out clause 80.
Amendment 26, in clause 80, page 47, line 27, leave out “31 March 2016” and insert “1 March 2017”.
Amendment 27, page 47, line 30, leave out “31 March 2016” and insert “1 March 2017”.
Amendment 28, page 47, line 36, leave out “31 March 2017” and insert “1 March 2017”.
Amendment 29, page 47, line 42, leave out “31 March 2017” and insert “1 March 2017”.
Amendment 30, page 48, line 3, leave out “31 March 2016” and insert “1 March 2017”.
Amendment 31, page 48, line 6, leave out “31 March 2017” and insert “1 March 2017”.
Amendment 32, page 48, line 20, leave out “31 March 2016” and insert “1 March 2017”.
Amendment 33, page 48, line 33, leave out “1 April 2017” and insert “2 March 2017”.
Amendment 34, page 48, line 43, leave out “1 April 2017” and insert “2 March 2017”.
Amendment 35, page 49, line 8, leave out “1 April 2017” and insert “2 March 2017”.
Amendment 36, page 49, line 17, leave out “1 April 2017” and insert “2 March 2017”.
Amendment 37, page 50, line 13, leave out “18 June 2015” and insert “18 May 2016”.
Amendment 1, page 50, line 18, leave out “planning permission” and insert
“an application for 1990 Act permission or 1997 Act permission”.
Amendment 38, page 50, line 19, leave out “18 June 2015” and insert “18 May 2016”.
Amendment 2, page 50, line 20, leave out “or judicial review”.
Amendment 3, page 50, line 30, after “Act” insert
“(excluding an extension agreed for the purposes of section 78(2) of the 1990 Act or section 47(2) of the 1997 Act)”.
Amendment 52, page 50, line 34, after “application”, insert
“(provided that this period does not include any extension agreed for the purposes of section 78(2) of the 1990 Act or section 47(2) of the 1997 Act”.
Amendment 4, page 50, line 35, leave out paragraph (iii).
Amendment 39, page 50, line 40, leave out “18 June 2015” and insert “18 May 2016”.
Amendment 53, page 50, line 40, after “18th June 2015”, insert “whether”.
Amendment 6, page 50, line 40, leave out “following an appeal”.
Amendment 5, page 50, line 40, after “following an appeal” insert—
“or a decision made by the Secretary of State, Welsh Ministers or Scottish Ministers following directions given under section 77 of the 1990 Act or section 46 of the 1997 Act, and”.
Amendment 54, page 50, line 40, after “appeal”, insert “or otherwise”.
Amendment 23, page 50, line 46, at end insert
“, or
(e) evidence that—
(i) an application for 1990 Act permission or 1997 Act permission was made on or before 18th June 2015 for the station or for additional capacity,
(ii) a grant of planning permission was resolved by the relevant planning authority on or before 18th June 2015,
(iii) planning permission was granted after 18th June 2015, and
(iv) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”.
Amendment 7, page 50, line 46, at end insert—
“( ) evidence that—
(i) an application for 1990 Act permission or 1997 Act permission was made on or before 18 June 2015 for the station or additional capacity,
(ii) the period allowed under section 78(2) of the 1990 Act or (as the case may be) section 47(2) of the 1997 Act (excluding an extension agreed for the purposes of section 78(2) of the 1990 Act or section 47(2) of the 1997 Act) ended on or before 18 June 2015 without the things mentioned in section 78(2)(a) or (aa) of the 1990 Act or section 47(2)(a) or (b) of the 1997 Act being done in respect of the application,
(iii) the application was referred to the Secretary of State, Welsh Ministers or Scottish Ministers in accordance with directions given under section 77 of the 1990 Act or section 46 of the 1997 Act,
(iv) 1990 Act permission or 1997 Act permission was granted after 18 June 2015, and
(v) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”.
Amendment 8, page 50, line 46, at end insert—
“( ) evidence that—
(i) an application for 1990 Act permission or 1997 Act permission was made on or before 18 June 2015 for the station or for additional capacity,
(ii) the relevant planning authority resolved to grant 1990 Act permission or 1997 Act permission on or before 18 June 2015,
(iii) 1990 Act permission or 1997 Act permission was granted after 18 June 2015, and
(iv) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”.
Amendment 9, page 50, line 46, at end insert—
“( ) evidence that—
(i) an application for consent for the station or for additional capacity was made under section 36 of this Act,
(ii) the consultation period prescribed by Regulations made under paragraphs 2(3) or 3(1)(c) of Schedule 8 to this Act had expired on or before 18 June 2015,
(iii) the Secretary of State caused a public inquiry to be held under paragraph 2(2) or 3(3) of Schedule 8 to this Act or decided that a public inquiry need not be held,
(iv) consent was granted by the Secretary of State after 18 June 2015, and
(v) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”.
Amendment 10, page 50, line 46, at end insert—
“( ) evidence that—
(i) an application for development consent for the station or for additional capacity was made under section 37 of the Planning Act 2008,
(ii) the deadline for receipt of representations under section 56(4) of the Planning Act 2008 had expired on or before 18 June 2015,
(iii) consent was granted by the Secretary of State after 18 June 2015, and
(iv) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”.
Amendment 11, page 50, line 46, at end insert—
“( ) evidence that—
(i) planning permission for the station or additional capacity was granted on or before 18 June 2015,
(ii) planning permission under sections 73, 90(2), 90(2ZA) or 96A of the 1990 Act or sections 42, 57(2), 57(2ZA) or 64 of the 1997 Act, a consent under section 36C of this Act, or an order under section 153 of, and paragraph 2 or 3 of Schedule 6 to, the Planning Act 2008 varying the planning permission under clause 32LJ(4)(i)(i) was granted after 18 June 2015, and
(iii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”.
