Making Britain a Clean Energy Superpower

Caroline Lucas Excerpts

Thursday 9th November 2023 Commons Chamber

[Claire Coutinho]

I will make some progress.

Oil and gas is an industry that supports 200,000 jobs and is expected to provide £50 billion of tax revenue in the next five years. That is the people and the money that the Labour party would send abroad, because it is not against oil and gas jobs, just against British oil and gas jobs—and for what? To increase our reliance on imports from foreign regimes with higher emissions and to send away billions of pounds of investment in carbon capture and hydrogen schemes. Opposition Members support those technologies but would rather the taxpayer footed the bill for them.

With our ambitions on net zero and for our energy security, it is critical that we make the most of our own home-grown advantages, but Labour and the SNP’s policy means jobs abroad, investment lost and energy security sabotaged. You do not have to take my word for it, Madam Deputy Speaker—the unions are sounding the alarm. It has been said that Labour “does not… understand energy”, is self-harming and “naive”, and that its policies would leave our oil and gas communities decimated, turning our oil and gas workers into the “coalminers of our generation”. Those are not my words but those of the GMB and Unite. We want to keep jobs and manufacturing here, but Labour has not understood that we needs natural gas supplies. Those are the words of industry. The important truth is that we know we need to transition to clean energy, but it is the same people, communities and expertise that will unlock the green transition. The skills of those working on oil and gas rigs today are the same skills that we will need for the offshore wind jobs of tomorrow.

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

I am losing track of the number of times I have pointed out in this Chamber that just because we extract oil and gas from the North sea does not mean that it gets used here. It gets sold on global markets to the highest bidders, as we have said 100 times.

When it comes to annual licensing rounds, which the Secretary of State is flagging up, is it not the case that the North Sea Transition Authority was already licensing in 2016, 2017, 2018 and 2019? It only stopped because of the climate compatibility checkpoint. The tests that she sets out are not worth the paper that they are written on; she knows as well as we do that they are impossible not to meet, because they are set so low. Will she stop pretending that the Bill is serious, and just admit that it is nothing more than a gimmick?

[Claire Coutinho]

It is not a gimmick to protect 200,000 jobs. It is not a gimmick to protect the investment that will go into the cleaner energies of the future. On the hon. Lady’s first point, 50% for the gas supply that we use here comes from domestic production.

--- Later in debate ---

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

It was my honour to attend the state opening of Parliament this week, representing the people of Banff and Buchan, particularly on this occasion of the first King’s Speech in over 70 years. I join others across the House in thanking His Majesty King Charles III for delivering the Gracious Speech.

In general terms, the King’s Speech shows that this Government are making the necessary long-term decisions to get this country on the right path for the future. One of the criticisms I am sure we all receive across the House is that politicians often focus too much on short-term outcomes, so this long-term approach is to be welcomed. This bright future will be delivered by growing the economy, strengthening society, keeping people safe and promoting our national interests.

The topic of today’s debate is making Britain a clean energy superpower, and it is on growing the economy and particularly the subject of energy security that I would like to focus. That will come as no surprise to most people in this House, as I have spoken at length in this place on the combined subjects of energy security and net zero even before that became the name of the Department headed by my right hon. Friend the Member for East Surrey (Claire Coutinho). The main thrust of my contributions has been, I believe, to reinforce the critical role played by oil and gas companies; their workers with their skills and expertise; the technology, supply chains and service companies; and, yes, the capital that those companies bring in making this country’s energy transition a success. I recognise that this appears counterintuitive to some across the House, but delivering on our energy security objectives and on our energy transition objectives are not mutually exclusive goals.

