Oral Answers to Questions
David Duguid Excerpts(2 months ago)
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Graham Stuart
The hon. Lady should, alongside us, celebrate the £500 million that the Government are contributing as part of an overall £1.25 billion investment in the modernisation of steel production at Port Talbot through, for instance, the electric arc furnace. Government and industry will also invest £100 million in skills to ensure that there are thousands of jobs for the future, and that we reduce emissions as well.
David Duguid (Banff and Buchan) (Con)
Will my hon. Friend reaffirm the Government’s commitment to develop four operational CCUS clusters, including Acorn in my constituency, by the end of the decade? Will my colleagues in the Department for Energy Security and Net Zero make representations to His Majesty’s Treasury to bring forward the financial investment decisions at the soonest opportunity?
Graham Stuart
I am grateful to my hon. Friend, and he is absolutely right: CCUS has such an important role, and we are committed to those four clusters. As we announced in March last year, we have delivered £20 billion of investment to make sure that we carry on with the transformation and decarbonisation of this country that was so woefully lacking when we took power in 2010.
Offshore Petroleum Licensing Bill
David Duguid ExcerptsTuesday 20th February 2024
(2 months, 1 week ago)
Commons ChamberRead Full debate Offshore Petroleum Licensing Bill 2023-24 View all Offshore Petroleum Licensing Bill 2023-24 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 20 February 2024 - (20 Feb 2024)
Dr Whitehead
The proposition before us today is for mandatory licence rounds in a declining North sea field, which would make no difference in the long term to the total amount of gas that we get out of the North sea, as everybody knows. It would instead put us firmly on the back foot as far as international climate change discussions are concerned. That is the key issue that we need to address this afternoon.
David Duguid (Banff and Buchan) (Con)
Following on from the question from my right hon. Friend the Member for Wokingham (John Redwood), is it therefore Labour’s position not to allow any new oil and gas licences in the future, if Labour were to come into power?
Dr Whitehead
It is Labour’s position that we do not wish to see new energy exploration licences issued for the future, but that does not mean that the North sea will not continue in production over a long period of time and provide a substantial amount of oil and gas for our domestic market.
Our first amendments, 17 and 18, would introduce a new test that would safeguard the legally binding commitments that the UK and all other nations made in the Paris agreement and have reaffirmed ever since. Every credible independent analysis—the Intergovernmental Panel on Climate Change, the International Energy Agency, the Climate Change Committee—shows that new exploration licences are not compatible with limiting warming and avoiding the worst of the devastating impact that climate change will have, and is having, around the world and here in the UK.
The test that we have put in amendments 17 and 18 is possible if we have achieved or are achieving our climate change goals internationally. Amendment 18 states:
“The climate change test is met in relation to a relevant year if the latest reports of the Intergovernmental Panel on Climate Change on the mitigation of climate change find that the granting of additional seaward area production licences is consistent with limiting warming to 1.5°C.”
No one who is serious about this can take that to mean that existing fields will not continue to produce for years to come—of course they will—but anyone who argues that business as usual and a few new licenses are the route to good, long-term jobs and energy security is frankly peddling a myth.
We must accelerate the transition to new opportunities for North sea workers in the low-carbon economy, including through carbon capture, usage and storage, through hydrogen and through floating offshore wind. We do not believe that tests are the best route to achieving that goal. We need a holistic strategy, but within the framework set out in this Bill, the climate change test we propose is the only way to achieve a policy that is consistent with being a responsible and leading actor on the world stage in the fight against climate change, with managing our existing North sea assets carefully and for the long-term, and with maximising the low-carbon economic potential of the North sea.
The other two amendments I will speak to highlight the extent to which the Bill fails even on the narrow terms it has set out. Amendments 19 and 20 would address the glaring deficiencies in the bogus carbon intensity test set out by the Government. Currently, the test compares UK gas production carbon emissions only against an aggregate of liquefied natural gas production emissions, ignoring pipeline-delivered gas, which makes up most of our imports, as the right hon. Member for Reading West reminded us. This amendment would correct that. As it stands, the test is designed to be impossible to fail, so it is barely worthy of the name. Including only LNG is a serious logical flaw. Before the Minister jumps to his feet, it is not true to say that every marginal unit of imported gas must be LNG. Indeed, we support substantial amounts of natural gas coming into the UK via the pipeline from Norway. The production of that gas is substantially cleaner than that of UK natural gas.
Apart from anything else, the Bill takes no account of the UK’s likely future gas demand profile. Demand for gas will decline as we rapidly decarbonise our power sector and electrify more and more of our economy. Indeed, this decline in demand, not just supply, is at the heart of a successful net zero transition.
Approving new exploration licences for fields that will take years to come online, on the assumption that the alternative must otherwise be LNG, without taking any account of future demand, is absurd. A fairer test would consider gas imports in the round.
David Duguid
I take on board the hon. Gentleman’s comment that, overall, 30% of our gas comes from Norway. Yes, that is the majority of our imports, but it is still 30% overall. Nobody in this House has authority over Norway’s future oil and gas prospects, but would he be in favour of the Norwegian Government exploring for new oil and gas to supply to us?
Dr Whitehead
No, in line with the IEA and the IPCC, I am not in favour of new exploration licences. The point is that, in a declining market, Norwegian supply will continue to be very substantial, even if no new exploration licences are granted in Norway.
The figure cited by the hon. Gentleman is almost right —the actual figure is 34%. The United Kingdom supplies 38% of its own gas, with the United States supplying 14%, Qatar supplying 9% and other countries supplying smaller amounts. Norway already occupies a very substantial position in our present gas supplies, and I am sure it will continue to do so.
David Duguid
My hon. Friend is making some very good points, particularly on the spatial squeeze. She says that this is not a choice between one thing and another. Opposition Members tend to see this debate as black and white, and that we have to go in either one direction or the other. Does she agree that, whether from the perspective of fishing, offshore wind or offshore oil and gas, it is very important that we come together so that everyone has a say?
Selaine Saxby
As always, I agree with the points my hon. Friend makes. Prioritising space is critical, as the Government have committed to delivering 50GW of offshore wind, which this represents approximately £93.3 billion-worth of investment and requires nearly 8,500 sq km of new marine space. I need to declare an interest, as the chair of the all-party group on the Celtic sea. As such, my particular concern is about the deployment of floating offshore wind, as it will open up areas such as the Celtic sea so that we can generate energy no matter which way the wind blows. As it can be deployed in waters deeper than 60 metres, that technology opens up 80% of our offshore wind resources.
The Celtic sea is an environment where strategic planning at this early point in the development of FLOW—not just for spatial prioritisation on the seabed but for clear planning of cable routes to optimise how power transitions to the grid—minimises blue carbon disruption from our ocean floors and onshore environmental damage from multiple plug-in points. Indeed, given the long-term commitment to energy generation in the Celtic sea, as well as the North sea, the chance to plan strategically and include all future leases within a national framework comes now. More renewable energy and greater energy efficiency contribute more to energy security than new oil and gas. This integrated spatial planning will require new licences to ensure that enough sea space is allocated for nature recovery and climate change mitigation. Otherwise, there is a risk that industrial activities could crowd out those important environmental purposes, which, with the right strategic planning early enough in the evolution of these vital new technologies, can coexist alongside those that are now waning.
Currently, the Bill has no provisions to require spatial prioritisation testing of the geographical blocks that become available for oil and gas search and production. That means that the North Sea Transition Authority will be able to grant new licences in areas of the sea where the cumulative impact of activities is incompatible with the achievement of Government targets in the Climate Change Act 2008 and the Environment Act 2021.
David Duguid
I was not sure if the hon. Gentleman had moved on from his glowing appraisal of the North sea transition deal, but can I take it from his reference to that deal that the SNP’s position is to support and welcome it in its entirety?
Dave Doogan
I am not going to meet the hon. Gentleman’s ambition to nail those colours to the mast, but I will tell him that through the Bill, the UK Government are turning a blind eye to the implications of a free-for-all when it comes to emissions and who benefits from revenue receipts. I am sorry if he finds that difficult, but he will to have to deal with it.
The prosperity that comes from oil and gas in Scotland is finite, as we know all too well. We have seen what deindustrialisation with no transition plan looks like—we witnessed it at first hand in the 1980s, when coal, steel and heavy industries were all torn asunder on the altar of monetarism and share prices in the City of London. That is set to happen again for oil and gas, under Thatcher’s willing disciples, the Leader of the Labour party and the Prime Minister. We cannot allow that to happen again. It is therefore essential that north-east Scotland and other areas reliant on oil and gas are afforded the investment required. That is what our amendment speaks to; it is about creating new jobs and transitioning in a managed, strategic fashion to accelerate our post-carbon future.
David Duguid
My hon. Friend mentioned the role of the NSTA in the facilitation and delivery of the North sea transition deal, which, as he said, was negotiated between industry and the UK Government. Does he agree that what he is advocating is precisely the purpose of the North sea transition deal—to facilitate the delivery of energy transition to net zero?
Peter Aldous
My hon. Friend is quite right: the North sea transition deal is the foundation stone on which we should be building, involving industry, involving the NSTA and giving industry the confidence to make the significant investment that we need.
The North sea transition deal includes the target to cut greenhouse gases and emissions by 10% by 2025 and by 25% by 2027. The NSTA wants to halve emissions by 2030. It is also committed to all new developments having no routine flaring and venting, with zero routine flaring across all North sea platforms, whether new or existing, by 2030 at the latest. Good progress is being made. Although figures are not yet available for 2023, emissions were reduced by 23% between 2018 and 2022, while flaring has been reduced by 50% over the same period. In addition to tracking, monitoring and reporting performance, the NSTA closely scrutinises operators’ applications for flaring consents, pushes back against requests to increase flaring, and has ordered operators to restrict production to stay within agreed limits. It has, where necessary, issued fines for breaches.
On marine spatial planning, the NSTA follows a precautionary approach and is acutely aware of the need for co-ordination and collaboration in what are increasingly crowded and sometimes very sensitive and precious waters. It is thus working closely with such organisations as the Crown Estate and the Marine Management Organisation in delivering the marine spatial prioritisation programme of the Department for Environment, Food and Rural Affairs.
In conclusion, the Bill and the amendments raise very important matters, but to tackle them properly, we need to adopt a long-term approach that transcends the four-to-five-year political cycle and that fully involves business.
David Duguid
I rise to speak in support of the Bill and of all the employees of companies right across the country, including in my Banff and Buchan constituency, that will play a critical and successful role in the UK’s ongoing energy transition to net zero by 2050.
I remind the Committee that, for 25 years prior to being elected in 2017, I worked in the energy sector—in the oil and gas sector specifically—in a wide range of roles for several different companies and in various places around the world. I also declare that I have a close family member with a financial interest in one of those companies, which is below the threshold required for registering interests. I can also assure the Committee that that financial interest has never had, and will never have, any bearing on my contributions in this or any other debate.
On Second Reading, I spoke about the potential for increased confidence and certainty that the Bill brings to the energy industry. For many people watching, including a few hon. and right hon. Members in this place, there would appear to be a perfectly polarised distinction between maximising oil and gas on one hand and promoting renewables on the other. The truth exists on a continuum between those two extremes, however. We have in fact been on a transition away from the most polluting of fossil fuels towards cleaner, lower-carbon, renewable sources of energy for a number of decades now. That transition is happening at various rates in different parts of the world, but it is fair to say that the United Kingdom is at the forefront, as the first major economy not only to legislate for net zero but to set the most stringent decarbonisation targets.
The Conservative Government have presided over the UK’s becoming the first major economy to have reduced carbon emissions by 50% from 1990 levels. That compares to only 7% that had been achieved by the time the Conservatives came to power in 2010. We have effectively transitioned away completely from coal power, and continue to reduce our demand for oil and gas and increase our renewable and low-carbon capacity, but not as fast as our domestic supplies will continue to decline, even with new production.
A critical point that needs to be reinforced in considering this legislation is that new oil and gas does not mean more oil and gas—a mistake that I heard in the speech of the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle). Even with new production, the North Sea Transition Authority predicts that UK oil and gas production will decline, not by the 3% to 4% suggested by the International Energy Authority to stay within the global 1.5°C target, but by twice that rate of decline, at around 7%. We are today 75% dependent on oil and gas for our energy needs, and not just for electricity generation, but for heat and transportation as well. Of that 75%, about 50% is produced domestically with the rest having to be imported.
The arguments for producing our own oil and gas closer to home have been well rehearsed. There is the obvious benefit of having that source of energy under our control, not that of other states and countries that are not always friendly. We have also heard how liquefying natural gas for transportation and shipping that LNG halfway around the world to then be de-liquefied back into gas when it arrives in the UK can produce up to four times the carbon emissions of domestically produced gas. We know from the Climate Change Committee that we are likely still to be up to 25% dependent on oil and gas by 2050. It therefore follows that carbon capture, utilisation and storage will be required for the UK to reach net zero by 2050. That includes, of course, the Acorn CCS and hydrogen project at St Fergus in my constituency, and in particular the role it will play in decarbonising gas-fired power generation at Peterhead.