Amendment 12, page 50, line 46, at end insert—
“( ) evidence that—
(i) 1990 Act permission or 1997 Act permission for the station or additional capacity was granted on or before 18 June 2015,
(ii) consent under section 36 of this Act that permits a greater capacity for the station than that permitted by the planning permission under clause 32LJ(4)(j)(i) was granted after 18 June 2015, and
(iii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”.
Amendment 13, page 50, line 46, at end insert—
“( ) evidence that—
(i) planning permission for the station or additional capacity was granted on or before 18 June 2015,
(ii) planning permission under clause 32LJ(4)(k)(i) was superseded by a subsequent planning permission granted after 18 June 2015 permitting a station with the same or a lower capacity than that granted under the planning permission referred to in clause 32LJ(4)(k)(i), and
(iii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”.
Amendment 14, page 50, line 46, at end insert—
“( ) evidence that—
(i) planning permission for the station or additional capacity was granted or refused on or before 18 June 2015, and was subsequently confirmed or granted after that date following a statutory challenge under section 288 of the 1990 Act, section 237 of the 1997 Act or section 118 of the Planning Act 2008, or following a judicial review, and
(ii) any conditions as to the time period within which the development to which the permission relates must be begun have not been breached.”
Amendment 15, page 50, line 48, leave out sub-paragraph 5(a) and insert—
“(a) evidence of an agreement with a network operator to carry out grid works in relation to the station or additional capacity and was originally made on or before 18th June 2015 notwithstanding the fact that may have subsequently been amended or modified, and
(ab) a copy of a document written by, or on behalf of, the network operator which estimated or set a date for completion of the grid works which was no later than 31 March 2017; or”.
Amendment 40, page 50, line 49, leave out “18 June 2015” and insert “18 May 2016”.
Amendment 41, page 51, line 10, leave out “18 June 2015” and insert “18 May 2016”.
Amendment 16, page 51, line 26, at end insert
“and includes planning permission deemed to be granted in accordance with section 90 of that Act”.
Amendment 17, page 51, line 31, at end insert
“and includes planning permission deemed to be granted in accordance with section 57 of that Act”.
Amendment 18, page 52, line 6, leave out “from a recognised lender”.
Amendment 42, page 52, line 16, leave out “31 March 2017” and insert “1 March 2017”.
Amendment 19, page 52, leave out lines 27 to 29, and insert—
“In this section “recognised lender” means a bank or financial institution or trust or fund or other financial entity which is regulated by the relevant jurisdiction and which is engaged in making, purchasing or investing in loans, securities or other financial instruments.”.
Amendment 20, page 52, line 32, leave out subsection (6).
Amendment 43, page 54, line 19, leave out “31 March 2016” and insert “1 March 2017”.
Amendment 44, page 54, line 21, leave out “31 March 2017” and insert “1 March 2017”.
Government amendment 50.
Amendment 45, in clause 81, page 56, line 3, leave out “31 March 2016” and insert “1 March 2017”.
Amendment 21, page 56, line 3, leave out subsection (a) and insert—
“(aa) by a 33kV connected onshore wind generating station consented after 30 September 2015, or
(ab) by a cluster connected onshore wind generating station consented after 31 October 2015, and”.
Amendment 46, page 56, line 6, leave out “31 March 2016” and insert “1 March 2017”.
Callum McCaig
New clause 2 is straightforward. It would re-devolve the power to issue a closure order in respect of the renewables obligation for onshore wind back to the Scottish Government, where it used to belong. That power was re-reserved, so to speak, on the explicit understanding that there would be no changes—no closure and no material impact on Scotland from agreeing to that proposal. The proposal would have allowed for closure of the renewables obligation later next year, as had previously been agreed.
We have been through this. There has been extensive debate on the renewables obligation. It is worth reiterating briefly some of the concerns. As I said, power over the renewables obligation was removed from Scotland against the explicit undertaking that the Government had given to Scottish Ministers. An element of betrayal of trust has come about. That has woven its way through the entirety of the Government’s handling of onshore wind and the closure of the renewables obligation. For a long time the industry had trust in the Government. That trust has vanished.
Today’s debate and a number of the amendments offer the opportunity to improve the measure that introduces the closure of the renewables obligation, notably the numerous amendments tabled by my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Philip Boswell), who has meticulously detailed how the closure of the RO and the accompanying grace periods could be carried out in a way that is fairest to developers.
Last week the Energy and Climate Change Committee produced a report on investor confidence which suggested:
“Sudden and numerous policy announcements have marred the UK’s reputation for stable and predictable policy development.”
That is fairly damning. I am not steeped in the ways of Select Committee reports and how Committees finesse their arguments, but that is a clear criticism of the Government’s policy and how it has been implemented. It did not need to be done that way.
Through the various stages of the Bill we have accepted that the Government have a commitment to pursue that policy. We disagree with it. Their policy is short-sighted and is not the correct way of going about things. Onshore wind, in the view of the Scottish National party, has a significant role to play in the energy mix in the United Kingdom and should not have been taken out of the mix in a rather crude and cack-handed manner, but the Government have chosen to act in that way. [Interruption.] If the Government are to do that, they should do so in the best way possible. [Interruption.] I feel there is something else happening that I am not aware of.
Mr Speaker
Very disorderly conduct. The hon. Gentleman is pressing a serious case. If I may, at the risk of making an in-joke, be permitted to say this, that whatever is the subject of this debate, fortunately, not least for him, Otis is not.
Mr Speaker
Fortunately for the hon. Gentleman, he does not need to do so. He is innocent. He has been transgressed against; he has not transgressed. He can now speed ahead with his oration, to which we look forward.