I therefore welcome the Offshore Petroleum Licensing Bill that was introduced this week. While this country continues to scale up our domestic, renewable and low-carbon sources of energy, data from the Climate Change Committee tells us that we are currently 75% dependent on oil and gas for our energy needs. As the right hon. Member for Doncaster North (Edward Miliband)—who is no longer in his place—mentioned earlier, that figure is not just for electricity generation, but includes transportation and heat. It was the Climate Change Committee that pushed for the very ambitious target of the UK getting to net zero emissions by 2050. That target was put into law by this Conservative Government—in fact, by my right hon. Friend the Member for Kingswood (Chris Skidmore)—making the UK the first major economy anywhere in the world to do so.

That data from the Climate Change Committee also tells us that by 2050, when we reach net zero, this country is predicted to still be at least 20% dependent on oil and gas. As has already been established, we have decarbonised faster than any other G7 country compared with 1990 levels: we have reduced emissions by almost 50%, with a target to reach a 68% reduction by 2030. We have almost completely transitioned away from coal, which provided 70% of our power generation in 1990 but provides less than 2% today, and the deadline for zero unabated coal power has been brought forward to 2024—just next year.

However, we have some way to go if we are to get to net zero. I make no apologies for saying this: we absolutely must continue to develop and install more and more renewable, low-carbon and sustainable sources of energy to generate the electricity and provide the heat and transport that our economy needs. We will continue to deliver more wind, solar, carbon capture and storage, hydrogen and other technologies to actively reduce the demand for oil and gas. We have come a long way, but we are not there yet. We need to get from where we are today to where we need to be in the future through the energy transition that we have already embarked upon—an transition that the oil and gas industry has been embarked upon for decades.

To give an example, we need look no further than Peterhead power station in my constituency. That power station came onstream in 1980, and is today the only dispatchable thermal power station north of Leeds. Originally designed to run on fuel oil, which already made it cleaner than coal-powered stations elsewhere in the country, it was operating fully on natural gas by the 1990s. In the 2000s, combined cycle gas turbine technology was installed, which made the station even more efficient. It is now towards the end of its life, and a new power station is planned to be built at the same site. With roughly two thirds of the capacity of the current power station, but linked to the Acorn carbon capture project at the nearby St Fergus terminal just up the coast, that new facility will generate power that is at least 95% emission-free. As many in the House will know, Acorn forms part of the Scottish CCS cluster, which will help decarbonise industrial processes at the Mossmorran liquefied natural gas plant in Fife and the petrochemical complex at Grangemouth in the central belt, among others.

As I have said, the energy transition is already happening, not just within the hydrocarbon production industry but by utilising the skills, technology and supply chains of that industry. I welcome this Government’s recognition of the vital role that oil and gas companies, and their more than 200,000 workers across the UK, will have to play in that energy transition.

The Offshore Petroleum Licensing Bill will require the North Sea Transition Authority to run an annual process inviting applications for new production licences in the UK continental shelf. A licensing round would take place only if the UK was projected to import more oil and gas from abroad than it produces domestically—that is, to continue being a net importer. The carbon emissions linked to UK gas production would also need to be lower than the equivalent emissions from imported liquefied natural gas. Those two tests are already included in the Government’s climate tests for new licences, known as the climate compatibility checkpoint. The Bill would make the tests legally binding.

I have heard some Members say, including today—in fact, I think it is the official Opposition’s policy, or at least it has been their policy—that not only should we not award any new production licences, but we should simply keep producing from the wells we have. That shows a staggering lack of understanding of how oil and gas reservoirs work. According to Offshore Energies UK, the trade body for the offshore energies industry,

“There are currently 284 active oil and gas fields in the North Sea and by 2030 around 180 of those will have ceased production due to natural decline.”

OEUK has warned that without fresh investment, by 2030 the UK will be reliant on oil and gas imports not for 50% of its needs, as it is today, but for 80%. As I have said, more than 200,000 jobs depend on the continuity of North sea energy companies. That workforce has developed world-leading specialist skills since oil and gas production from the UKCS began in the 1970s. About 90% of those workers have skills that can be readily transferred to renewable energy production, and in the growing carbon capture, utilisation and storage sector that figure is probably closer to 100%.