What will also be required to get to net zero are precisely those skills, technologies and supply chains that currently exist and will, no doubt, continue to be developed within the oil and gas industry. However, those critical elements would sadly no longer be available to us if we shut down our domestic oil and gas industry prematurely, which is what would happen if the Opposition parties had their way, whether it is the SNP’s “presumption of no new exploration” for oil and gas—a direct quote of the SNP’s draft energy strategy—or Labour’s “just stop oil” approach.
I am seeing some nods of agreement from across the Floor, but there has recently been something of a war of words between the two main parties—I am referring to Labour and the SNP—in Scotland following Labour’s screeching U-turn on its £28 billion a year green investment plan. Of course, we on the Conservative Benches always saw that plan as undeliverable without massive tax increases. Labour announced that it would not only increase the energy profits levy and make it last longer, but remove the investment allowance.
David Duguid
Before I give way, I will gently point out to Opposition Front Benchers—I am not sure whether they are aware of this—that the 78% tax rate they are so keen to copy from Norway comes with an equivalent 78% investment allowance in that country. Labour’s plans would remove the investment allowance, putting future investment across the energy sector even further at risk.
Of course, as we heard earlier, Labour still maintains its position of banning all new oil and gas licences, which has inevitably led to an outcry from the sector in recent weeks. Among others, Offshore Energies UK’s chief executive David Whitehouse has said:
“We remain deeply concerned about what Labour’s proposals could do to our people. If we can’t get companies to invest here, there are no jobs. It’s that simple.”
He went on to describe Labour’s proposals as
“a hammer blow to the energy we need today and to the homegrown transition to cleaner energies that everyone in the UK wants to see.”
That is the key point, which often goes over the heads of so many on the Opposition Benches: the skills and technologies to deliver net zero are not going to appear magically over the horizon, and the talent and expertise in what would become a defunct oil and gas industry will not automatically and immediately transfer across to the renewables sector. More likely, companies and their employees who will find themselves squeezed out of oil and gas in the UK will simply move overseas to deliver someone else’s energy security and someone else’s energy transition—and, no doubt, deliver oil and gas that we would end up having to import.
Of course, the SNP has come out of the woodwork to jump on the bandwagon, criticising Labour’s approach while completely contradicting its previous stance and—more than likely—that of its Scottish Green coalition partners in Holyrood. SNP leader Humza Yousaf said last September that he did not want Scotland to be Europe’s oil and gas capital, presumably wishing to pass that mantle to our North sea neighbours in Norway. A little over a year ago in its draft energy strategy, the SNP stated—I quote again—that there should be a “presumption” against new exploration for oil and gas. I am not sure whether the hon. Member for Angus (Dave Doogan) is still looking to intervene, but I wonder whether he would take this opportunity to answer that question.
Dave Doogan
I am grateful to the hon. Gentleman for taking my intervention, even though it was about five minutes ago on a different subject. He made a really interesting point in his speech: that new licences do not mean more oil and gas. Conversely, having a more circumspect and rational approach to licence issuance—taking it out of the political arena and putting it into the bureaucratic space—does not mean less oil and gas. I am sure the hon. Gentleman will accept that if that is true for one, it is true for the other. Does he not agree with my position, and that of my party, that as the oil and gas industry continues on its journey to its natural conclusion of a much reduced industry, for whatever reason—the transition to renewables, or depleted resources—it is much more important, and in fact elegant, to make sure that those tax receipts are invested in the energy of the future, not squandered by His Majesty’s Treasury?
David Duguid
I find myself looking for a point that I might agree with in the hon. Gentleman’s intervention, and sadly failing. However, his point about the decline of oil and gas in the UK has been made time and time again. Ever since 2004 we have been a net importer of oil and gas, so my point about new oil and gas not being more oil and gas is about managing that decline to make up for the fact that we are not replacing that oil and gas generation with renewables as fast as we would like. I will address that point in more detail in a moment.
Those comments from the SNP leader just go to show the staggering hypocrisy and inconsistency of the SNP, but neither the industry nor the electorate are so easily fooled, particularly in the north-east of Scotland. If asked whether they support new oil and gas licences, as we have seen today, some SNP Members—and, I dare say, some Labour Members as well—may find it difficult to commit to a position, particularly when facing their constituents in the north-east of Scotland. However, this Conservative Government and, in particular, the Scottish Conservatives have maintained consistent support for the oil and gas industry—the companies, and the tens of thousands employed from right across the UK. We recognise, as this Bill does, the potential for the people in this industry not just to keep our lights on and keep the economy moving in the near term, but to lead the world in showing how a successful energy transition from oil and gas to renewables can be done. Sadly, as has been confirmed a couple of times today, all His Majesty’s Opposition seem able to offer is to lead the world in virtue signalling.
Caroline Lucas
In following the hon. Member for Banff and Buchan (David Duguid), I have to say that his speech was one of startling complacency, which still seems to be based on the misunderstanding that just because we exploit oil and gas in the North sea, that somehow means that it is ours—that it gets used here, rather than being sold on global markets at international prices. So many of us have said that so many times in this Chamber, but it still does not seem to have penetrated.
I rise to speak in support of my amendments that have been selected for debate: amendments 2, 3, 13 and 14. Before I begin in earnest, I want to emphasise that seeking to amend this sham of a Bill in no way legitimises what is nothing more than a political stunt. It is not a serious piece of legislation; rather, it is a desperate and dangerous attempt to create yet another culture war. It will make no practical difference at all, given that there have been annual licensing rounds for most of the past decade, with even the board of the North Sea Transition Authority expressing the unanimous view that this legislation is not needed. The amendments I have tabled are designed to expose the falsehoods that have been told by the Government in attempting to justify new fossil fuel extraction in the midst of a climate emergency. The first is that new oil and gas licences can in any way be compatible with delivering our climate targets, and the second is that propping up oil and gas can possibly be in the interests of workers, rather than genuinely engaging with the need for a just transition and the practicalities of how it is delivered.
I will first address my amendments 2 and 3. Taken together, those amendments would insert a new climate test into the Bill alongside the Government’s carbon intensity test and the net importer test, which as we know are not so much robust assessments as they are free passes to pollute. The climate test is very simple: it would be met in a given year only if the IPCC finds that current global fossil fuel infrastructure will not emit more greenhouse gas emissions than is compatible with limiting global heating to 1.5°. According to the climate Minister, the right hon. Member for Beverley and Holderness (Graham Stuart), that critical threshold is supposedly the Government’s “north star”—a threshold that, as we all know, was passed for the first time across the entirety of last year. I therefore hope that the Minister will support my amendments, which would ensure that proposed licensing rounds do not undermine global efforts to secure a safe and liveable planet for the future and keep that north star shining.
Indeed, as I mentioned earlier, the UN production gap report has warned that Governments already plan to produce more than double the amount of fossil fuels in 2030 than would be consistent with limiting heating to 1.5°. If we look at what the IPCC itself has said, its sixth assessment report was clear:
“Projected CO2 emissions from existing fossil fuel infrastructure without additional abatement would exceed the remaining carbon budget for 1.5°C”.
Closer to home, the Climate Change Committee observed in its latest progress report:
“Expansion of fossil fuel production is not in line with Net Zero.”
Regardless of the claims from Conservative Members that the UK will continue to need some oil and gas up to 2050, this, and I again use the words of the Climate Change Committee,
“does not in itself justify the development of new North Sea fields.”
Indeed, last month its interim chair, Professor Piers Forster, was forced to correct the Chancellor on this front, reiterating:
“UK oil and gas consumption needs to fall by over 80% to meet UK targets.”
David Duguid
I am very familiar with the report the hon. Member has just quoted. Does she recognise that what Offshore Energies UK is referring to—the Goldilocks zone, as I have heard it described—is the point at which we need to make maximum benefit of the skills, supply chains and technologies that currently exist in the oil and gas industry, so that we can make the best use of those skills to deliver net zero?
Caroline Lucas
The best way to make use of those skills is by making sure that we put resources behind those workers so that they can make the transition, which so many of them want to do, into renewables. Right now, those workers are actually having to pay to make that transition themselves. They have to pay for the training. [Interruption.] They do. I tabled an amendment to a previous piece of legislation on education and training to try to make it much less onerous for oil and gas workers to shift into, say, the renewables sector. We need to have those plans, and we need the resources behind them to make that a lot easier than it is today.
The result and the reality is that the number of jobs in the oil and gas sector has already dropped by more than half over the past decade, despite hundreds of drilling licences being issued. The just transition plans test would be met in a year if the Oil and Gas Authority assessed that all existing seaward area production licence holders have published just transition plans for their workforce that are compatible with limiting global heating to 1.5°. Amendment 14 specifies that those plans must be agreed through formalised collective agreements with unions, and that they apply to all workers whether they are directly or indirectly employed—or, self employed, which is vital with the heavy casualisation in the oil and gas workforce.
Indeed, a report in 2020 revealed a high level of concern about job security and working conditions in the oil and gas industry, and that 80% of surveyed workers would consider moving to a job outside that particular sector. Furthermore, given the opportunity to retrain to work elsewhere in the energy sector, more than half would be interested in renewables and offshore wind. Workers are ready to lead a just transition, yet a more recent report has revealed that
“companies are increasingly announcing net zero targets—but there is no example in the UK oil and gas sector of worker involvement in decision-making on decarbonisation.”
That must change.
This amendment would be a step towards delivering a just transition that would see workers at the centre of transition planning, with a clear and accessible pathway out of high-carbon jobs. Rather than propping up jobs that we know are not going to exist in the future, the Government should be actively supporting workers to transition out of the oil and gas sector now, while also addressing their very real concerns, such as the cost of retraining, which is often borne by workers themselves, or the inferior employment protections offshore, which can lead to wage under-cutting. There are even some cases of seafarers working in the offshore wind sector being paid below the minimum wage. That is a scandal, and the Government should urgently establish a wage floor to apply to all offshore energy workers, regardless of nationality, who are carrying out any work on the UK continental shelf. The failure to deliver a just transition is not an inevitability, but a political choice. If the Government are serious about listening to workers and protecting jobs, they should have no problem supporting this amendment, which puts job security at the heart of the transition.
I note that the hon. Member for Angus (Dave Doogan) has tabled amendments 10 and 11 on a just transition, but I have to say that I do have two serious concerns. First, according to the drafting of amendment 11, the SNP test will be met
“if the OGA assesses that…new licences will support the delivery of the North Sea Transition Deal’s…emission reduction targets”.
Yet, as we know, the 50% reduction by 2030 which is in the NSTD proposal, against a 2018 baseline, is far weaker than the 68% reduction recommended by the Climate Change Committee, which it says is achievable. It is also important to note that this only includes scope 1 and 2 emissions, so it fails to take account of emissions produced when oil and gas is burned. Secondly, there is no provision to consult workers as part of this test. Therefore, given that it would fail to deliver a worker-led transition and it also exceeds the advice of the CCC, I sadly cannot vote for that.
Before concluding, I offer my support to a number of other amendments. First, I support amendment 12, on banning flaring and venting, tabled by the right hon. Member for Reading West (Sir Alok Sharma). As others have mentioned, Norway banned routine flaring back in 1971, giving the lie to the Government’s claim that UK gas has lower emissions.
Secondly, I support amendments 19 and 20, tabled by the right hon. Member for Doncaster North (Edward Miliband), to amend the carbon intensity test and to include all gas, not just LNG. Given that we import most of our gas through a pipeline, it is utterly ridiculous to compare UK production with LNG that is vastly more polluting.
David Duguid
I am reluctant to intervene, because the hon. Gentleman is making some interesting points, many of which I agree with, but I have a burning question. He makes a point about the amount of storage we have around the UK, which is equivalent to more than we have produced out of the North sea, and we must take advantage of that. In his amendment, he refers to licensing conditions for specific fields been tied to having a net zero effect through carbon capture and storage. He has already explained that carbon capture and storage is typically taken from flue gas from the likes of Mossmorran in his constituency, or Peterhead power station in mine, so how does he make that link between offshore exploration licences and the resultant carbon capture, which will be way down the production line?
Neale Hanvey
The hon. Gentleman makes an important point. Many of the operators are serious about exploiting the resource not just in Scottish or UK waters but in other countries, and other countries can leverage those types of concessions when they grant licences. The UK Government can therefore make no serious argument that they cannot do that.
One of the refrains we heard during the Brexit debate was about the reclaiming of national sovereignty. It was one of the reasons for Brexit. One of the most limiting factors for job creation in renewables was that contracts for difference and European rules prevented conditionality from being applied to the granting of oil, renewables and other licences. If the UK now has that sovereignty, why not use it to ensure that the communities that are part of the supply line get some form of benefit out of the process? One of the most obvious benefits is to reduce at source, through a levy on any licence, the carbon footprint of the exploitation of that resource. That would seem a reasonable expectation, and certainly we feel it is essential in granting any future licences.
Amendment 15 would create a requirement for a specific field commitment of a net zero carbon footprint, as we have just discussed. That would be achieved mainly through connection to the carbon capture network. The prize is to be a world leader in research and development, with an economy built on renewable energy, of which Scotland has an absolute abundance. The UK Government’s dither and delay on Acorn has gone on for far too long. It is time for Scots Members on the Government Benches and their Government colleagues to back a secure future for Scotland’s North sea oil and gas sector and to back this amendment.