Callum McCaig
Speed is the operative word, I think. We have called for the re-devolution of the power and for the grace periods to be dealt with in the most appropriate manner. In its manifesto and in debates the Conservative party has professed a desire to see local control of this matter, and nobody would argue with that. However, that requires that we respect local decisions, but the grace periods as they stand do not do that. That is why the new clause and the amendments are necessary, particularly amendment 8, in the name of my hon. Friend the Member for Coatbridge, Chryston and Bellshill, which relates to planning decisions at committee that were dealt with before the closure date, but where the approval certificate was not granted, in Scotland, owing to section 75 of the Town and Country Planning (Scotland) Act 1997, on planning gain—in England, I think it is section 106 of the Town and Country Planning Act 1990. This issue is clearly about local decision making, and the Government should give their consent so that it can be included in the Bill.
We accept that the change is going to happen. Having been explicitly opposed to it, the industry now sees that it is better to have some certainty, rather than continued uncertainty. However, that certainty needs to be correct certainty—it needs to be fair certainty and it needs to be certainty that does what it is intended to do.
We should respect local decision making. Where locally elected bodies—councils in England, Scotland, Wales and Northern Ireland, although there are different stipulations there—have agreed to projects but have not been able to get their certificate to allow them access to the renewables obligation because of the technical nature of decision making around planning gain and other such issues, that is simply wrong.
John Redwood (Wokingham) (Con)
Will the hon. Gentleman remind the House why he wishes to burden his constituents and others with much dearer electricity from an interruptible source we cannot rely on?
Callum McCaig
Onshore wind has clearly been demonstrated to be one of the cheapest forms of renewable energy. If we were having a tête-à-tête, I would ask the right hon. Gentleman why he supports the obscene waste of money that will be spent on the Hinkley power plant, which will cost considerably in excess of what would be spent on onshore wind. However, as we are not having a back-and-forth, I will resist that temptation.
The issue is straightforward: we need to press ahead. The industry needs to be given certainty. The issue has been handled incredibly badly, but there is time, particularly taking cognisance of last week’s Energy and Climate Change Committee report, for the Government to make amends, to change some of the stipulations on the grace periods and to allow things to happen in the best way possible. Repenting, however late, is better than carrying on regardless.
Several hon. Members rose—
Chris Heaton-Harris
Thank you for calling me early in the debate, Mr Speaker.
I sat on the Energy Bill Committee, along with many right hon. and hon. Members present today, and I want to add a bit of balance to the Scottish National party’s contribution. We had this debate in Committee. The SNP would very much like the responsibility for the renewables obligation sent back to Scotland, and many people on the Government Benches would probably like the SNP to commit to paying for that, if it were to happen. However, only half of that is covered in the SNP proposal.
Chris Heaton-Harris
I am surprised that the hon. Gentleman wants me to give way.
Callum McCaig
The hon. Gentleman is absolutely right that we had that debate, but does he accept that we will be paying an extortionate price for the Conservative party’s nuclear power plans if he gets his way?
Chris Heaton-Harris
If we are talking about paying for things, I wonder how the SNP would have paid for its proposals had Scotland gone independent, given that the oil price is residing around $30 or $40 a barrel. Let us make sure that we talk about energy in a sensible way. We did have a constructive and sensible debate in Committee, even though it was good fun to fall out occasionally on different points.
Unfortunately, Mr Speaker, you did not select any of the amendments to which I put my name. I was not being cheeky in tabling them; I just wanted to make a point. The Conservative party had a manifesto commitment on removing the renewables obligations a year earlier than expected, with no new subsidies for onshore wind, and on some planning changes. Those provisions were in the Bill, but Members of the House of Lords did not like them. In Committee, we debated what would happen if we reinserted that clear manifesto commitment, and how that would be quite a foolish thing to do because there are other methods within the planning rules that we could use.
It would be fair to talk about amplitude modulation in relation to planning requirements. There is a huge amount of concern about noise from wind turbines. I thought that I would identify a couple of the concerns in a tiny bit more detail so that Members could understand my approach.
Andrea Leadsom
As I have said to the hon. Gentleman, I think our intentions are clear from words spoken in this Chamber and in the Bill Committee. I will certainly look into the case he mentions, but I do not have the information that he is looking for right now.
Amendments 24 to 46 are all intended to delay the early closure of the RO until 1 March 2017, closing it only one month earlier than the original closure date of 31 March 2017. It is therefore my understanding that the hon. Members who have tabled the amendments want the RO to close to onshore wind only a month earlier than planned, while maintaining the grace period provisions set out by the Government. Clearly, such a change would not meet the objectives of the early closure policy, which I have consistently set out in debates on the Bill and have explained again today. To change the early closure date to 1 March 2017 would go against the intentions of our manifesto commitment, and would be likely to make no reduction to overall deployment or costs under the levy control framework.
I remind hon. Members that those limits have been set for a crucial reason. As my right hon. Friend the Secretary of State set out in a speech in November last year:
“We can only expect bill payers to support low carbon power, as long as costs are controlled. I inherited a department where policy costs on bills had spiralled. Subsidy should be temporary, not part of a permanent business model.”
I remind hon. Members again that the Government have an electoral mandate to deliver on our manifesto commitment to halt the spread of onshore wind, and that is exactly what the clause is intended to do. However, the Government are mindful of the need to protect investor confidence and to take into account the interests of the onshore wind industry. That is why we have set out grace period provisions, which appear in clause 80.
I believe that I have consistently explained that the Government have an obligation to protect consumers from the risk of over-deployment of new onshore wind and rising energy bills. The date changes proposed in the amendments would simply put us back to where we started, providing no protection for consumers and putting us at risk of deploying up to 7.1 GW of additional onshore wind, which is well beyond what the Government have decided is affordable under the levy control framework.
To conclude, I stress the importance of swiftly moving forward with the proposals. I again quote the hon. Member for Coatbridge, Chryston and Bellshill, who said in Committee on this very issue:
“We agree that swift passage of the Bill with clear and consistent RO grace period provisions is needed in order to provide certainty to investors in the onshore wind sector as quickly as possible.”––[Official Report, Energy Public Bill Committee, 2 February 2016; c. 127.]