To recap, why does the UK need more oil and gas licences? Data from the NSTA shows that the UK replaced only 3% of production with new reserves in 2022, meaning that only one new barrel was invested in for every 33 barrels produced today. The UK is expected to close production from 20 fields this year, while only two new fields will start producing, and for every oil and gas well drilled, around three are closed. Even with an increase in new wells, we will not be producing more oil and gas; even in the most optimistic projections, with new oil and gas, production is predicted to continue to decline by 7% a year. Let me repeat that: new oil and gas does not mean more oil and gas, but we do need to maximise the amount of oil and gas we get from the UKCS for as long as we need it. And need it we will —need it we do!

As I said earlier, as we grow our capacity for renewable, low-carbon and sustainable forms of energy, our demand for oil and gas is set to decline, from 75% today to 20% in 2050. As such, if we need oil and gas, it makes sense at the most basic level of understanding that we should produce it as locally as we can. The carbon footprint of importing liquified natural gas, for example, can be anything between two and five times that of domestically produced gas.

[Caroline Lucas]

What about Norway?

[David Duguid]

Norway is the two. Actually, it is broadly equivalent, but apart from Norway, any gas coming in from overseas has between two and five times the carbon footprint. New oil and gas capacity will reduce exposure to global instability—the kind of instability that we saw when Russia invaded Ukraine. This Bill means that we can reach net zero without unduly burdening families and businesses. Data from the North Sea Transition Authority and the Climate Change Committee tells us that if we produce as much oil and gas from the new wells as we can, that will still merely slow the decline in production. Even with an optimistic 7% year-on-year decline—I mean optimistic from a producer’s point of view—that decline is faster than the average global decline needed to align with the Intergovernmental Panel on Climate Change’s 1.5°C pathway.

Finally, if we follow the SNP’s presumption against new oil and gas or Labour’s Just Stop Oil approach and shut down this vital industry too soon, we will not see a massive transfer of workers to the renewables sector, as is predicted. We will not even see a bunch of unemployed oil and gas workers; we will see a massive exodus of those oil and gas workers, going where the oil and gas industry is being promoted.

--- Later in debate ---

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

I would like to start by saying what I think we can all clearly see: that the Offshore Petroleum Licensing Bill announced in the Gracious Speech is no more than a cheap and divisive gimmick. It is nothing but a last-ditch attempt to boost the Prime Minister’s ailing poll ratings and simultaneously prop up the dying oil and gas industry. It is a deeply dangerous attempt at that, because undermining the hard-won climate consensus for short-term electoral point scoring is simply reckless and threatens the progress that all of us in this House have worked so hard to achieve.

In reality, the Bill will make no difference at all. It will require the North Sea Transition Authority to run an annual process of inviting applications for new production licences. However, as the Minister well knows, the NSTA was already holding annual licensing rounds—most recently in 2016, 2017, 2018 and 2019. This was only paused in 2020 when it said that it would await the so-called climate compatibility checkpoint before opening further rounds. Now that the checkpoint is in operation, we can expect the NSTA to resume regular licensing rounds, not least because it has the obscene legal duty to “maximise economic recovery” of petroleum from the North sea.

Instead of adding more obsolete and outdated legislation to our statute book, the Government should be bringing our laws up to date and ensuring that they help, rather than hinder, our transition to a zero-carbon society, especially when this embarrassment of a Bill will do absolutely nothing, as so many hon. Members have said, to help those struggling households facing energy bills that are double what they were two years ago, with a staggering 6 million households in fuel poverty as we head into the winter. Indeed, it was the Secretary of State herself who let the cat out of the bag earlier this week by almost immediately contradicting the Prime Minister’s claim that new licences would help to reduce bills by admitting, as we have heard, that

“it wouldn’t necessarily bring energy bills down, that’s not what we’re saying.”