David Duguid
I feel almost obliged to intervene, if only to agree totally with what the hon. Member just said. The Aberdeen University study relates specifically to the decline over previous decades. We have lost a lot of workers in the industry, not just because of the decline in production, but because of new technology and the desire to remotely operate offshore platforms in the interest of safety. There has been decline. What he seems to be missing is that we are talking not about a return to the glory days of peak production in the late ’90s, but managing that decline with reference to how much energy we need. As was mentioned, we need to promote a Goldilocks period in which we make the most of the skills and technologies in that industry for the renewables-based future.
Barry Gardiner
The hon. Gentleman is absolutely right to say that we must manage the decline, but we must manage the decline in the community’s livelihood, which is not necessarily the same thing. If we make sure that we have a just transition, and introducing support for retraining and gaining skills, as outlined in the amendments that I am supporting, he will find that his constituents and many others around the country will much better weather that decline and prepare for the sort of future that we want.
The Bill, unfortunately, does the opposite. It ignores the 30,000 hard-working people directly employed in today’s oil and gas industry, and the further 100,000 individuals supported by the supply chain. It provides false hope. It sends confusing signals to energy companies, to investors, to the global community, and indeed to unions and the workers they represent. It pretends that nothing needs to change—that business can continue as usual, and that jobs in oil and gas are safe. The Government are acting as if maxing out the North sea can happen indefinitely, or at least until they are no longer in office and therefore do not have to pick up the pieces.
Amendment 14 sets out the need for formalised collective agreements with unions and the workforce to create just transition plans. In Spain, we have seen what can be achieved when Governments, businesses, workers and unions come together. The just transition agreement that the Spanish Government have negotiated with affected workers, unions and businesses is popular, economically responsible and environmentally sound. It is a settlement for all involved. That is the approach that ought to be taken in the North sea. The region needs a new settlement, in which: there is an increase in domestic manufacturing; a new generation of renewables, such as green hydrogen, turbocharges employment in energy-intensive industries; the technology of carbon capture, usage and storage and the UK’s unique storage capacity for sequestering carbon can provide a new service that is exportable to the world; the benefits of the energy system are shared fairly; jobs are truly safe and secure; and, above all, those communities who were once the proud purveyors of our fossil fuel energy become our proud sequesterers of the world’s emissions and the champions of the renewable powerhouse of the future.
Before I conclude, I want to mention one further spurious reason that the Government have put forward to justify the Bill: that it stops us from being dependent on oil and gas from dictatorial regimes such as Russia. Yesterday in the House, my right hon. Friend the Member for Barking (Dame Margaret Hodge) pointed out that a loophole in our sanctions regime means that countries such as China and India import Russian crude oil, process it and then sell it to the UK as refined oil. In 2023, we imported 5.2 million barrels of that oil. That means we sent something like £141 million in tax revenue to the Kremlin’s war chest. Britain is also the biggest insurer of Russian oil moved by sea, most of which is sold at prices well above the price cap, again violating sanctions. If the Government really wanted to stop such dependence, they could tighten the sanctions regime—they know how to do so, but they do not.
I will not vote for this piece of 20th-century legislation that instructs the House to look backwards and not forwards. I will not vote to make Britain colder and poorer. I will not vote to increase flooding. I will not vote to leave communities and workers behind. I will not vote to lock volatile fossil fuels into our already broken energy system. Sadly, we must wait for a future Parliament—and, I trust, a future Government. I look forward to working with Members from across the House in pursuit of those goals.
Offshore Petroleum Licensing Bill
David Duguid ExcerptsMonday 22nd January 2024
(3 months, 1 week ago)
Commons ChamberRead Full debate Offshore Petroleum Licensing Bill 2023-24 View all Offshore Petroleum Licensing Bill 2023-24 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Douglas Ross (Moray) (Con)
It is an honour to speak in the debate about the oil and gas sector, the industry and the jobs that rely on it. Certainly, in my Moray constituency, many people are employed in the sector. They travel through to Aberdeen to go off shore, and it is a regular commute for many people. That is the case in towns and villages throughout Moray, such as Buckie.
Since I have been able to get Buckie into this debate on oil and gas, it hopefully allows me the opportunity to put on the record my appreciation to the club for an outstanding match against Glasgow Celtic yesterday at Parkhead in the Scottish cup. They sadly lost 5-0, but it was an outstanding game for the highland league team. Graeme Stewart and his players did not just do the club, the highland league community and Buckie proud, they came away with an absolute host of new fans, because of what they achieved over the weeks since that game first came into the public domain. It has been great to see cup fever in Buckie and to see stalwarts of the club, such as Annie Jappy and Sandra Paterson, recognised for everything they have done for the club over many years. I am sure the congratulations of everyone in the House go to Buckie Thistle on their achievements.
David Duguid (Banff and Buchan) (Con)
I of course join my hon. Friend in congratulating Buckie Thistle, but will he answer just one question: which side played in the home strip?
Douglas Ross
Of course, they both play in green and white hoops. Celtic played in green and white, and Buckie were in yellow.
As I say, this is an important debate for many towns, villages and communities in Moray, because a large number of people living in that area are employed in the oil and gas sector. It is important for my constituents in Moray, and I have been clear that it is right that we continue to grant new oil and gas licences to continue the exploration in the North sea while there is still a demand that needs to be supplied, but people will be left wondering what is the current position of the SNP. That is why I put a very direct question to the hon. Member for Angus (Dave Doogan). Normally at this point I would say that I will give way to any SNP Member willing to intervene if they are able to answer, but there is only one here. Would the hon. Gentleman like to intervene and say very simply, to the people of Angus and the people of Scotland, what his party’s position is and what his personal position is? Does the SNP support the granting of new oil and gas licences —yes or no?
Douglas Ross
I absolutely agree with the right hon. Gentleman. People should watch closely what the hon. Member for Angus said on his own behalf and on behalf of the SNP—as I say, SNP MPs are speaking with their actions tonight by not even turning up to the debate.
Opponents of this Bill—the Labour party, the SNP and others—try to present our energy transition and support for oil and gas as a binary choice. They say that we cannot achieve our net zero goals while at the same time supporting new oil and gas licences and projects, but nothing could be further from the truth. The oil and gas sector in Scotland and across the UK is essential to delivering and achieving net zero.
The investment in green energy infrastructure that will allow us to build our renewables capacity is coming from the revenue from oil and gas extraction. The businesses that are looking to expand offshore wind and the windfarms for tomorrow are staying solvent today because of their revenues from North sea oil and gas. The people with the skills and expertise that we have heard about throughout this debate, which will be required to secure our offshore renewables going forward, work in our oil and gas sector today. That is why it is so important that I made the point to the right hon. Member for Doncaster North (Edward Miliband) that people such as Sir Ian Wood are saying that Labour’s plans and the cliff edge that Labour would impose on the sector would see job losses. That is why that position is frankly unacceptable and is not supported by many people, if any, in the north-east of Scotland.
The businesses, the investment and the jobs that make Scotland and the UK a world leader in oil and gas are the same skills, businesses and jobs that are going to drive forward the green agenda and our renewables future. We cannot have one without the other. We cannot tell investors, businesses and workers who pause their plans for the UK’s energy infrastructure due to an artificial ban on new fields to come back when the green technologies have become cheaper or more viable, because those investors, those businesses and those workers will go elsewhere. I say to the hon. Member for Angus that that is not a moot point. That is the reality if we do not continue with the exploration of oil and gas in the North sea and the granting of new licences.
David Duguid
I am sure that my hon. Friend will join me in welcoming the vast number of offshore wind projects being developed off the coasts of our respective constituencies—as well as that of the hon. Member for Angus (Dave Doogan)—and the operations and maintenance facilities in Buckie in his constituency and Fraserburgh in mine, which are entirely dependent on those offshore wind facilities. As much as people from the oil and gas industry are moving into them, there are just not enough of those jobs to make up for those that we would lose in oil and gas. Does he agree that a lot of the people who work in oil and gas would not go to renewables if there were no oil and gas jobs, but would just go where there is oil and gas overseas?
Douglas Ross
I absolutely agree with my hon. Friend. We have a base at Buckie harbour that is supporting a number of jobs and will continue to do so for decades to come—it is a small number of jobs at the moment, with opportunities to grow—but at the moment the vast majority of the workforce is employed in the oil and gas sector. I agree with him that they will go elsewhere, shifting their jobs and expertise to other countries, and another city will become Europe’s offshore energy capital. That would be devastating not just for our net zero ambitions and for Aberdeen, but for the economy of Scotland and the UK as a whole.
We have already heard in the debate that 90,000 Scottish workers are employed in North sea oil and gas. It has been for decades, and will continue to be for some time to come, one of the most important sectors in Scotland’s economy. Yet I believe that it is the position of the SNP—it would be if more SNP Members than just the hon. Member for Angus had turned up to state their case—to put those jobs on the scrapheap. The SNP wants to have a cliff edge in our oil and gas sector and exploration because it is in government with the Greens in the Scottish Parliament. It is supporting Green Ministers who want an immediate end to the extraction of fossil fuels from the north-east, and that is putting those 90,000 jobs, and the Scottish and UK economies, at risk. That is viewed extremely dimly in many parts of Scotland, particularly the north-east, which the hon. Member for Angus represents.
Barry Gardiner (Brent North) (Lab)
I refer to my entry in the Register of Members’ Financial Interests.
Mr Deputy Speaker, I know you were not around at the time, but you will know that the stone age did not end because of a lack of stone, and the oil age will not end because of a lack of oil. It will end because decent people of all political persuasions, such as the former right hon. Member for Kingswood, are farsighted enough to recognise and brave enough to stand up against the vested interests that would consign our children and the natural world to a costly, disruptive and, frankly, terrifying future. He was right to say that history will judge harshly those who continue down the reckless fossil fuel path that this Bill represents.
This Bill is founded upon a lie—in fact, several lies. The Government say it will safeguard our domestic energy supplies and boost investment; it will not. They say it will enhance our energy security and reduce our dependence on imports from overseas; it will not. The truth is that it is a political distraction that will reduce investment in and delay our transition to the clean energy that is the only sustainable and secure future both for our country and for the global community. This Bill is not a credible plan to fix Britain’s broken energy system; it is a sad attempt to sew division and polarise our politics. It shows that the Government have given up governing and are out of step with the British people’s priorities. When 6 million people live in fuel poverty and when 4,700 people died last winter as a result of living in cold, damp homes, this Bill falls well below what our constituents deserve.
As the world’s hottest year on record was concluding, nearly 200 countries agreed at COP28 to transition away from fossil fuels. The contrast between the promise made in Dubai and what the Government seek to do today could not be more profound, nor more depressing. By inviting Parliament to enable annual licensing rounds for offshore oil and gas extraction, the Government are failing to understand that to transition away from fossil fuels, we have to stop producing them. The Government argue, “But it is still a declining field.” “This simply slows the rate of decline,” they say. The problem is that it also slows the rate of investment in a just transition that will unleash the power of wind, solar, tidal and energy efficiency.
The North sea is a declining basin. Its reserves are predominantly oil, not gas. Between now and 2050, new licences are expected to provide just 103 days of gas, which is four days of gas on average each year. The Government know that once oil and gas is licensed, it belongs to the companies that hold the licence. As the Government recently admitted to my hon. Friend the Member for Brighton, Kemptown (Lloyd Russell-Moyle), 80% of UK oil reserves are sent abroad by these companies and sold on the international market to the highest bidder. No wonder the former executive director of BP said last year that the Government’s decision to expand North sea drilling is
“not going to make any difference”
to Britain’s energy security.
If the Government’s ambition is to minimise gas imports, there is a very simple solution—insulate homes. The best way to cut imports is to reduce domestic fossil fuel consumption by building renewables and insulating homes. This would have the additional benefit of reducing people’s energy bills and tackling fuel poverty. By channelling investment into oil and gas, the Government are heading precisely in the wrong direction. I do not deny that there is a role for existing oil and gas, but it is in the journey to a clean energy economy. What there is not a role for is the production of new oil and gas. We already know that to stand a 50% chance of keeping below the 1.5° threshold, 90% of the world’s coal reserves and 60% of oil and gas reserves would have to stay in the ground.
David Duguid
Is the hon. Member aware of this? He mentioned the pathway to the 1.5° target, and the IEA’s description of what is required is a 3% to 4% reduction in oil and gas production year on year between now and 2050. Does he agree with the assessment of the NSTA itself, which expects that, even with the new oil and gas licences, North sea oil and gas is predicted to decline by 7%, or twice that amount?
Barry Gardiner
I am well aware of that—of course I am—but the hon. Member will have heard the discussion that took place earlier about global leadership. He will know that other countries around the world are not declining at the required rate, and leadership is about taking a lead.