Clear and consistent provisions are exactly what the Government are attempting to provide, and we need to be able to move forward with the debate to do so.
Callum McCaig
I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
Clause 79
Onshore wind power: closure of renewables obligation on 31 March 2016
Amendment proposed: 24, page 46, line 20, leave out “31 March 2016” and insert “1 March 2017”.— (Dr Whitehead.)
This amendment and amendments 25, 26, 40, 41, 42, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38 and 39 have the effect of closing the Renewables Obligation for onshore wind a month earlier than the original date set out in the Statutory Instrument: Renewables Obligation Closure Order 2014: 2388, rather than a year earlier, as the Bill does in its present form.
Question put, That the amendment be made.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
New clause 6—Emissions trading: United Kingdom carbon account—
In section 27 (net UK carbon account) of the Climate Change Act 2008, after subsection (2) insert—
“(2A) No carbon units deriving from the operation of the EU Emissions Trading System may be credited to or debited from the net United Kingdom carbon account for any period commencing after 31 December 2027.””
New clause 7—Carbon capture and storage strategy for the energy industry—
‘(1) The Secretary of State must—
(a) develop, promote and implement a comprehensive national strategy for carbon capture and storage (CCS) for the energy industry to deliver the emissions reductions required to meet the fifth and subsequent carbon budget, as advised by the committee on climate change;
(b) develop that strategy in consultation with HM Treasury, the Department for Business, Innovation and Skills, the Oil and Gas Authority, the National Infrastructure Commission, energy intensive industries and other relevant stakeholders including the CCS industry; and
(c) have that strategy in place by June 2017 and report to Parliament on the progress of its implementation every three years thereafter.
(2) The strategy provided for by subsection (1) shall, amongst other things, include—
(a) the development of infrastructure for carbon dioxide transport and storage;
(b) a funding strategy for implementation including provision of market signals sufficient to build confidence for private investment in the CCS industry;
(c) a strategy for international co-operation on the development and implementation of relevant technologies;
(d) priorities for such action in the immediate future as may be necessary to allow the orderly and timely development and deployment of CCS after 2020.
(e) a strategy for co-operation through the European Union.”
New clause 8—Decarbonisation target range—
‘(1) Section 1 of the Energy Act 2013 is amended as follows.
(2) Leave out subsection (2) and insert—
“(2) The Secretary of State must by order (“a decarbonisation order”) set a decarbonisation target range, which shall be reviewed annually thereafter.”
(3) Leave out subsection (5) and insert—
“(5) The decarbonisation order shall be made within six months of the adoption of the fifth carbon budget set by virtue of the duty of the Secretary of State under section 4 (2) (b) of the climate Change Act 2008.””
New clause 9—Amendment to Energy Act 2013: Capacity agreements—
After Section 28(4) of the Energy Act 2013, insert—
‘(4A) Electricity capacity regulations introduced by subsection (1) for any fossil fuel generating plant granted 15 year capacity contracts under the capacity agreements established by this section shall be subject to the Emissions Performance Standard as established by Section 57 (2) of this Act.””
New clause 10—Emissions trading: United Kingdom carbon account—
In section 27 (net UK carbon account) of the Climate Change Act 2008, after subsection (3) insert—
‘(3A) In respect of any period commencing after 31 December 2027, the regulations must not make provision for carbon units to be credited to or debited from the net United Kingdom carbon account on the basis of the number of carbon units surrendered by operators of installations in the United Kingdom pursuant to the European Union Emissions Trading Scheme.””
New clause 11—Zero net UK [carbon] emissions—
‘(1) The Climate Change Act 2008 is amended as follows.
(2) After section (3) of the 2008 Act, insert the following—
3A Net UK carbon emissions target: zero emissions year
‘(1) The Secretary of State shall set a date by which net UK emissions must be zero or lower (“the zero emissions year”) by order no later than 12 months from the date on which the Energy Act 2016 comes into force.
(2) It is the duty of the Secretary of State to ensure that the net UK emissions for the zero emissions year and each year thereafter is zero or less.
(3) If an annual statement of UK emissions under Section 16 for a year after the zero emissions year shows that net UK carbon emissions are more than zero, the Secretary of State must, as soon as reasonably practicable lay before Parliament a statement which—
(a) explains why the zero net emissions target has not been met, and
(b) sets out proposals and policies to ensure that the target will be met in subsequent years.
(4) The Secretary of State may by order amend the zero emissions year.
(5) The power in subsection (4) may only be exercised if it appears to the Secretary of State that it is appropriate to do so due to significant developments in—
(a) scientific knowledge about climate change, or
(b) European or international law or policy.
(6) An order under subsections (1) or (4) may only be made by statutory instrument that has been laid in draft before, and approved by a resolution of, each House of Parliament.
(7) Before laying a draft of a statutory instrument under subsection (6) the Secretary of State must obtain, and take into account, the advice of the Committee on Climate Change.
(8) As soon as is reasonably practicable after giving its advice to the Secretary of State, the Committee shall publish its advice in such manner as it considers appropriate.
(9) If an order under subsections (1) or (4) sets or amends the zero emissions year in a way that is different from the recommendation of the Committee under subsection (7), the Secretary of State must lay a statement before Parliament explaining his reasons for that decision.
(10) When the Secretary of State comes to any decision under this section, or the Committee on Climate Change considers its advice in relation to any such decision—
(a) the matters listed in Section 10(2) must, and
(b) other matters may,
be taken into account.”
New clause 12—Strategy for a Just Transition away from fossil fuels—
‘(1) The Secretary of State must develop a comprehensive national strategy for the UK energy sector to move away from fossil fuels and towards 100% renewable energy by 2050, under the framework of a Just Transition outlined in subsection (5)(a).
(2) The strategy must be developed by June 2017 and the Secretary of State must report to Parliament on the progress of its implementation every year thereafter.
(3) The transition must ensure that UK carbon emission reductions make a fair contribution to the goals set out in the 2015 Paris Climate Change Agreement.
