Energy Bill [Lords]
Debate between Callum McCaig and Tom Blenkinsop
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.
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.