The logic of drilling for more when the world has already more than it can safely burn is that of the myopic salesman, not the visionary politician, or to use the Prime Minister’s words, it is the logic of the zealot. The Government’s actions are already making the UK a less attractive place for green investment. Three quarters of all North sea oil and gas operators currently invest nothing at all in UK renewables. The largest operator, Harbour Energy, has ruled out such clean investment altogether, yet last year the five oil super-majors—BP, Shell, Chevron, ExxonMobil and TotalEnergies—rewarded their investors with record payouts of more than £79 billion, so we know the money is there to do it.
David Duguid (Banff and Buchan) (Con)
I want to start by reminding the House, in the interests of transparency, that for 25 years prior to being an MP I worked in the energy sector, specifically the oil and gas sector—I have not made a secret of that in the past, by the way. Also in the interests of transparency, I note that I have a close family member who has a financial interest in that industry, although I feel keen to point out that that interest is below the threshold required for registering interests. I can also assure the House that that interest has never had any bearing, and will not have any bearing, on my contributions in this place.
We are not a nation that needs to be convinced of the need to transition away from oil and gas. The Minister for Energy Security and Net Zero, my right hon. Friend the Member for Beverley and Holderness (Graham Stuart), said on his return from COP28 that he
“was proud to represent a country that has cut greenhouse gas emissions more than any other major economy since 1990; that has boosted our share of renewable electricity from a rather dismal 7% in 2010 to almost half today”—
I think we have exceeded 50% since he said that—
“while almost entirely phasing out coal power; that has led the world in mobilising green finance; and that is now ensuring that we bring the British public with us on the transition to net zero”.—[Official Report, 14 December 2023; Vol. 742, c. 1032.]
We have essentially transitioned away completely from coal and continue to reduce our demand for oil and gas, but not as fast as our own domestic supplies continue to decline, even with new production. One of the critical points that needs to be made when considering this proposed legislation is that new oil and gas does not mean more oil and gas.
It is important to state a few basic facts that will hopefully help people understand why this Bill, aimed at promoting and facilitating new oil and gas production in this country, is not in contradiction to delivering on our net zero targets and global agreements and commitments. We are today 75% dependent on oil and gas for our energy needs, not just for electricity generation but for heat and transportation as well. Of that 75%, about 50% is produced domestically with the rest needing to be imported, including from Norway, as has been said. Even by 2050 we will be at net zero and still up to 25% dependent on oil and gas. Even with new oil and gas exploration and production, coupled with that decline in demand, we are extremely unlikely to have a net surplus ever again. The UK has been a net importer of oil and gas since 2004, long after our own production profile peaked in the late 1990s.
There are currently 283 active oil and gas fields in the North sea, and the Offshore Energies UK trade body estimates that by 2030 around 180 of those—that is more than 60%—will have ceased production due to natural decline. If we do not replace those depleting oil and gas fields with new ones, production will decline much faster than we can build low-carbon sources to replace it.
It is worth remembering, as I pointed out earlier, that even with the new oil and gas fields and wells, we can reasonably predict that we are still looking at a 7% year-on-year reduction in UK production, according to the North Sea Transition Authority. That is twice as fast as the International Energy Agency recommends. It suggests that the global reduction of oil and gas production needs to be about half that, at 3% to 4% a year, to stay within our 1.5° target.
In line with the Climate Change Committee’s balanced pathway, the UK’s demand for oil and gas will reduce over time, and is forecast to be approximately 16 billion barrels of oil equivalent cumulatively over the period through to 2050. However, existing domestic fields are expected to deliver only between 4 billion and 6 billion barrels of oil equivalent, so we can see the gap. That is the import gap, which we need to fill through imports.
New field developments and licenses are required to reduce our reliance on overseas imports. Without new investment, it is predicted that reliance on overseas imports will increase from 50% today to closer to 80% by 2030. If demand for oil and gas is to continue—which it will, albeit it will be declining—in the coming decades, it makes sense to get it from as close to our own shores as possible.
Reducing demand for oil and gas is key, not reducing supply. I think we can all agree that we need to do that. Simply reducing or cutting off our domestic supply will not help net zero to happen any faster or any more successfully; it will only make us more dependent on foreign imports.
There are other factors to consider. We have all heard today about the 200,000 or so jobs dependent on the oil and gas industry. Those people are directly employed by the oil and gas industry, and protecting those jobs and livelihoods and understanding the impact that an industry has on communities and societies, as well as on our local and national economies, is extremely important.
My biggest worry goes beyond that. It is not necessarily that those people will become unemployed—some of them may find jobs in the burgeoning renewables sector, and as I discussed with my hon. Friend the Member for Moray (Douglas Ross), we are seeing that in our constituencies, although in the short to medium term there are not enough of those jobs to go around—but about the potential loss of precisely the skills, technologies and supply chains that will be crucial to the delivery of the energy transition. If we shut down this critical industry too soon, those skills and supply chains will merely go overseas and deliver someone else’s energy security and transition.
For the past 50 years, the North sea offshore industry has been seen as a centre of excellence in the global oil and gas industry. Nowhere in the world is oil and gas produced more safely, efficiently, cleanly and environmentally responsibly. The former right hon. Member for Kingswood and my right hon. Friend the Member for Reading West (Sir Alok Sharma) have said that we are a clean energy superpower that has decarbonised faster than any other G20 nation. We have reduced our emissions by 50% at the same time as growing our economy 70% above 1990 levels. To quote the former right hon. Member for Kingswood:
“That is a paragon and a model that all other nations look to”.—[Official Report, 9 November 2023; Vol. 740, c. 301.]
Where the former right hon. Member for Kingswood and I do not agree is that far from damaging that reputation we have built over decades, we have the opportunity to maintain and build on that perception as a centre for excellence for producing oil and gas better and more safely and cleanly than anyone else and for decarbonising faster than anyone else, rather than for virtue signalling better than anybody else, as the Opposition appear to be seeking to do.
I welcome the Bill and the increased certainty that it brings to the offshore energy industry, businesses and the people with the skills and talent who work in those companies. They will help to deliver not only our energy security for years to come but a successful energy transition to net zero. We can not just show the world that it can be done, but lead the world in showing how it can be done.
Jerome Mayhew
I am grateful to the hon. Lady for that intervention. The Climate Change Committee gives us the science, and the political decisions are taken in this House. We are not talking about an increase in exploration; we are talking about a managed reduction of 7% per annum.
Moving on, the question is not whether we have oil or gas, yes or no. We need oil and gas, certainly for the transition period between 2024 and 2050, and even beyond—according to the Climate Change Committee, around 25% of our energy will still come from oil and gas. The question is: where should that oil and gas come from? If we need to supply this economy with oil and gas, it is my belief that we should use UK oil and gas, and there are reasons for that. The first is that the industry employs 200,000 people. I would prefer that employment to remain in the UK economy, rather than export it to Russia, Qatar, Saudi Arabia or other oil and gas producing countries. That is a reasonable position, given that our consumption is required for the future.
The second reason is geopolitical. We need an alternative to Russian gas, and not just in this country. I accept the point made earlier by Opposition Members: that oil and gas is a global market, and that 80% of North sea oil is exported to Europe. But emissions are global and so are the geopolitics. It is right, and in our strategic interest, that Europe should have a viable alternative to Russia for the supply of hydrocarbons. We have seen in the last two years the awful consequences of an overreliance on the Russian supply of hydrocarbons, and more so in Europe—Germany, in particular—than in the United Kingdom. We have become a net exporter of gas to mainland Europe—a little from the North sea, but a lot from Milford Haven. Qatari liquid natural gas is imported into our country and transported by the connectors to mainland Europe. The Europeans are sucking up very polluting liquid natural gas because they do not have a viable, cleaner alternative, which North sea gas would provide.
David Duguid
It has been pointed out to me that gas in Qatar is produced at a broadly equivalent carbon footprint to ours, but the compression into liquid, the transportation and the de-liquefaction when it gets into this country quadruple that carbon footprint.
Jerome Mayhew
My hon. Friend is right. Opposition Members have no answer to that. In Germany in particular, misguided green policies have led to the extraordinary decision to decommission the low-carbon nuclear industry and replace it with coal-fired power stations. I could hardly make it up. Germany is massively increasing its reliance on imported liquid natural gas, which is much more polluting than the cleaner, more local and geopolitically more stable alternative of North sea gas and oil.
The third reason why I would prefer that we used UK oil and gas is that it pays UK tax. I am not ashamed to say that I welcome that. If we are to extract hydrocarbons that will be taxed, I prefer for that tax to be paid in the United Kingdom, rather than in some other country. Just between 2023 and 2028 it is estimated that those tax receipts will amount to £30 billion. We know how much trouble Opposition Members have trying to explain where they will get their £28 billion of borrowing each year, and how that will raise interest rates, debt and inflation. That would be more than doubled if they got their way and their policies destroyed the North sea oil and gas sector.
Vicky Ford (Chelmsford) (Con)
I suspect that for many Members, there are times when votes in this place can cause a sleepless night or two. For me, this vote has caused a number of sleepless nights. There is a dilemma: on the one hand, the responsibility to care for the lives and livelihoods of those people we represent today; and on the other, the responsibility to care for those who will come in the future and to leave the planet in a better place for generations in times ahead.
On the one hand, there is the risk to our energy security, a much greater risk than any of us would have predicted just a couple of years ago, due to the war in Ukraine, the situation in the middle east and in the Red sea, and who knows what next. The Government are right on energy security that we cannot move away from fossil fuels overnight. We need to prioritise energy security for as long as we need fossil fuels. Importing LNG involves much greater emissions than using gas extracted here. Relying on overseas energy means jobs overseas, not British jobs.
On the other hand, there is the risk of climate change. In my Essex constituency, the summer before last we saw at first-hand how real that risk is, with a really hot summer and raging fires. Recently, across the UK, so many people have witnessed awful floods. We know that the warmer the weather, the wetter it will be. A couple of years ago, I saw at first-hand the true devastation when I went to the eastern part of Ethiopia, a region that a few years ago was teeming with wildlife. They used to say you should never ask a herder how many animals he had, because you would never be able to stop counting. Right now, that land is totally devastated by consecutive years of drought. Millions of people will no longer be able to live in the lands where they have lived for generations. The impact of that climate change will mean more people will be forced to leave their countries. There will be more migration and that will impact us here at home.
Unless there is action to tackle emissions and climate change, we will see those impacts accelerating and worsening. We also know that actions to tackle climate change need to be global. The Government are right that the UK has done more than any other G7 nation to reduce emissions. They are right that other countries also need to play their part. Incidentally, I get really cross when people say to me, “Countries like China and India are doing nothing.” Actually, China is now investing in more renewables than any other country, and more than the US and Europe put together. India is on track to deliver 500 GW of renewables by 2030, which is absolutely massive. Countries are moving. At COP28 just last month, which I attended, countries all over the world signed up to the pledge to transition away from fossil fuels. We signed that pledge, too.
The Government will rightly point out that even with these new oil and gas licences, the North sea will continue to be a declining basin and that we are transitioning away from fossil fuels, but the perception internationally is that by granting these licences the UK may be walking away from our promises on climate change. When encouraging other countries to do the right thing, leadership matters and the UK has a key role to play. We hosted the world in Glasgow at COP26. If we, the UK, are seen or perceived to be walking away from the promises we made to the world, then other countries might walk away from their promises, too. That is why it is vital that we are seen to be keeping the promises we make.
We must continue to cut energy waste and reduce our emissions. I am very proud to be a member of the Energy Security and Net Zero Committee. As one of only two members of the Committee contributing to the debate, I will talk about some of the things that have been done and that we must do more of.
Millions of homes have become more energy efficient. We should continue to do more, especially in owner-occupied homes. The priority has been social rented homes, which has been very successful, but we must to do more to help owner-occupied homes. We have unlocked massive amounts of renewable energy, but we can unlock more. It is really important that we get it connected to the grid more quickly—the Government are working on that. I would also like to see more local energy networks, so we can have local energy production nearer to where we have high energy risks and then we would not need quite so much extra grid transmission.
We need to accelerate new nuclear. There have been some good announcements about that this month, but, especially in respect of the small modular reactors, can we go faster? We need to remove barriers to more innovations such as hydrogen, especially for heat, and we need to support the transition to more zero emission vehicles, especially for those in terraced houses. I say to the Minister that we need to get rid of the “pavement tax” so that charging is affordable for all. On all those matters the Government have made great progress, but we need to do more. Incidentally, I will take no lessons from Labour Members on this, because in their 13 years of power they did so little to cut emissions.
The Government are right to say that the transition to net zero needs to be affordable, practical and pragmatic, but it should also involve being honest with people. It is estimated that even the new gas licences will provide only 103 days’ worth of gas—1% of today’s demand—between now and 2050, so let us have an honest discussion about the fact that this Bill will not do everything. However, it is important for energy security that we continue to look at how we can best meet our local energy needs. On offshore oil and gas, I have first-hand experience of how important being a respected world leader on environment issues can be in persuading other countries to change their behaviour.