(4) The strategy must be developed in consultation with—
(a) energy sector workers,
(b) trade unions,
(c) the Committee on Climate Change,
(d) HM Treasury,
(e) the Department for Business, Innovation and Skills,
(f) the Oil and Gas Authority,
(g) the renewable energy industry,
(h) the National Infrastructure Commission,
(i) Scottish and Welsh Ministers,
(j) civil society organisations, and
(k) other relevant stakeholders.
(5) The strategy must, amongst other things, include—
(a) the adoption of the principles of Just Transition set out by national and international trade unions, including—
(i) full participation and engagement of workers, trades unions and communities most directly affected, and
(ii) training, education and skills policies to enable workers to make the transition to employment in sustainable, low carbon industries,
(b) an assessment of the proportion of existing UK oil and gas reserves that should remain unexploited,
(c) a strategy for redirecting all direct and indirect fossil fuel exploration and production subsidies into low carbon industry; and
(d) cooperation with EU institutions and EU member states to embed the principles of Just Transition at EU level.”
This new clause would require the Secretary of State to develop a strategy for a Just Transition away from fossil fuels and towards a renewable energy future.
New clause 1—Strategy for incentivising competitiveness of UK-registered companies in decommissioning contracts—
‘(1) By June 2017, the Secretary of State must develop a comprehensive strategy for the Department of Energy and Climate Change to incentivise the competitiveness of UK-registered companies in bidding for supply chain contracts associated with the decommissioning of oil and gas infrastructure (the strategy), which shall be reviewed annually thereafter.
(2) In developing the strategy, the Secretary of State must consult—
(a) HM Treasury;
(b) the Department for Business, Innovation and Skills;
(c) the Oil and Gas Authority;
(d) Scottish Ministers, and
(e) any other relevant stakeholders that the Secretary of State thinks appropriate.
(3) The strategy must include, though shall not be restricted to—
(a) an appraisal of tax incentives that can be extended to oil and gas operators to incentivise their use of UK-registered supply chain companies; and
(b) an outline of other appropriate support that can be provided by the Government, or its agencies, to UK-registered companies which express interest in bidding for decommissioning contracts.”
This new clause would compel the Secretary of State to bring forward a strategy for ensuring that UK-registered supply chain companies benefit from decommissioning contracts.
New clause 4—Contract for Difference—
After section 13(3) of the Energy Act 2013 insert—
‘(3A) An allocation round must be held at least once in each year which the carbon intensity of electricity generation in the United Kingdom exceeds 100 grams per kilowatt hour.”
This new clause would compel the Secretary of State to hold a Contract for Difference allocation round at least once in each year that the carbon intensity of electricity generation in the UK exceeds 100g per kilowatt hour.
New clause 5—Amendment to the Petroleum Act 1998: definition of “the principal objective”—
In subsection 9A of the Petroleum Act 1998, leave out subsection (1) and insert—
“(1) The “principal objective” is the objective of maximising the economic return of UK petroleum, while retaining oversight of the decommissioning of oil and gas infrastructure, and securing its reuse for transportation and storage of greenhouse gases, in particular through—
(a) development, construction, deployment and use of equipment used in the petroleum industry (including upstream petroleum infrastructure), and
(b) collaboration among the following persons—
(i) holders of petroleum licences;
(ii) operators under petroleum licences;
(iii) owners of upstream petroleum infrastructure;
(iv) persons planning and carrying out the commissioning of upstream petroleum infrastructure;
(v) owners of offshore installations.””
Government amendments 48 and 49.
Amendment 47, in clause 8, page 6, line 10, at end insert—
“Hierarchy of matters relating to decommissioning
The need to consider the most advantageous use of North Sea infrastructure for the overall benefit of oil and gas extraction prior to the decommissioning of such sites”
To require the OGA to have regard to the need to ensure most advantageous use of North Sea infrastructure for the overall benefit of oil and gas extraction prior to the decommissioning of such sites when exercising its functions.
Government amendment 51.
Callum McCaig
Having moved new clause 3, I shall speak to new clauses 1 and 4—I am rather confused by the ordering—and I shall support the cross-party new clause 10 on behalf of the SNP.
I was struck when, in the earlier debate on the previous group, the right hon. Member for Wokingham (John Redwood), who is no longer in his place, talked about how to find an environmentally sustainable way of getting power from the island of coal in a sea of oil and gas. I take it that he was referring to Great Britain in that regard. There might well be a way of achieving that in an environmentally sustainable way—through carbon capture and storage. My new clause 3 calls on the Government to bring forward a proper, well thought out and extensively consulted on plan and strategy for carbon capture and storage for utilisation in both the energy industry in particular and industry more widely, including energy-intensive industries, which might move offshore if they are not able to consume power in an affordable way that meets our higher environmental standards.
We have talked about the discussion and report from the Energy and Climate Change Select Committee, which referred to the innumerable sudden changes to policy as having an impact on the reputation of the United Kingdom for investor confidence. The decision to withdraw the £1 billion funding available for the CCS competition at the same time as the Secretary of State for Energy and Climate Change was in Paris leading the “high-ambition coalition” on behalf of the country at the Paris talks is perhaps the most grave of the changes.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I agree with the hon. Gentleman. Does he agree with me that the fact that this information was extolled to the City of London and the stock exchange rather than this place on the very same day demonstrates this Government’s real attitude to this place?
Callum McCaig
I very much agree. I remember sitting on this very Bench, looking through the Budget statement and being somewhat relieved that the rumours I had heard about this competition being scrapped did not appear to be in that statement. Lo and behold, however, an announcement was made to the stock market a few moments after the Chancellor had left the Chamber, removing that funding. I understand that no greater certainty was provided to the companies involved in both White Rose and Peterhead.