Even the Prime Minister’s closest allies cannot stand by his falsehoods, and it is no wonder. Despite the Prime Minister’s failed attempts to present this legislation as “benefiting families”, the truth is that the only people it will help are the fossil fuel companies that pocket the profits, because any oil and gas that is extracted will be owned by private companies and sold on the global markets to the highest bidder—I really do not understand what is so difficult about getting one’s head around that—and because

“more U.K. production wouldn’t reduce the global price of gas.”

Those are not my words, but those of Tory party chairman and former Energy Minister, the right hon. Member for Chelsea and Fulham (Greg Hands).

If the Government genuinely cared about reducing households’ costs, they would look to urgently decouple the price of electricity from expensive gas. If they genuinely cared about people’s bills, they would work to get off costly fossil fuels altogether, including by bringing forward a much-needed and long-delayed nationwide, street by street, local authority-led energy efficiency programme to upgrade the UK’s cold and leaky homes. If the consequences were not so dreadful, the Prime Minister’s claim that his party is saving British families money would be frankly laughable, because the Climate Change Committee itself has been crystal clear that the callous decision to scrap the upgrade to the minimum energy efficiency standards for private rented homes

“will lead to higher household energy bills”.

In fact, at current prices, tenants of upgraded homes would stand to save over £300 a year, and would still save about £250 at so-called normal prices. What we have is an energy affordability crisis, not an energy supply crisis, so the Government’s decision to double down on the very thing that is driving high energy bills is not just negligent, but positively absurd.

Let me turn to some of the Government’s other misrepresentations. It is exasperating that, despite being told time and again that new oil and gas extracted from the North sea will not improve the UK’s energy security, Ministers continue to rehearse the same old tired line, with the Prime Minister once again pointing to energy security in Tuesday’s debate. Let me remind the Minister again why new licences will not deliver on that goal. First, 70% of the remaining North sea reserves are oil, not gas, the majority of which will be put in tankers and exported overseas because it is not suitable for UK refineries. Secondly, the hundreds of licences that have been issued already in the 13 years under Conservative Governments have provided the UK with a grand total of 16 days’ worth of gas, half of which was exported to the Netherlands. Thirdly, the NSTA has itself confirmed that new licences would only make a difference to gas production “around the edges”, given the age and geology of the basin. As I have said, the best solution to volatile gas prices is to reduce our dependence on gas altogether, not to redouble it.

When the Prime Minister announced this Bill on Tuesday, he emphasised its importance in

“supporting hundreds of thousands of British jobs.”—[Official Report, 7 November 2023; Vol. 740, c. 20.]

I very much share his concern for workers in the North sea, but the reality is that, while the Government have awarded more than 400 new licences in the last decade, over 200,000 jobs have been lost in the sector over that same time period, because—I say it again—the North sea is a declining basin. So may I urge Ministers to stop playing politics, and instead get on with delivering a proper just transition for workers and communities, alongside unleashing our abundant renewables to create good, well-paid green jobs for the long term?

May I also draw Ministers’ attention to the words of Fatih Birol, head of the International Energy Agency, who recently said that those expanding oil and gas production could be

“taking very unhealthy, unwise economic and climate risks”.

While they may profess the economic benefits of new oil and gas, we should not ignore the risk of stranded assets, as Mr Birol suggests, which it is estimated could exceed $1 trillion globally, nor the Office for Budget Responsibility’s warning that continuing to rely on gas at our current levels could cost more than double the public investment required for the transition to net zero.

Finally, it was utterly bizarre to hear the Secretary of State say earlier this week and again today that the tax revenues from future oil and gas production, which may not materialise for decades, could be invested in renewables. Why not just invest in renewables in the first place, and do it now?

[Hon. Members]

We are!

[Caroline Lucas]

No, you are not. From a sedentary position, Ministers say, “We are”, but I would draw their attention to the last round for offshore wind. Tell us again how much that delivered? It was a big round zero —so let us be a little bit serious about this issue.