Members will recall that 10 years ago the world watched in horror when the Deepwater Horizon explosion caused an environmental catastrophe in the gulf of Mexico. At the time the European Union had a knee-jerk reaction, and produced draft legislation that would have banned all deep-water drilling. As a member of the European Parliament’s Committee on Industry, Research and Energy at the time, I was appointed by MEPs to lead the work of the European Parliament in scrutinising that directive. I met offshore safety experts, environmentalists, geologists and regulators, and it became clear to me that the European Commission’s proposals were not the right way forward. Time and again I was told that not all deep-water drilling was dangerous and not all shallow-water drilling was safe. I remember tabling more than 300 amendments to the European Commission’s text, changing it paragraph by paragraph so that instead of banning all deep-water drilling the Commission would take a site-specific approach, looking at the risks of every single proposal.
I persuaded the British Labour Members of the European Parliament that that was the right thing to do, and I persuaded the British Liberal Democrat MEPs that it was the right thing to do. I persuaded parliamentarians from 27 countries that it was the right thing to do. They agreed because they knew that the UK was the world leader when it came to the environmental and safety standards of the offshore oil and gas industry.
Vicky Ford
I am going to carry on.
My point is that maintaining our leadership in environmental standards in the North sea is key to persuading other countries to think about their energy in the future. The Government say that they want this country to continue to be a world leader, but at this point we have lost a bit of leadership to Norway, where gas is produced in a way that is 50% less carbon-intensive than the way in which gas is produced in our North sea. Measures such as banning flaring, electrifying the production process with the use of floating wind and working with neighbouring countries to see how our carbon capture capacity can be used to decarbonise the refining processes could make a huge difference to the carbon emissions that are caused and used when we are producing oil and gas in our North sea. As we make the transition away from fossil fuels, I should like to see the world move towards considering how we can make that industry as low-carbon as possible.
Some of my colleagues have talked about amendments relating to some of these issues, and I hope the Minister and the Government will be open to any such amendments. I think that, as currently worded, the Bill does not really let the Government do anything that they cannot do already—they can already grant these licences—but it does give us an opportunity to show that this country has the ambition to ensure that any carbon emissions that come from fossil fuels during this transition are as low as possible, and that our industry is as clean as possible. That would help the UK to maintain its world-leading voice in environmental negotiations and encourage other countries to clean up and decarbonise their production, thus helping to ensure that the global transition away from fossil fuels takes place in as clean a way as possible. I believe that we should be able to do all that while also addressing those other priorities such as delivering and improving our energy security, and delivering and improving job security here at home.
Richard Drax
That point has been raised several times, and I totally agree that the tax receipts from investment in oil and gas play a huge part in our economy.
I might have this wrong, but as I understand it these companies will face 50% corporation tax and a 35% windfall levy. I would be grateful if, in his summing up, the Minister could say whether that is true. I am not an expert in the industry, but I think that chief executives, board members and shareholders would wince if, having been told that they have to do all this, they have to pay all that punitive taxation. They might say, “Why on earth should we do this in the first place?”
David Duguid
Not to step on the Minister’s toes, but my understanding is that even before the 35% energy profits levy, the oil and gas sector was, at 40%, already the most taxed sector in the country—40% plus 35% is 75%. I stand to be corrected by the Minister if I am wrong.
Richard Drax
I hope my hon. Friend and I can be corrected by the Minister because, as the House has just heard, the tax rates are punitive. If we are going to do this for all the common-sense reasons that the Minister and the Government say we should, why on earth are we raising taxes to such a point that it discourages and disincentivises all those who need to spend hundreds of millions of pounds, or more, to get the oil and gas out of the ground?
The powerful Climate Change Committee, which operates outside this place, is mentioned occasionally but, frankly, it is pretty unaccountable. It is very influential, and it has now set our fourth carbon budget, which can be legally challenged once it is in place. I wonder whether the Government fear that they could find themselves in the courts as they rightfully plough on with this Bill, to which many people object.
It shocks me to the core that it has taken a war in Europe for the west to prioritise both energy and food security. For how many decades have we been talking about nuclear power, and what has happened? Very little. Nuclear will be a vital component of keeping the lights on and keeping this country safe. Globalisation has softened our resolve to stand alone, if need be, when hard times hit, in whatever shape they come. The Bill has a lot going for it, not least a most welcome return to our old and absent friend: common sense.
I urge the Government to find pragmatic solutions to the transition to net zero and allow the private sector to do what it does best, which is provide jobs and prosperity, not least in Scotland. The search for alternatives to fossil fuels will continue and, as we have heard, the tax receipts will be used to invest in green energy. I have no doubt at all that an affordable, reliable and plentiful solution will be found—the human race has a remarkable ability to survive—but, in the meantime, will the Government continue to work in the real world to keep the lights on, the economy running and the country strategically safe?
Grangemouth Oil Refinery: Energy Security
David Duguid Excerpts(3 months, 2 weeks ago)
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Graham Stuart
The hon. Lady is absolutely right to champion such opportunities, of which there are so many going forward. That is why, if a decision is made on refining there, I believe that would be countermanded multiple times over by the opportunities in issues such as SAF, which she mentioned. Scotland and that area have such a role to play in delivering and continuing the UK’s global leadership in cutting emissions. We recently celebrated the fact that we have halved emissions—we are the first major economy on earth to have done so—and of course going forward we are ambitious than any other major economy on earth. Scotland has such a vital role to play in that.
David Duguid (Banff and Buchan) (Con)
My right hon. Friend makes an excellent point about the importance of the jobs at Grangemouth and the skills that have been developed over the years—this year, it is 100 years since it first came on stream. Does he agree with me and most of the oil and gas industry, which is adamant that the skills, technologies and supply chains that supply not just the Grangemouth refinery but the whole North sea offshore industry are vital for managing not just the energy security of today but the energy transition of tomorrow?
Graham Stuart
My hon. Friend is a great champion of those workers in the oil and gas industry. We now have an integrated energy industry. He may have seen the recent research suggesting that 90% of those currently employed in oil and gas have transferrable skills to the green transition, in which we can positively expect to see many more jobs in future if we maintain the strength of that industry today. That is why it is so disappointing that some Opposition parties oppose new licensing of oil and gas when that is vital to maintaining those jobs and that capability. In that respect, the Alba party is more constructive than others sitting on the Opposition Benches.
We are working closely with both the company and the Scottish Government to ensure a managed transition of the site, support its workers and ensure that Scotland’s fuel supply remains resilient. Petroineos’s plans will ensure that the Grangemouth site can maintain Scotland’s fuel supply through imports. Adapting the infrastructure to accommodate imports in larger tankers, particularly of diesel at Finnart on the west coast of Scotland, will ensure that the import terminal has greater flexibility and maintain robust fuel security.
I recognise that consumers may be worried that increasing the UK’s reliance on imported fuel products could increase the price they pay at the pump. I want to provide reassurance that this conversion is unlikely to drive up the price of petrol and diesel for the Scottish consumer. Fuel prices are mainly driven by international petroleum product markets and exchange rates, and imports into other sites such as Clydebank are already competitive in the Scottish market.
I also want to acknowledge that the announcement of the conversion will be concerning to the refinery’s employees and their families. We remain in close contact with the Scottish Government to mitigate impacts on jobs and the local economy. As part of our commitment to levelling up, the UK Government are already supporting the Falkirk Council area through the UK shared prosperity fund. Its allocation of more than £6.1 million will deliver a range of interventions that support local businesses, communities, people and skills. We are also supporting Falkirk Council with £40 million of UK Government investment through the Falkirk city and regional growth deal, which is supporting a range of locally driven projects that will create high-value jobs to help boost the local economy. We are working with the Scottish Government to deliver the Forth Green freeport, which covers the area. The freeport aims to drive a transition to net zero by 2045 by attracting up to £6 billion-worth of investment and creating approximately 50,000 jobs, generating an estimated £4.2 billion in gross value added in the first five years.
Oral Answers to Questions
David Duguid Excerpts(5 months ago)
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Andrew Bowie
I thank the hon. Lady for that question and, yes, I can give that commitment, because we are already engaging in that work. We are working with companies up and down the UK to ensure that they are able to decarbonise and deliver secure, high-wage, high-skilled jobs into the future, which will be the backbone of this economy as we move forward.
David Duguid (Banff and Buchan) (Con)
First, let me thank the Government for the support they give for CCUS, and not least the Acorn project in my constituency. Does my hon. Friend agree that CCUS needs to be developed across the UK at pace? Does he recognise the particular value of new CCUS power stations, such as the planned project in Peterhead in my constituency, which will generate more than 900 MW and, in conjunction with the Acorn project, will do so 95% emission-free?
Andrew Bowie
Yes, I thank my hon. Friend and congratulate him on his relentless efforts to decarbonise the North sea and the north-east of Scotland, and his support for the Acorn project. I was pleased to join him and the Prime Minister at the announcement on that in the summer. As my hon. Friend knows, CCUS is a priority for this Government, and we are progressing at pace. Power CCUS will be a vital component of our route to net zero, which is why we are committed to supporting at least one power CCUS plant by the mid-2020s.
Making Britain a Clean Energy Superpower
David Duguid Excerpts(5 months, 3 weeks ago)
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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.
David Duguid (Banff and Buchan) (Con)
My right hon. Friend is being generous in allowing interventions. On the GMB leader’s quote about oil and gas jobs becoming the coal jobs of the future, is it not the case that the people with oil and gas skills, who we really need to deliver the energy transition, will not be left on the unemployment line, but will go and do their jobs overseas and deliver other countries’ energy security and energy transition?
Claire Coutinho
My hon. Friend makes an important point. We are lucky to have the skills, expertise and equipment in this country, which are the same skills that we need for a future in renewable energy. It is vital that we protect them and keep those skills here. To unnecessarily cut off those workers’ livelihoods in this country would wreck our clean energy ambitions. We remain resolutely committed to our ambitious net zero targets. More renewable energy; a nuclear revival; exciting new technologies such as hydrogen, carbon capture and fusion; and, where we need oil and gas, jobs for British workers—that is our vision for the future.
Edward Miliband
Never mind then. Keep quiet.
The Government could have legislated to change planning rules to speed up renewables and cut energy bills, but they did not. They do not seem to realise how tin-eared, how out of touch, how absurd they look.
So how did we end up with this Bill? The hon. Member for Bosworth (Dr Evans), who was not allowed to intervene, thinks it is about energy security, and that is what the Secretary of State said. The truth is, however, that she is trying to peddle an illusion, and I suspect that she knows it. Fossil fuels, with their markets controlled by petro-states and dictators and their price set internationally, cannot give us energy security. That is the obvious basic lesson of the past two years. Whether gas is produced in the North sea or imported from abroad, we pay the same price. How much did we import from Russia at the beginning of the crisis? It was 5% —but we were the worst hit country in western Europe, not because of our imports from Russia but because of the way in which the price is set on the international market.
I cannot put it any better than the National Infrastructure Commission, which said just three weeks ago:
“Reliance on fossil fuels means exposure to geopolitical shocks that impact the price of these internationally traded commodities.”
We have had North sea licensing for the last 40 years in this country. If more of it were the answer, the British people would not have faced the pain that they have. According to Energy UK, new oil and gas licences
“will not lower customer bills or significantly improve the UK’s energy security.”
David Duguid
The right hon. Gentleman made a very good point earlier about the difference between the percentage of renewables for electricity and the percentage of renewables for energy overall, including heat and transport. Does he acknowledge that the United Kingdom is currently 75% dependent on oil and gas, and does he agree with the members of the Climate Change Committee, who have stated that themselves, and who have predicted that by 2050, when we get to net zero, the proportion will still be about 20%?
Edward Miliband
I think the Climate Change Committee is actually saying that its most ambitious scenario, which we should be aiming for, is for us to cut the use of gas by 90%. Are we going to carry on using North sea oil and gas? The question for the hon. Gentleman, and for the whole House, is this: do we choose, for the future, to carry on drilling every last drop? That is the Government’s policy, in contravention of all the scientific advice, which is that we will end up in a 3° world—needing billions of pounds of taxpayer subsidy to bring about that investment through persuasion, and diverting investment from the private sector. Personally, I do not think that that is the right choice.
The lesson of this crisis is one that the Government should have learnt, and one that other countries around the world have learnt: the only way to get energy security is to sprint for clean power. That is why the Government’s onshore wind ban is such a disaster. That is why their offshore wind auction is such a disaster. That is why their energy efficiency failures are such a disaster. This Bill neither protects us on price nor gives us energy security.
Here is the thing, the Bill is not motivated by millions of people lying awake at night, worrying about the cost of living crisis; it is motivated by a Prime Minister lying awake at night, worrying about the Conservative party crisis. The interesting thing is that this Bill was planned well before the right hon. Member for East Surrey (Claire Coutinho) became Energy Secretary. It is the last desperate throw of the dice by what we might call the No. 10 galaxy brains, to use climate change as what they call a “wedge issue.” They say this to the newspapers all the time. Series 1 of this new strategy was aired in September, when the party of Churchill and Thatcher became the peddlers of wacky conspiracy theories they found on the internet: abolishing the mythical seven bins; ending the imaginary threat of compulsory car sharing; saying no to invented conspiracy theories on 15-minute cities; and fighting the fictional meat tax. And now we have a sequel. No longer a few throw-away conspiracy theories, this is now the central strategy of their legislative programme.