Philip Boswell
Further to that point, on the very morning of that Budget, I intervened on another Member and asked the Minister to provide assurances that both the Peterhead and the White Rose projects would not be cut, but no answer was forthcoming. There was nothing in the paperwork that day to show that this was going to happen.
Callum McCaig
I agree with my hon. Friend. The fact that different parties have the same essential view not only about the Government’s abysmal handling of this process, but about how to salvage something from the ashes of the carbon capture competition suggests that there is not a huge amount of difference between my new clause and new clause 7, tabled in the names of Labour Front-Bench Members. The main difference—we discussed the issue in Committee—is that our provision includes the devolved Administrations as bodies that should be developing a strategy. I know that the Scottish Government—who, working with DECC, pursued what should have been the second phase of carbon capture and storage at Grangemouth—have high ambitions for the deployment of CCS and share the concerns of many Members here about the way in which the Government have handled this matter.
As for short-sighted decisions, I understand that the White Rose project had substantial European Union funding associated with it. The potential for Peterhead to use carbon capture and storage—or potentially carbon capture and utilisation to create a virtuous cycle for enhanced oil recovery—was there, but that potential has now been lost. The suggestion from the Energy and Climate Change Committee that this will make meeting our climate change commitments all the harder, highlights the need for the strategy that I am proposing.
We have seen that the Government are all over the shop when it comes to CCS. One minute they are for it; another minute they are against it. One minute it is not working; the next minute it is looking promising for the future. These represent severe mixed messages for investor confidence, when we need clarity. If we are to get investment from industry—I hope we do, and I gain the impression that Members of all parties want to see this become a reality in the UK—we need an unequivocal statement from the Government. Then we need an unequivocal strategy, which is what I am calling for today.
There is a tie-in between the utilisation of the infrastructure in the North sea and what can be deployed for CCS. I believe that it is also incumbent on the Government to bring forward a strategy for decommissioning, which is the subject of my new clause 1. Decommissioning is one of the sad realities of the North sea that is going to happen. We all, or at least the majority of us, hope that this will happen at some time in the future. The Government can take steps to deal with that. The industry has called for tax cuts, and loan guarantees for oil and gas companies are also a key part of ensuring that decommissioning happens as far in the future as possible. It is, however, going to come.
Decommissioning provides a huge opportunity, when there is upwards of £30 billion-worth of work to be done. A large part of the bill will be paid back by reimbursing the companies for previous tax paid. They have built up the tax to offset against decommissioning costs. Essentially, as we go forward, the Treasury will be footing the bill for a large part of decommissioning.
It strikes me and my party that we need to ensure that the greatest possible benefit comes to these shores. The east coast of this island is ripe with opportunities for ports and the like. Frankly, they should be champing at the bit to see the work come ashore. I believe that the Shell platform at Brent is coming to Hartlepool. That is a strong commitment and an investment in infrastructure, but also in skills.
Tom Blenkinsop
The hon. Gentleman is spot on about Teesport work at Hartlepool and the decommissioning of rigs. Does he agree, however, that including the decommissioning of rigs also provides potential for extra surveys of where rigs are currently based to investigate syngas potential? The infrastructure is already there for looking at sub-sea coal, for example.
Callum McCaig
A large number of things need to be done before we commence wholesale decommissioning, and this includes the widest possible consideration of what the infrastructure could be used for. The proposals and possibilities are perhaps not endless, but they are numerous. Whether we are talking about carbon capture, storage of hydrogen or looking for further hydrocarbon resources that are yet to be discovered, there are vast possibilities. While the infrastructure is there, the opportunities for doing other things with it will remain; once it is gone, the opportunity is gone. The Oil and Gas Authority—which a large part of this Bill deals with, although not the aspects we are debating at this precise moment—has done a lot of work on that and is to be commended on that development.
Decommissioning is a reality. If we are smart collectively —if we can line up the ducks, in terms of the supply chain, skills and investment in the ports and suchlike—there could be a massive windfall. We have considerable leverage, as funders of a large part of this work, through tax receipts offset against previous earnings, and we should be looking to maximise that economic potential, in the same way as we were looking to maximise the economic recovery of the North sea.
Philip Boswell
On the point about that opportunity, does my hon. Friend agree that decommissioning goes hand in hand with the critical assessment, evaluation and management of the infrastructure that surrounds these isles to enable access to marginal fields, which would not otherwise be available, were the critical infrastructure not kept in place, as part of an overall plan with a long-term vision for the energy supplies of these isles?
Callum McCaig
I agree with my hon. Friend, and that is something the Oil and Gas Authority is set to look at. It will also be hugely beneficial to the oil and gas industry, so that work needs to take place. We need to be aware of what opportunities exist, but we also need to remember that this Government have a duty to support the oil and gas industry at this time, so I reiterate the calls made by me and others in my party to see substantial movement in Wednesday’sBudget.
It might seem somewhat ironic to some that I am moving from how we best exploit the North sea to how we best tackle climate change but, as I have said a number of times in this place, because we have been a major producer and user of hydrocarbons, there is a moral duty on us to do what we can. I note new clause 11, standing in the name of the right hon. Member for Doncaster North (Edward Miliband), among others, which is not something I would be ready to support, although I wholeheartedly endorse the principle. This is something we need to do, but I would see new clauses 4, 8 and 10—which deal more closely with the short term—plus the issue around carbon capture and storage, as being the correct pathway.
It strikes me that we are very much at a crossroads when it comes to the deployment of technology. It is likely—or, I am hopeful—that a zero-carbon future can be achieved, but the pathway to that is not clear to me, and I do not think it would be clear to the Government if they were to commence that work now. I would rather see things that are in the gift of the Government at this precise moment in time—if they were to focus on them, to deliver on them and act sooner rather than later—because the more work we do now, the less we have to do in future. It is about timing and priorities. The concept is to be wholeheartedly commended and supported, but I am not quite sure I am there when it comes to prioritising it now.
