Offshore Petroleum Licensing Bill

Debate between David Duguid and Caroline Lucas

Committee of the whole House
Tuesday 20th February 2024 Commons Chamber

[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.”

--- Later in debate ---

[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.

Making Britain a Clean Energy Superpower

Debate between David Duguid and Caroline Lucas

Thursday 9th November 2023 Commons Chamber

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Caroline Lucas]

What about Norway?

[David Duguid]

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

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

Energy Bill [Lords]

Debate between David Duguid and Caroline Lucas

2nd reading
Tuesday 9th May 2023 Commons Chamber

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

I appreciate that hon. Members want to demonstrate cross-party support for net zero. Yes, by and large, we agree about decarbonisation, but sadly we do not agree about the speed of that process. The UK has a responsibility to go much further and faster than most other countries because we are disproportionately responsible for the cumulative emissions that are already in the atmosphere.

We were the first country into the industrial revolution—the fossil-fuel industrial revolution—and we need to be the first country out of it. I have not heard enough urgency from Members on either side of the House about that this evening. Winning slowly on this issue is the same as losing. The bottom line is that there can be no new exploration for fossil fuels if we are serious about doing our fair share to avoid the worst of the climate crisis. The report by the United Nations environment programme on the production gap states clearly that

“governments still plan to produce more than double the amount of fossil fuels in 2030 than will be consistent with limiting global warming to 1.5°”.

Ministers often seek to justify new oil and gas developments in the North sea in the name of energy security, but that is profoundly misleading. The majority of fossil-fuel projects in the pipeline are for oil, not gas, which will do nothing to boost energy security, given that we currently export at least 80% of the oil we extract because it is not even the type that is used in UK refineries.

That defence also exposes a paucity of imagination and a failure to grasp what true energy security looks like. True energy security is about abundant and cheap renewables. It is about a flexible energy grid. It is about properly insulated homes and it is about better storage. I urge Ministers to grasp this opportunity genuinely to transform the future of our energy system so that it works for people and planet.

What is most striking about the Bill is its failure to wean us off fossil fuels—the very thing that is choking our planet and driving high energy prices. I endorse the Lords amendment on the prohibition of new coalmines. It was simple in its drafting but vital in its importance. The Minister will no doubt note that it does not only cover coal for energy; it covers coal in its entirety, extending its reach to the newly approved Whitehaven coalmine—and so it should, because that stranded-asset coalmine would produce vast amounts of climate emissions. It is neither wanted nor needed by the UK steel industry, and it is not wanted in Europe, which is rapidly moving towards green steel. I urge the Government to retain the amendment to the Bill.

We need to go much further than that, and reduce our wider reliance on all fossil fuels, not just coal. As a first step, that must involve a review of the outdated and dangerous duty to maximise the economic recovery of petroleum from the North sea. It is beyond imagination that at a time of climate crisis we still have on the statute book an obligation to maximise the economic recovery of oil and gas. We need to move away from that. We also need to move away from the extraordinary position on the so-called windfall tax.

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

I am listening to the hon. Lady’s speech with great interest, and want to pick up on one part of it. On moving away from maximising economic recovery, does she agree that we are already less than 50% dependent on our own domestic sources of oil and gas? Does she agree with the Climate Change Committee’s assessment that our dependence on oil and gas will decline more slowly than our ability to replace it, so we will become more dependent on imports? What she has recommended will not stop our use of oil and gas—it will just make us more dependent on imports.

[Caroline Lucas]

I thank the hon. Gentleman for his intervention, but I totally disagree. The option before us is not to use home-grown fossil fuels versus imported fossil fuels. The choice—[Interruption.] No, it is not. The choice before us is whether we continue to depend on fossil fuels or whether we shift to a green transition much faster. I appreciate why that is difficult for him to understand. Having listened to the right hon. Member for Epsom and Ewell (Chris Grayling), who spoke about the future of aviation, I was struck by the fact that nowhere in his speech was there anything about demand management. People are looking for technical fixes the whole time without recognising that the bottom line is that there are climate limits to what we can do.

[David Duguid]

Will the hon. Lady give way?

[Caroline Lucas]

No, I will not, I am sorry. Some climate limits mean that we need to change behaviour as well as depending on new technologies.

I was about to talk about the windfall tax and the gaping hole that allows corporations to claim £91.40 for every £100 invested if—perversity of perversities—they reinvest that money in yet more oil. This comes at a total cost to the taxpayer of nearly £11 billion—enough to give an inflation-matching pay rise to every NHS worker and teacher for a year. Instead, the North Sea Transition Authority should have a duty to help meet the UK’s climate commitments and deliver a managed and orderly phase-down of UK petroleum. This, of course, must come with a requirement to support a just transition for oil and gas workers and communities—a clear pathway coupled with financial support to enable them to move into green jobs. Crucially, we need to see no new licences, which means that Ministers must give up any idea of giving a green light to projects such as Rosebank, the UK’s largest undeveloped oil field, which would produce more emissions than 28 low-income countries combined. That would be the definition of recklessness.

The Energy Bill aims to deliver a

“cleaner, more affordable and more secure energy system”,

which is a worthy aim. I very much hope the Government listen to hon. Members on both sides of the House who have talked about introducing a new duty on Ofgem to abide by net zero requirements. The amendment on that tabled in the other place received cross-party support, and I cannot see why the Government would not want to make sure that we retain that.

The Government have repeatedly said that they wish to see more community energy generation, but they objected to amendments on that in the Lords on the grounds that they constituted a subsidy. That is not the case. Rather, those amendments would give community energy schemes fair access to the market. If the Government are serious about community energy, they have to find a way to bring community energy to market, precisely by the kind of mechanism—a fixing of price—that we already use with contracts for difference. I urge the Government to accept retain the amendments on community energy, or offer a workable alternative.

In the very short time I have left, I would love to say more about energy efficiency and the need to insulate our homes properly. The cheapest energy is the energy that we do not need to use in the first place, and I despair of the fact that the Government have still failed to come up with the community-led, local authority-led, street-by-street home insulation programme that would achieve proper progress on this.

In the very few moments that are left I want to say a few words about nuclear. Government support for this nuclear white elephant, formalised by the Bill, is beyond ludicrous. We have already discussed the cost of nuclear—it is massively expensive and going up in price—but it is also massively slow. The Government have accepted the goal of decarbonising the UK’s power system by 2035. Given that it will take eight to 10 years to produce new nuclear, it will make absolutely no difference to that decarbonisation target. It is too expensive, too slow and it needs to come out of the Bill.