Members should not take my word for it. It is what the Prime Minister’s advisers brief to the papers day after day. One paper I read on Monday reported that the Prime Minister wants to “weaponise climate change” as a wedge issue. Where the British people see an energy crisis forcing up their bills, the Government see a wedge issue. Where the British people ask how they can have liveable towns and cities with good transport, the Government see a wedge issue. Where the British people worry about the effect of the climate crisis on their kids and grandkids, the Government see a wedge issue. The point is that the Government cannot really deny it, because they know this is what they are saying every day. “We think there is a big opportunity for the Conservative party to try to create division on climate change.” That is why the Prime Minister uses words like “eco-zealots.” It is all very transparent. They are locked in the boot of a strategy. Whether they agree with it or not, that is what is happening.
Dave Doogan (Angus) (SNP)
This Gracious Speech serves as a stark reminder that the Westminster Government cannot be trusted to deliver for the people of Scotland—certainly not in terms of energy. It is ludicrous that people living in energy-rich Scotland are having to grapple with unaffordable energy bills. As a solution, we have a King’s Speech that does nothing to address that. The only energy-related Bill that was referred to in the King’s Speech on Tuesday was the Offshore Petroleum Licensing Bill, which the Secretary of State herself admitted just a few days ago would not bring energy bills down. It is therefore incorrigible that, at a time when a record number of households are facing fuel poverty, the only concrete proposal mentioned in the King’s Speech is one that, by the Secretary of State’s own admission, will not help cash-strapped households across these islands. It could though, she says, release funds to support households with energy bills—the operative word there being “could”. But even in this vaguest of commitments, the mask slips. Let me reinterpret that comment. It basically means that, in the absence of additionality to the Exchequer, this Government will stand idly by while people freeze.
The speech also included reference to help
“attract record levels of investment into renewable sources”
and
“reform grid connections”,
but no Bills were specifically named that set out how that might be achieved. There were no plans, and no detail or funding, to deliver the transition network that is needed to lower bills and ruthlessly dial out gas from our generation systems, thereby protecting consumers. It is utterly hopeless. It is a blank cheque for new extraction based on maximising extraction in abstract, with very little strategic ambition or joined-up thinking, except that of maximising London’s receipts from Scotland’s hydrocarbon endowments. Old habits, it would appear, do indeed die hard.
This ambition also comes with the worst possible greenwashing nonsense as supposedly qualifying criteria, which are entirely permissive, including the carbon intensity test, which seeks to discern whether gas extracted from the North sea will have a lower carbon footprint than gas processed and shipped from around the world— I am pretty sure that you and I, Madam Deputy Speaker, can guarantee that it will. Then there is test that discerns whether the UK remains a net importer of both oil and gas. It seems that that, too, will be a fairly consistent position. It is not even clever or sly; it is almost an indignity to put criteria like that, which is so simple to meet or exceed, in the legislation.
With the same forked tongue that the Government used when they claimed that revenues could go to supporting household energy bills, they also claimed that tax revenues could go towards supporting renewable energy investment. If they meant that, they would be setting out exactly how that would happen; but they have not, because it will not happen under this Treasury or this Tory Government.
In Scotland, we know what the revenues from our oil and gas will be spent on. It is the same thing that they have been spent on by UK Governments over the past 40 years: infrastructure investment in the south-east of England and stemming the economic collapse of broken Brexit Britain. Scotland will not reap any endowment from this latest round of extraction. The Government claim that this is for energy security and to reduce our reliance on foreign oil and gas, when only last month they explicitly decided to prolong that very reliance on gas: through the rollback of the boiler replacement ambition; through the failure of auction round 5, resulting in even more gas generation, which will have to replace the offshore wind that did not happen as a result of that auction round; and through the rollback of the deadline to phase out internal combustion engine cars.
There is no progress on energy efficiency, home insulation, curtailing demand, protecting bills and keeping people safe in their homes—none of it—in this ambition. And the Government are now congratulating themselves on the gas front, because the gas that we will extract from the North sea is marginally less environmentally damaging than that which would have been shipped in from Asia or the middle east. It is the stuff of nonsense.
David Duguid
The hon. Gentleman says that the gas imported from overseas is only marginally more environmentally damaging. Does he not agree with the likes of the North Sea Transition Authority, Offshore Energies UK and other experts in the field that estimate that it could be anything between twice as much or up to five times as much the carbon footprint to take liquefied natural gas into this country, deliquefy it and then get it into our system?
Dave Doogan
I thank the hon. Gentleman for his contribution. I think that we actually agree: the gas that we extract from the North sea is less environmentally damaging than that which would be shipped in from around the world. The point that I am making, and the point that many other observers are making in this space, is that we should be running as far away as we can from yesterday’s hydrocarbon technologies and throwing everything that we have, including the kitchen sink, at getting into a renewable space, protecting bills and saving the environment from further damage. That is where we should be, so mithering over percentages here or there is not the way for us to proceed.
Dave Doogan
That would depend on what we want to grow. If we want to invest substantially in renewable energy and the technologies of the future, then yes, I do. If we want to invest in Chinese expertise, French reactors and nuclear power plants, then no, I do not. It is very much horses for courses with this Government, and I wish that my constituents, and everyone else in Scotland, did not have to rely on these misguided ambitions any longer than we absolutely must.
David Duguid
I want to ask a genuine question of the hon. Gentleman, if he does not mind. He mentioned that he was hoping for between 50% and 60% inflation on the strike price for AR6, as and when it comes around. Could he expand on how that is calculated?
Dave Doogan
I do not want to go into the calculation elements of it, but it looks at the disconnect between the strike price that was delivered in auction round 4 and the ambition for auction round 5, wraps it up in the inflation environment that we are in—bear in mind that these are 2012 prices, so it is not actually that number—and comes out with a figure within that range. It is an auction, as the hon. Gentleman will know very well, so there is an element of second-guessing to it. However, after this Government’s failure in auction round 5, we cannot allow something similar to happen in auction round 6, which will create a disinvestment in offshore wind that we cannot allow to happen.
Scotland is a well-established net exporter of electricity. In 2020, we created 31.8 TW of renewable electricity in Scotland, equivalent to powering all the houses in Scotland for three and a half years. That was in 2020, and we are now generating even more. Calls in Scotland are growing louder and louder, asking how it is possible that in our country of 5.5 million people, where we produce six times more gas than we consume, a staggering 50% of Scottish people aged 55 to 64 are living in fuel poverty. It is as well that they ask, because the answer lies in being handcuffed to Westminster.
Scotland is currently leading the world on floating wind, but only by a very slim margin. We need strategic ambition and significant investment to leverage our intellectual, engineering and geographic advantage into a systemic lead on this technology on a global scale, certainly for technology and design, and for manufacturing in the European sector. Until three months ago, Scotland had the world’s largest floating offshore wind installation, but that title now belongs to Hywind Tampen in Norway.
We are at a critical juncture for offshore floating wind in Scotland, with the potential to exploit our enormous growth opportunity, and to export our manufacturing expertise across the world, but only if we get the strike price right. It is therefore frustrating in the extreme to see the Tories talk about the need for economic growth while at the same time utterly failing to do anything ambitious to support this burgeoning industry of almost limitless potential for Scottish jobs, UK jobs and global sales. Contrast that investment posture with the rush to welcome Chinese expertise and French technology into England’s nuclear industry.
Floating wind must get an appropriate strike price in AR6 that reflects the enormous growth potential of the industry. The Department needs to stand up to the Treasury and secure an administrative strike price that reflects the rudimentary understanding that, as a new technology, floating wind will have a higher cost per megawatt-hour, but it will reduce over time. The price must reflect the advantage of having a more advantageous strike price that allows the supply chain to fall on these islands, not forcing developers to get their supply chain from abroad.
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.
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.
Richard Thomson
I thank the hon. Member for giving way. In his haste to castigate the SNP for presumptions against oil and gas, will he not at least have the intellectual honesty to recognise that in the climate change compatibility checkpoints, his own Government are introducing a presumption against further development, no matter how weak and feeble that presumption might seem to anyone with a care for the subject?
David Duguid
I have heard the hon. Gentleman make that remark before, and I am sorry to say that I completely disagree. A presumption against new oil and gas development is a presumption against new oil and gas development; a climate change compatibility checkpoint is part of an assumption of new oil and gas, so it is not a presumption against new oil and gas. [Interruption.] I have just explained it.
Those workers with their skills and expertise, those supply chains and those service companies with their technology will simply go elsewhere—as I have said—and deliver someone else’s energy security and energy transition. I commend the Offshore Petroleum Licensing Bill for showing this Government’s commitment to not let that happen, and to make the right decisions for this country’s long-term future.
Anthony Mangnall (Totnes) (Con)
It is a pleasure to follow the hon. Member for Warrington North (Charlotte Nichols). Her faith in technology—she read her speech from it—is far greater than mine. I have seen many a speech kiboshed in mid-flow. I agree with much of what she said. There is certainly work that can be done on mental health and PIP. I have always been amazed by PIP assessors’ inability to understand the causes or symptoms of the issues from which people are suffering, and by their inability sometimes to understand whether or not a claimant’s circumstances might change. The constant need to reanalyse claimants throughout their lifetime causes a great deal of hardship for family members who have to do the applications. My office spends a great deal of time on the issue.
It is a pleasure to speak in this debate in support of the King’s Speech. I am surprised that we have not heard a little more positivity in today’s debate because, across the House, it is recognised that we have been a leader on energy markets, on growing our economy and on cutting emissions. The Vallance report, for example, identifies this country’s extraordinary growth. Between 1990 and 2019, we grew our economy by 78% and, at the same time, cut emissions by 44%, which shows the significant changes we have made in this country and our significant progress in creating a green economy.
We have to remind people, both in this Chamber and across the country, that we have cut emissions faster than any other country in the G7, which is something to be proud of and to build upon—and we forget it at our peril. It breeds hope among our people and our businesses that we can set up the infrastructure and the network to encourage more businesses to do the same.
I have heard from many Members on both sides of the House about how they hope to see oil companies become a dying breed. I say this with a little caution, but I do not think there is a single person in this room who, if we could flick a switch and transition immediately to a green economy—taking all the oil industry jobs and all the investment with us—would not gladly flick that switch. In the absence of a switch, we have to encourage and push the oil companies to go green, as so many of them are. The oil companies are part of the answer to a greener economy. Encouraging them to invest in solar, wind and marine power has to be part and parcel of that mix and structure.
I am also surprised that, in this debate, we have not spoken more about the Treasury’s position on incentivising businesses to do more to invest in green technologies in this country, whether through tax credits, encouraging research and development, innovation funds, the UK Infrastructure Bank—I can see the Exchequer Secretary to the Treasury nodding; he knows a great deal about this—or the £22 billion of capital that has been made available for businesses to invest in this sector in the United Kingdom. We forget that at our peril, because it will create the certainty to help us transition to a cleaner, greener economy that addresses climate change.
That said, we can all recognise the opportunities. I will cite a few examples from my constituency of Totnes and South Devon. The first is marine energy. We have some of the strongest tides in the world, and we should use them. Until recently, I would have argued that our interest and investment in marine energy has been lacklustre, yet recent trials across the country, supported by the UK Government, have shown the huge potential to go green in our coastal areas. Indeed, a vicar in Dartmouth is trying to make his church the first marine energy-powered church in the country. Such things need to be promoted and supported.
We need to review things like tidal lagoons. It has been far too long since we have had a proper debate in this place on the Swansea tidal lagoon and the power it would have generated. There are mechanisms out there to support these things, and we have to explore them to make sure we have a diverse mix—not just solar and wind but marine and, as others have said, nuclear, and using the last vestiges of oil and gas where necessary.
I do not know whether he is still sponsoring this Bill but, two years ago, my hon. Friend the Member for Wantage (David Johnston) presented the Local Electricity Bill. Many of us on both sides of the House supported the Bill, which would have allowed electricity generators to become local electricity suppliers. I very much welcome what the Secretary of State said in her opening remarks, because she talked about upgrading the grid. If we can upgrade the grid, the possibilities of the Local Electricity Bill would be immense and we could find all sorts of innovative ways to power local communities.
An example in my constituency is Sustainable South Brent, which has erected a wind turbine that is powering parts of the village and helping to reduce the costs for those buildings. We should be trying to replicate these things across the country, but we can only do so if we upgrade the grid and encourage and embolden local communities to take such action.
It was a privilege to hear the speech of my right hon. Friend the Member for Kingswood (Chris Skidmore), and I agreed with much of it, although I am sorry that he will not be voting for the King’s Speech. He is right that we are a paragon and a model to the rest of the world, and that we have been a leader in this area. Where I disagree with him is that I think we are still a leader.
Of course, we have to take people with us. We are in this place only because people have sent us here to represent their views, and there is a great deal of scepticism out there. The Prime Minister is right to be honest with people about the cost of the green transition. He is right to make sure that we are realistic about our plans and proposals, and he is right to try to minimise the significant costs that might end up on people’s doorstep. Those things are to be applauded, and I do not think they are watering down our green agenda.