Finally, I would like to talk about new clause 10, to which I was happy to add my support—I imagine that a number of others who also put their name to it will talk about it in greater detail. Our carbon accounting mechanisms need to be brought into line with what is happening and going to happen. The fact that we can get to the stage where upwards of half our emissions do not properly factor into our carbon accounting means that we cannot set about achieving what we must in an open and honest way. Following on from Paris, numerous people have said that we need to get serious about this. If we are to get serious about taking the steps we need to take to make our contribution to tackling climate change, we absolutely have to be clear about what we are counting, which is the basics of this. The bean counting of climate change might not seem particularly appealing to some, but it is fundamental. If we do not know what the emissions are and we are not counting them properly, how can we tackle the challenge of reducing them properly?
Mr Alistair Carmichael
New clauses 5 and 6 stand in my name, but they are covered by other new clauses, so I do not intend to press either of them to a vote; the other new clauses lead in broadly the same direction.
First, let me deal with carbon capture and storage. When I intervened on the hon. Member for Southampton, Test (Dr Whitehead), the term I used in relation to the Government’s decision to pull the funding from the project was “irrational”. I hope I was not unkind to the Government in saying that, but if it was not irrational it must have been ideological. In any event, it certainly did not make any sense. A competition was running and the point at which they withdrew the funding was significant. Had they allowed the competition to run a little longer, it might have reached the conclusion that there would be no more money to be spent—who knows? We will never know now. The decision was irrational, because of the impact it will have on getting our own CCS sector up and running in this country. As he said, the work on this is being done elsewhere and inevitably we will end up playing catch up and importing expertise that could have been generated here. Who will ever suggest that a shareholder put money into CCS in this country? This is the ultimate failure of evidence-based policy. Notwithstanding the provisions on the amendment paper tonight, I now wonder whether it is worth calling for any more rethinks, because even if we got new Government commitment, who on earth is going to believe it, given events thus far?
The hon. Member for Aberdeen South (Callum McCaig) made the point that there is a synergy between CCS and the issues relating to decommissioning in the North sea. For some years, the technology used in CCS has been routinely and effectively used in the North sea in enhanced oil recovery; gas has been used to extract more oil from other parts of the existing substantial infrastructure network. It gladdens my heart that the Oil and Gas Authority goes from strength to strength, as I have followed the project closely from its inception, from the work of the Wood commission and through the creation of the shadow authority. To get the maximum benefit, it will be necessary for the OGA to get on, use the powers that we have already given it and those we give it in this Bill, and come forward with the strategy that will make these things happen.
Of course, for there to be a strategy there will first have to be survival, and the very real danger at the moment is that the age of the assets in the North sea, especially those in the north North sea, will mean that the critical mass may tip over and there is then a rush to decommissioning. Not only could any such rush be bad for the economy of the north-east of Scotland, and the Northern Isles in particular, but it would be tragic if it meant that the infrastructure was removed and the opportunities to develop CCS at some future date were therefore then lost.
Callum McCaig
I made the point about a large part of the tax liability for decommissioning falling on the Treasury. If there is the rush to decommissioning that the right hon. Gentleman describes, the Chancellor will find it more difficult to meet his fiscal target, as he will have to hand out the cash. Does the right hon. Gentleman therefore agree that there needs to be proper support from Government to delay that?
Mr Carmichael
There absolutely has to be that support. We have seen the tax intake from the North sea fall off a cliff. I cannot recall the exact figures, but I seem to recall that about £20 billion is set aside to deal with this rush to decommissioning, if it occurs. That is a future liability at the moment, but if the liability were to appear on the left of the sheet, the Treasury would be dealing with a double-whammy; it would not only be losing the income, but it would suddenly be liable for expenditure at an earlier stage. The real significant event in that regard will take place not tonight but on Wednesday, when the Chancellor comes forward with his Budget. The Minister and the Secretary of State will doubtless have heard the measured and well-thought-out requests from Oil & Gas UK, and I trust that even at this stage they will be using all their influence in government to ensure that as many of these requests as possible are delivered when the Chancellor stands up.
The right hon. Member for Doncaster North (Edward Miliband) spoke to his new clause 11, and he has been absolutely right in how he has brought it forward. It is measured and it future-proofs the commitments. Given the substantial commitment the Secretary of State showed in relation to the Paris negotiations, it would be a suitable way for this House to give that commitment some legislative heft.
Andrea Leadsom
The right hon. Gentleman misses the point. The OGA is going to have an enormous brief. The point about its principal objective being to maximise the economic recovery is that that would focus its efforts on the long-term sustainability of the North sea and not what the other House tried to put in place, which is related to short-termism and trying to maximise profitability and so on. That would be counter to the interests of jobs and growth in his constituency and others. Removing the OGA’s focus on that principal objective seriously risks weakening its ability to provide support to an industry that is urgently in need of it, and the potential knock-on effect would be significant. Doing so would risk the premature decommissioning of key North sea infrastructure and would seriously jeopardise vital skills and experience, including those that could help to promote the longevity of the industry through carbon storage projects. From that perspective, the amendment is self-defeating. Furthermore, the “Maximising the Economic Recovery” UK strategy has now been published and is currently before Parliament. The amendment would undo the significant amount of work that has been undertaken with industry and would require the OGA to revise its MER UK strategy to take into account the expansion in the principal objective.
As the hon. Member for Aberdeen South has mentioned on several occasions, it is mission critical that the OGA maintains a “laser-like focus” on maximising economic recovery above all else. Without such a focus, we risk conflicting the OGA—setting it up to fail in its crucial mission to protect our domestic energy mix and to support hundreds of thousands of jobs. That is not what is best for the UK continental shelf now or in future.
Callum McCaig
I thank the Minister for drawing attention to that. It is absolutely fundamental that the OGA has that laser-like focus. It is also fundamental for the industry that the Chancellor has that laser-like focus. I reiterate to the Minister the need for her to use her good offices to make sure the industry gets the support it needs on Wednesday.