Moving to the specifics of the Bill, the Government’s proposed tests are simply not worth the paper they are written on. These tests are meant to ensure that a new licensing round supports the delivery of net zero, if indeed such a thing were possible with a new round. Let us look at the tests. The net importer test is supposed to ensure that the UK remains a net importer of both oil and gas, which clearly does not relate to the impact of oil and gas on our climate at all.

The carbon intensity test is to ensure that the average carbon intensity of domestic gas is lower than the average carbon intensity of imported liquefied natural gas. It is profoundly frustrating that the Government continue to point to LNG, the dirtiest form of gas imports, while ignoring the fact that more than half of our gas imports come via a pipeline from Norway, where gas production is half as polluting as in the UK. Worse, these tests ignore the fact that new oil and gas production can never be compatible with our climate targets.

The Climate Change Committee itself observed earlier this year:

“Expansion of fossil fuel production is not in line with Net Zero.”

Indeed, it went on to spell out:

“The UK will continue to need some oil and gas until it reaches Net Zero, but this does not in itself justify the development of new North Sea fields.”

I know the Minister may say that what they are proposing is not an expansion and that even with continued licensing, as we have heard, production from the UK continental shelf is projected to decline at 7% annually, while not proceeding with new licences increases reliance on imported LNG. Yet that thinking implies that this new production in the UK will replace expansion elsewhere, and we know that that is simply not the case.

However much the Government choose to ignore our climate reality, the truth is that there is already far more coal, oil and gas in existing developments than can be safely burnt if we, our children and our grandchildren are to have any hope of a liveable future. Indeed, I draw their attention the latest UN production gap report, which was published just yesterday. It revealed very plainly, as I say, that Governments already plan to produce more than double the amount of fossil fuels in 2030 than will be consistent with limiting heating to 1.5°C.

I do wish the Government would end the misinformation that they continue to promulgate. Instead, would the Minister confirm if these tests will be replacing the climate compatibility checkpoint, which is marginally more robust despite abysmally failing to take account of scope 3 emissions—in other words, those produced when the oil and gas is actually burnt, rather than just the extraction emissions—and if so, will she admit that this is a further weakening of our climate commitments, and heed the advice of the Climate Change Committee and halt this legislation all together?

Will Ministers also stop Rosebank, which was cynically approved during conference recess, when there was no opportunity for parliamentary scrutiny? The project is no less than a climate crime and would leave the UK’s climate record in tatters. At nearly 500 million barrels of oil and gas, this development is enormous—triple the size of neighbouring Cambo. If its contents were to be burned, they would produce over 200 million tonnes of CO₂; that is more than the combined annual CO₂ emissions of all 28 low-income countries in the world, which together are home to 700 million people. That is not to mention the fact that the British public would carry almost all the costs of developing Rosebank, thanks to the Government’s generous subsidy regime, which would hand Equinor over £3 billion in tax breaks, all while Equinor pockets the profit. In what world could that ever be justified, let alone in the context of the climate and cost of living crises?

Let us remind ourselves that this Bill has nothing to do with protecting households, and everything to do with populism and division. It is just part of the Government’s cynical attempt to stoke yet another culture war by falsely pitting meeting our climate targets against the cost of living scandal, rather than taking steps to address the very real concerns that families up and down this country face. Instead, we have this pitiful Bill, which will do nothing to help anyone except the fossil fuel companies.

Why are the Government not delivering the future we know is possible by, for example, bringing in a green new deal Bill to kick start the transformation we need: a future in which everyone has a warm and comfortable home to live in and the scourge of fuel poverty is eliminated; a future where everyone has access to good green jobs and a proper just transition has been delivered for workers and communities; a future that is powered by cheap and clean renewables, rather than the fossil fuels which are driving the climate crisis; a future in which the Government have responded to the urgency of the climate and ecological emergency, as we know the public are crying out for them to do? It is entirely possible to deliver this future, yet what has been made painfully clear by this King’s Speech is that this Government are neither capable nor willing to do it. We are out of time for our country and our climate. We need a general election now.