I wish to make a few remarks about other parts of the King’s Speech. I serve on the Select Committee on Business and Trade, having served on the former Select Committee on International Trade. We have to inject a bit more energy—literally—into our trade deals. A number of countries want to sign up to free trade agreements with the UK, including Morocco. It wants to introduce a solar and wind interconnector to the UK, and an FTA can help to facilitate that. The fact that it is rumoured that the connecting point will be in Devon has nothing to do with my raising this matter, because I do not believe it would be in my constituency. This does show the power and potential in our trade agreements to find new ways in which we can co-operate on an international scale to help harness the power of our natural resources.
Our trade agreements are the perfect way in which we can help harness and create technology here and trade it with like-minded countries around the world. We have already heard the important points made by my right hon. Friend the Member for Basingstoke (Dame Maria Miller) about battery power and battery technology in this country, and the relationship the UK has with Canada. We need more of that, because that is what our FTAs can facilitate.
David Duguid
My hon. Friend knows more about trade than many people in this place. In addition to all the different renewable and sustainable energy technologies we could be exporting that we develop here, does he agree that an opportunity is provided by the mere act of having a successful transition from 75% oil and gas dependency today to 20% oil and gas in the future? Being seen to be able to do that and our showing how to do that can, in itself, be an exportable commodity?
Anthony Mangnall
My hon. Friend is spot on. If we can help and support those emerging democracies and economies around the world to leapfrog the intensive carbon industries that they think they might need, and to go in a green direction, it will be to the benefit of not just our countries and economies, but the whole world. We should absolutely be talking about this stuff.
The hon. Member for Warrington North mentioned the CPTPP and trade scrutiny. I have caused the Government constant angst by talking about scrutiny. The debate on CPTPP is welcome and I look forward to seeing as many Members as there are in the Chamber now when that Bill comes before the House. I firmly believe that if this House is denied proper scrutiny, we are all poorer off in our constituencies, with our respective businesses, farmers and fishermen. It should be part of our due process that we make sure that a proper, significant level of scrutiny is provided in this place.
With that in mind, I have a proposal: it is time to update Labour’s Constitutional Reform and Governance Act 2010 to make sure, now that we are outside the European Union, that we have a proper debate on it, with a votable motion if that is required. Let me add an aside: it would be advisable to give Privy Counsellor status to all members of the Business and Trade Committee —I declare my interest on that front. There is an important point to this, which is that we can do better, as we have seen with the trade agreements that have come before. We need greater attendance, scrutiny and ability to talk up the benefits of the trade deals.
I am sorry to focus on the hon. Member for Warrington North, but she said that 0.8% was not a lot. I urge caution on forecasts, because on trade deals they are often wrong. They are judged at a static point, rather than on the basis of how businesses take advantage of them. In nearly every instance of a trade agreement that is signed—such as the North American free trade agreement, which was predicted not to be worth a significant amount to the United States economy but turned out to be worth a great deal more—we should not necessarily go with the forecasts. There are enough quotes out there to say why economists are wrong. However, I welcome the Bill and the opportunity for more discussion about joining one of the fastest growing regions in the world.
Let me make a couple more points. I have already spoken before in this place about the Renters (Reform) Bill. We do badly when we pass pieces of legislation quickly. I welcome the fact that we have committed to repealing section 21 evictions in that Bill, but we need to make sure that we have a Bill that works for both landlords and tenants. We have to have that balance, because at it stands we are about to present a Bill into Parliament that will deter people from putting properties into the long-term rental market. It will incentivise the short-term market over the long-term rental market, which will be a disadvantage to the millions of tenants in this country. We must be careful about that. It is easy for us to clip small parts of our speeches in this place and put them out because they say the right thing, but the devil is in the detail and we have to get it right.
It is fantastic to see the Prime Minister double down on apprenticeships, T-levels and what we can do with further education. South Devon College, in my constituency, is the absolute exemplar of what can be done in further education. It trains people in subjects from photonics to boat building, bricklaying to hospitality and tourism—the range is staggering—and it has Government funding and support. The more we can encourage businesses and students to take advantage of the opportunities in their areas that lie within our agenda for further education, the better off people will be in finding jobs and the more likely we will be to find ways in which we can create businesses, not just in centralised parts of the country but across all the regions of the UK.
Finally, over the last few days we have spoken a lot about what the King’s Speech says about keeping people safe. There is no doubt that it is right that we have a robust response to those who have committed the most heinous crimes. As ever, we can do far more to tackle antisocial behaviour and rural crime in areas across the south-west and other parts of the country. Local initiatives have been set up across the south-west that the Government would do well to support, not least the councillor advocate scheme, set up by Alison Hernandez, the police and crime commissioner for Devon and Cornwall, in which she liaises with councillors across the area to enhance police visibility and engagement, or my own initiative to create police hubs in village halls across South Devon, driving up visibility, disrupting rural crime and antisocial behaviour and inspiring more confidence that the police are there to help and serve, as we all know they are.
It is a pleasure to be able to support the King’s Speech and to speak up about the proud record this country has in addressing climate change, reducing emissions and creating new technologies and industries. We should be proud of that, talk it up and never let the fearmongers win.
Richard Thomson (Gordon) (SNP)
It is a pleasure to speak in a debate about energy, because it feeds into the most pressing crisis that all our constituents face at this point in time: the cost of living crisis. We know that higher interest rates are not the answer to the inflation they face. Brexit has certainly made things a great deal worse by increasing the cost of imports, but the cost of living crisis has at its core the massive increase that we have seen in the cost of energy. That taps into our energy security and, as we have heard, it taps into the climate crisis, but it also taps into the opportunities for economic transformation as we industrialise—at least, we have the opportunity to industrialise —through the green revolution.
The Government seem to be failing to provide answers in this area. I agree with the right hon. Member for Doncaster North (Edward Miliband)—words that I do not say very often—that I cannot think of a Government, certainly in my lifetime, who have been so ill suited to facing up to the challenges of the era we all face. No matter how graciously it happened to be delivered, the King’s Speech revealed that we have a Government who are not guided by principle, by strategy or by science, whether woke or otherwise. Instead, they appear to have made a lifestyle choice—if I can put it that way—to be guided by the whims of a few hundred voters in Uxbridge, where they squeaked a very narrow by-election victory, in the vain hope that by pandering on the issues that they thought brought them success in that corner of suburban London, they might find a wedge issue that will allow them to progress in the culture war they are waging against everyone in the UK except their core supporters, to try to protect them from the electoral wrecking ball that appears to be coming their way with increasing force and momentum.
To genuinely be a clean energy superpower, three things are needed. First and foremost, we need an energy market that works. We also need a genuine energy transition, not one that just pays lip service to the idea, and we need Governments who are prepared to invest in making that happen. On the first point—having energy markets that work—one of the reasons we have heard for energy bills being so high is the artificial link mandated by Government between the price of electricity and the price of gas, which the hon. Member for Brighton, Pavilion (Caroline Lucas) mentioned in her substantive contribution. That completely distorts the market, artificially inflating the cost of electricity, which hits both industry and consumers hard.
Another reason why our electricity markets do not work is the inadequacy of not just the energy grid, but grid pricing, particularly when it comes to electricity. That means that anybody generating electricity in the north of Scotland pays a subsidy for the privilege of feeding it into the grid, whereas the further south we go in the UK, generally speaking, that turns into a subsidy for the generator. We are left with the utterly ludicrous situation of somebody who wishes to promote a wind farm in the north of Scotland having to pay handsomely to get that energy into the grid, whereas if they were able to reactivate Battersea power station and burn coal in it, they would end up with a subsidy because of the locational pricing structure we have. That is an absolute nonsense. I can see the brows being beetled feverishly on the Government Benches; I encourage Members to think on that, because it is the situation that the national grid pricing structure has given us for years, and it is holding Scotland back.
Turning to the storage of energy, the UK foolishly did away with most of its storage capacity for gas, on the flawed assumption that it would always be able to buy gas whenever it was needed at the price that was right. We have seen the folly of that in recent times, but of course, it is not just gas storage that is important; we need the means of storing electricity, whether through electrolysis at peak times to generate hydrogen that can be stored and released back into the energy system at other times, the greater use of batteries on an industrial scale, or using pumped storage hydroelectric power. I should confess a particular interest in pumped storage hydropower, because my father was an engineer at Cruachan power station in Argyle, and that is where he met my mother. If it was not for that pumped storage power station in Scotland, I would not be here, so I put that interest on the record. [Laughter.]
There are proposals to double the capacity at Cruachan power station, and to develop a very large pumped storage facility at Coire Glas. It is the regulatory role of the UK Government in those projects, or the oversight they have, that will decide whether or not they go ahead. I encourage the Minister—it might be worth her listening to this—to make progress on those projects, because that is one of the ways in which we will deal with the fluctuations of renewable energy to meet the baseload requirement.
That takes me to my second point, which is on how to be a clean energy superpower. We need a genuine energy transition, and that starts with a bit of basic honesty about the role that oil and gas need to play. The unlimited extraction of oil and gas is simply not compatible with our climate obligations. However, we also need to recognise that, even if there was not a pressing climate change catastrophe looming, our domestic capacity is in long-term decline. Any new licences that are issued and actually come to fruition are only going to slow the rate of overall decline, and we need to be making an impact where we really can, which is in licensing new renewables.
The right hon. Member for Basingstoke (Dame Maria Miller) gently chided us about playing politics on this issue. I must say that I always enjoy it very much when the Conservatives decide not to play politics with energy, particularly when it comes to the debate in Scotland. While it is tempting to say that the Labour party now appears to have the policy on oil and gas that the Scottish Conservatives have long accused my party of having, we really need to raise the debate from that level.
In an exchange with the hon. Member for Banff and Buchan (David Duguid), I pointed out the Conservative policy that dare not speak its name: the Government’s own presumption against further oil and gas development. It prompts the question that if any new oil and gas developments do not meet their tests, what then happens? My presumption would be that they fail, and I understand that also to be the presumption of the Government.
David Duguid
It is really very simple: the difference is between a presumption in advance of deciding whether we even want new oil and gas and a caveat that we put in place after a decision that we want to produce more oil and gas. A presumption—a “pre-sumption”—is different from a caveat.
Richard Thomson
I am not sure I am any the wiser after that intervention. Either a development passes or it fails, and presumably if it fails, it does not go ahead. I will leave the hon. Gentleman to dance on the head of that particular pin.
On the Government deciding to license new fields, we need to recognise that not all of those licences will be taken up and not all of them will produce any significant amount, so when it comes to mitigating where we are, renewables are the only way forward. That is the way to lock in low prices for the future and the way to guarantee energy security.
The Secretary of State, who is now back in her place, was good enough to take an intervention from me, just as she was reaching a rhetorical zenith about floating offshore wind. The answer to my question, which she quite understandably chose not to give, is that the last round of floating offshore wind options would increase capacity by absolutely nothing because not a single bid came in. The reason for that is embarrassing. It yielded absolutely no bids because the price was wrong. The industry told the Government that, and the UK Government persisted in thinking that they knew best. The auction, rather predictably, fell flat on its face, and the result of that auction round was that the increase in offshore wind capacity was net zero.
The final point I wish to make is on the need to invest in making this happen. We need to learn the lesson that future oil and gas can only slow the rate of decline, and that we need to be doing much better in incentivising the technologies of the future. When Prime Minister Boris Johnson paid a visit to the Moray East offshore wind farm, he made a predictably vacuous and facetious remark, saying that Margaret Thatcher was a green pioneer through her virtual destruction of the coal industry. Just as we know there was no just transition for the miners, it looks unlikely that there is a just transition planned for steelworkers who may be affected by recent announcements. We need to make absolutely sure that there is a just transition for the oil and gas sector, but it does not look as though there is anything in prospect from anything the Government are planning, other than that it will be everybody for themselves.
That is in stark contrast to the approach of the Scottish Government, who have earmarked £500 million exclusively to aid the transition, onshore and off, in the north-east of Scotland. That sum is equivalent to the amount that both the Scottish and the UK Governments are putting into the Aberdeen city region deal. The failure —the repeated failure—of the UK Government to match that is not only, I believe, a betrayal of the communities of the north-east of Scotland, but a complete abrogation of the UK’s constitutional and moral responsibilities.
I shall wrap up. What was needed was a King’s Speech that delivered on the means by which we would achieve energy security, that tackled the climate crisis and that delivered the potential for economic transformation, as well as giving relief to hard-pressed energy users. The evidence is that this is not going to happen in Westminster, and it should be devolved. We should be independent, which would be a better place for Scotland to be, so that we can get on with taking the right decisions for the right reasons, off the back of our own decisions mandated by the electorate of Scotland.
Green Energy: Ports
David Duguid Excerpts(6 months, 1 week ago)
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Stephen Crabb
I am grateful for the very concise way in which my hon. Friend has sung the virtues of his local port. He draws attention to an extremely important point. Very rarely are we talking about individual technologies in isolation; often they come together as a mix. There are so many synergies from different companies working together, as we can see at so many ports around the United Kingdom. It is really encouraging to see so many colleagues in the Chamber from so many different parts of the United Kingdom, hopefully looking to share in the vision that we are talking about.