Andrea Leadsom
I am grateful to the hon. Gentleman for that. He will be aware that the Chancellor and the Prime Minister have looked carefully at the matter, so I hope that he will be pleased. I assure him that his interests and the interests of the UK continental shelf are being carefully considered. I hope that the right hon. Member for Orkney and Shetland will be content not to press the new clause to a vote.
Finally—hon. Members will be pleased to hear that—I turn to amendment 47, which was tabled by the hon. Member for Wigan and others. The amendment would oblige the OGA to consider the most advantageous use of North sea infrastructure for the overall benefit of oil and gas extraction prior to the decommissioning of such sites. I am delighted to note the support across the House for the measures to establish the OGA and give it the powers needed to maximise economic recovery. The impact of the fall in oil prices on industry makes that even more critical.
Although we are taking urgent steps to stimulate investment in exploration, it is equally important to the overall viability of the North sea that we make the best use of infrastructure in order to mitigate the risks of premature decommissioning. That requires a holistic approach in which operators, licence holders and infra- structure owners collaborate to ensure the maximum economic recovery of petroleum from the UK continental shelf. That is precisely provided by the OGA’s principal objective set out in section 9A of the Petroleum Act 1998.
The strategy to maximise economic recovery further addresses that issue. It includes duties to plan, commission and maintain infrastructure in a way that meets the optimum configuration for maximising the value of economically recoverable petroleum, taking into account the operational needs of others. The strategy and the measures in the Bill ensure that before commencing the decommissioning of any infrastructure in relevant UK waters, the owners of the infrastructure and the OGA must ensure that all viable options for its continued use have been suitably explored. The OGA is already working to support a stable and sustainable decommissioning framework focused on improving late-life management. The OGA will publish its decommissioning sector strategy early in the summer. I hope that hon. Members have found my explanation reassuring and will be content not to press the amendment to a vote.
Callum McCaig
I have learned a lot from this process, and I thank my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Philip Boswell) for helping me to work things out as we have gone along. This has been an interesting process, but I am happy that I will not have to go through it for the first time again.
Throughout the process, as is natural in a political environment, we have focused on that which divides us, and there have been significant and, in some cases, profound divisions on aspects of this Bill. I do not wish to go back over that at this stage, because the discussions we have had repeatedly about onshore wind are a matter of record. I am aware that the Bill will go back to the House of Lords, so I make a final plea to the Secretary of State to look once again at grace periods. We accept that the Government have a mandate to do this, but we disagree with how it is being done and we ask that it be done in the best way possible. If there are concessions to be made in the Lords, please make them and take the possible benefits into account.
We have had some good suggestions and individual contributions from Members from all parts of the House. The Government have said that they are prepared to listen to a number of those suggestions. In fact, generally speaking, there has been a spirit of open-mindedness. The view was expressed that now is not the time for some measures to be put into practice, but the time will come soon, so I hope that we will continue to see that open-mindedness to suggestions, particularly to those from my party about making the most of the opportunities arising from decommissioning. We need to create a stable and sensible platform to ensure that the United Kingdom can develop a carbon capture and storage industry.
I wish to focus on one part of the debate that has received little attention, but which, to my mind, is the most important, and that is the creation of the Oil and Gas Authority. Broadly speaking, there has been unanimous support for that across the House, which is impressive in and of itself, but what is perhaps more impressive is the fact that in Aberdeen and in the north-east of Scotland—and probably the oil and gas industry the length and breadth of the United Kingdom—the Oil and Gas Authority is seen as the correct body with the correct tools at its disposal. That will be even more so once this Bill has completed its passage, as the authority will be properly equipped.
There is also tremendous support for Andy Samuel and his team in the work that they are doing, and I wish to pay tribute to him and all his staff for their endeavours. The OGA was envisaged in very different times. The role that Andy Samuel and his team have taken on was not what they expected, and they have taken to it impressively with sheer determination. They have taken the industry with them on a journey that none of them was expecting. The work that they have done, which was not really in their remit, has fostered the collaborative spirit that the industry needs if it is to ride out this time, and that is to be commended. In large part, this industry will survive if those in it work constructively together and stop some of the needless competition that adds unnecessarily to cost merely for the sake of differentiating themselves from their competitors.
The industry was rife with daft practices, by which I mean unnecessary duplication. By bringing people together and facilitating the exchange of ideas in a constructive way, the OGA has a major part to play. It is interesting that it has such support in the House, but it also has the support of the trade unions and the large and small players in the industry, and that is something that needs to continue. I wish the OGA well in its efforts.
We must recognise that the OGA was formed as part of the Wood review, which has also had cross-party support, but both come from different times. The Wood review was commissioned and completed at a time when oil was trading at above $100 a barrel. We cannot expect the creation and the formalisation of the OGA’s powers to be enough to solve the difficulties of the oil and gas industry at this moment in time.
I welcome the comments from the right hon. Member for Wokingham (John Redwood) about the need for fiscal concessions. [Interruption.] I see that the hon. Member for Waveney (Peter Aldous), chair of the all-party group on offshore oil and gas, is seeking to intervene on that point, and I would expect nothing less from him than to be pushing for that too. This is critical. The Oil and Gas Authority will do what it can. Industry is doing what it can. A 40% reduction in costs has been achieved, which is impressive. More needs to be done, but the one thing that has not moved on since last May are the changes to taxation. The suggestion was welcome then, but we must recognise that that was a different time. Oil was selling at about $60 a barrel then as opposed to $40 a barrel now. These are changing times. The oil price has been lower and lower for longer and longer than anyone expected, and to expect the taxation regime from the time of super-profits to work for this basin at this time would be naive at best.
In the Budget on Wednesday the Chancellor will have the opportunity to provide the oil and gas industry with the shot in the arm that it requires. That opportunity cannot be missed.