David Duguid (Banff and Buchan) (Con)
On the subject of ports, I should not let the moment pass without mentioning Peterhead and the nearby St Fergus gas terminal. As my right hon. Friend will know, it is the site of the Acorn carbon capture and storage project, which, when completed, will have import capability that perhaps exporters of carbon dioxide from his constituency will take advantage of.
Stephen Crabb
I am grateful for my hon. Friend’s intervention. Banff and Buchan is a constituency with which I am very familiar, as he knows, and there are some exciting things happening. For a long time the north-east of Scotland was associated with fishing and oil, but there is a lot more to talk about now, so I look forward to hearing further contributions from him this afternoon.
To encourage the investment required for all the ports that we have an interest in and are talking about this afternoon, the targets that the Government are setting are really important because they set the level of ambition and send a signal to investors in the marketplace about what the Government want.
There are two documents that are particularly important in describing the opportunities flowing from the new energy environment that we are in. One is the energy security strategy published in April last year; the other, which was published in March this year, is “Powering Up Britain”, which speaks to the role of new renewable technologies in our energy mix and outlines the scale of the ambition. Because of my local port and our proximity to the Celtic sea, I have a particular interest in the Government’s ambitions for floating offshore wind. In those two Government documents, I believe there lies a major new industrial opportunity for our nation.
The targets that have been set include 5 GW of floating offshore wind, 10 GW of low-carbon hydrogen production capacity, up to 70 GW of new solar, and an ambition for between 20 million and 30 million tonnes per annum of carbon storage. That is an exciting and ambitious set of targets that the Government are setting out. Meeting them will require a lot of work and a lot of investment, and ports will be right at the centre of it.
Different ports will undoubtedly offer different capabilities according to size, location, local skills mix and local supply chains. It is too easy to say that there will be something for everyone, but if the floating offshore wind sector in the Celtic sea plays anything like the role that the Government are setting out for it in “Powering Up Britain”, it will generate new activity in multiple port locations across south Wales and south-west England.
But let us not get ahead of ourselves. The truth is that we still do not have any floating offshore wind projects up and running in the Celtic sea. That leads me on to the final section of my speech, in which I will outline the significance of what we have in my constituency at Milford Haven, as well as summarising the key asks that I want to put to the Government.
Oral Answers to Questions
David Duguid Excerpts(7 months, 1 week ago)
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Amanda Solloway
As I previously mentioned, retrofitting is one of our most important projects. Of course, skills are a real issue, which is why we are delighted that this will enable us to enhance our skill bases.
David Duguid (Banff and Buchan) (Con)
I welcome my right hon. Friend the Secretary of State to her new role. Given the vital role that oil and gas play in managing our energy security as demand continues, albeit declining, and the vital jobs, skills, technologies and expertise in that industry, 90% of which are thought to be immediately transferrable to the renewables sector, does my right hon. Friend share my disappointment at today’s reports of Humza Yousaf’s vow to end Scotland’s place as the oil and gas capital of Europe?
Energy Bill [Lords]
David Duguid ExcerptsTuesday 5th September 2023
(7 months, 3 weeks ago)
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Andrew Bowie
I can confirm that we will move to a consultation in the next few months. Indeed, we will use the powers to support the use of those fuels in heat in future, should they be needed. Again, as we move through the consultation period, other Ministers in the Department and I would be delighted to meet my hon. Friend and all Members concerned. I understand that this issue affects many constituencies across the country and, rightly, interests many right hon. and hon. Members. As we move forward with the consultation and towards implementing the powers, we will be delighted to meet Members.
David Duguid (Banff and Buchan) (Con)
I welcome Government new clauses 52 and 63, which are of particular value to those living in certain parts of the country, such as north-east Scotland, as the Minister is very much aware. Will he join me in reinforcing and emphasising the benefit of developments in sustainable aviation fuel and renewable liquid heating fuel respectively, particularly in Aberdeenshire?
Andrew Bowie
Yes, I am very pleased to welcome developments in renewable liquid heating fuel. The consultation, which will be UK-wide, will benefit those living in rural constituencies such as Banff and Buchan, and those across north-east Scotland and rural Britain. I welcome the support for the sustainable aviation fuel amendment, to which I will refer shortly.
David Duguid
I welcome the hon. Member to his new role and pay tribute to his predecessor, the hon. Member for Kilmarnock and Loudoun (Alan Brown).
The hon. Member gave a whole list of reasons why there would be an absence of baseload in Scotland, but I think I may have missed the point where he suggested how that baseload would be supplemented in the absence of nuclear. Could he clarify that? Does it include a new gas-fired power station in Peterhead with carbon capture, usage and storage?
Dave Doogan
The hon. Gentleman is entirely correct: he did miss me highlighting what would replace that baseload, and I refer him to Hansard after today’s debate.
The challenges of inflation and interest rates have altered the parameters to such an extent that this Government’s pretence that it is business as usual is breathtaking. Have they not seen what happened in the recent auction round in Spain or, conversely, what happened in Ireland when the Irish Government intervened to protect investment in renewables and reaped the benefit and reward for their economy?
If projects do slip from allocation round 5 as a result of an unrealistic strike price, where do Ministers think the supply chain capacity, the skilled workers and the specialist vessels will go? They will not wait around here, waiting for the Department to get its sums right—they will be off to the US and the EU to access commercially cogent incentive packages such as those found in the Inflation Reduction Act or the EU’s Net-Zero Industry Act. The stakes could not be higher for both net zero commitments and UK energy prices.
I am proud that the SNP has worked to protect people from the worst effects of the Westminster cost of living crisis with our amendments to the Bill, with steps that would protect the next phase of contracts for difference projects within AR5, properly provide for a comprehensive and complementary mix of energy storage solutions, advance local supply rights and work towards supporting our most vulnerable with the development of a social tariff, especially for those with higher energy use caused by medical conditions. I am pleased that the SNP’s new clause 39 will be put to a vote this evening, and I urge all Members to support that provision, which, while modest in scope, would have profoundly positive effects on many in our rural constituencies who live off the grid and have to heat their homes through liquid fuel.
David Duguid
In the interests of time, I will limit my remarks to carbon capture and storage, and the impact of offshore wind on other commercial activities at sea, specifically fishing. If I have time at the end, I will talk about hydrogen and maybe even the future of oil and gas.
I welcome the announcement on 31 July by the Prime Minister in my constituency confirming the Acorn CCS and hydrogen project; that will mean that four CCUS clusters will be operational by the end of the decade. The Scottish cluster is particularly crucial for my constituency of Banff and Buchan, as well as the whole of Scotland, not just for the estimated 21,000 jobs the project is predicted to support but to enable the construction of a new CCS power station at Peterhead. That power station will replace the existing one, which is currently the only dispatchable thermal power station north of Leeds. It will be critical is providing stable baseload in support of intermittent renewable sources of energy, and will do so in a way that is 95% emission-free.
Again in the interests of time, I am not going to speak about every single amendment that I tabled, but I hope the Minister will bear with me and perhaps respond to the following questions. In respect of clause 2, which deals with licensable activities and their prohibition, can he clarify whether, or why, an economic licence would be required specifically over and above the geological storage licence that would be granted under the existing regulatory regime, namely the Storage of Carbon Dioxide (Licensing etc.) Regulations 2010? Will private operators be able to develop merchant models in competitive transport and/or storage markets in the longer term?
As the Minister will know, the UK has about a third of Europe’s entire offshore carbon dioxide storage potential undersea, roughly equal to that of all the other EU states combined. Only Norway has slightly more than the UK in the North sea. This enormous potential to offer CO2 storage services to European and other countries presents an opportunity for the UK to become a global leader in CCUS, and accelerate the global efforts to prevent CO2 emissions. How will cross-border transport and geological storage of carbon dioxide be enabled to develop in time, without having to rely on the granting of exemptions to allow private networks to develop? Can the Minister also confirm that it will be possible to facilitate transportation by ship, and any other means of transport other than pipeline, through regulation, and that that is covered adequately by clause 128(1)(a)? I see him nodding.
Finally, may I raise the subject of offshore wind? The fishing industry understands that energy security matters, and that offshore wind has an important part to play in the overall energy mix, but food security matters too. The Minister will be aware of studies which have shown that up to half our seas could be lost to fishing owing to other activities, including offshore wind. Academic studies carried out by Heriot-Watt University, among others, have shown the impact that electromagnetic fields from subsea cables have had on the migration, growth and development—including abnormalities—of crabs and lobsters. The Energy Bill already makes provision for the principle of a levy to address the environmental impact of these new wind farms, which is absolutely right and proper, so what consideration—including engagement with devolved Administrations, as required—has been given, or could be given, to the businesses, industries and coastal communities that will inevitably be impacted by offshore wind operations?
Last month, the think-tank Onward published a compelling paper arguing for statutory payments, from developers, to be made to communities where—if and when—onshore wind was developed. If that principle is fair, payments for actual loss of earnings to other marine business from offshore developments are even more compelling as a principle. I am aware of the various voluntary codes and guidance that are available, but they have so far proved to be insufficient. If the Minister is unable to respond to that last question today, will he agree to meet me, and representatives from the fishing industry, to discuss how best to embed a fair and equitable principle in Government action, that would come at no cost to His Majesty’s Treasury?
Wera Hobhouse (Bath) (LD)
The UK has a responsibility to deliver an effective net zero strategy. This Energy Bill provided a chance to ensure that the Government’s own climate commitments could be met. Some parts of the Bill are welcome, but as it stands, it presents us with many missed opportunities. The Liberal Democrats fully support the establishment of the independent systems operator, and I am pleased that the Government have finally listened and given Ofgem a net zero duty. However, I am disappointed that the Government removed sensible amendments in Committee, such as the amendment to ban new coalmines, and I strongly support new clause 2.
Let me now focus on the Liberal Democrats’ new clauses 11, 12, 15, 24 and 28. The aim of new clause 28 is to ban fracking permanently. Fracked fuel is a fossil fuel; it hardens our reliance on expensive gas, and it flies in the face of our net zero commitments. The Government’s own experts have said that the seismic activity caused by hydraulic fracking is not safe. It is incomprehensible that the Government ever considered lifting the ban, and it caused huge anxiety among communities across the country. That must never happen again.
Last year, Shell forcibly installed prepayment meters in more than 4,000 homes, while making £32 billion in profits. Those on prepayment meters typically spent about £130 a year more than direct debit customers. Why are so many vulnerable people forced into this? The Government must support my new clause 15 to prohibit the installation of new prepayment meters unless consumers explicitly request them.
Solar is one of the cheapest forms of energy, and again it is incomprehensible that this Government do not give it the support that it deserves. The Climate Change Committee says that UK solar power deployment is significantly behind the Government’s target of 70 GW by 2035. The smart export guarantee should incentivise households to invest in solar panels by allowing them to sell the excess electricity produced back to the grid. However, under the current system it will take householders decades to break even and this will not incentivise solar investment. Our Liberal Democrat new clause 11 aims to enhance the reward under the smart export guarantee.
Oral Answers to Questions
David Duguid Excerpts(11 months, 1 week ago)
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David Duguid (Banff and Buchan) (Con)
Unlike the SNP, who continue to talk down the fantastic Acorn project, which by the way has never actually stopped—[Interruption.]. One of the reasons it has not stopped is because of the over £40 million invested by this Government in the Scottish cluster; £80 million was promised by the SNP but never delivered. What progress has been made to provide access to CO2 storage sites such as those in the North sea for industrial clusters without direct access to those sites by pipeline—for example, through shipping? What advantage can be taken of existing infrastructure at ports located near storage sites, such as Peterhead in my constituency?
Grant Shapps
My hon. Friend is absolutely right about the £40 million that the UK Government have already spent on the Acorn project. We have track 1 expansion later this year and track 2 will be announced later this year for CCUS. We look forward to further developments. He is also right to highlight the importance of the storage and transportation of carbon; in fact, it is a subject being considered today in the Committee on the Energy Bill. By the way, the largest Energy Bill that the House has ever considered is being passed by this Government.
Graham Stuart
I thank the hon. Lady for her question and her years of effort to support constituents in this respect. I would be delighted to meet her.
David Duguid (Banff and Buchan) (Con)
There has been lots of talk in the Chamber today about green jobs. When I talk to stakeholders in the renewable and low-carbon technology sector, they talk about the need for electrical technicians, mechanical technicians, engineers, instrumentation engineers and all kinds of skills that currently exist in the oil and gas industry. Will my right hon. Friend join me in encouraging young people to consider a career in oil and gas, not just to meet the energy security demands of today but to develop the skills that will be much needed in the future?
Graham Stuart
When I recently visited Aberdeen, Inverness, Port of Nigg and Orkney in the constituency of the right hon. Member for Orkney and Shetland (Mr Carmichael), it struck me that nearly all—in fact, I think all—the companies I met were working across oil, gas and renewables. They are part of one system, whether it is fabrication, subsea engineering or any number of other things. In truth, our energy security is about oil, gas and renewables. We are reducing our use of fossil fuels, but producing it here at home is a noble career for people in my hon. Friend’s constituency.