Oil Refining Sector

Euan Stainbank Excerpts

Thursday 11th December 2025 Westminster Hall

[Martin Vickers (Brigg and Immingham) (Con)]

I beg to move,

That this House has considered the future of the oil refining sector.

It is a pleasure to see you in the Chair, Mr Western. I am pleased that this debate has attracted considerable support, particularly from north of the border, and that today The Times had a timely editorial on this issue.

My constituency is in northern Lincolnshire on the south bank of the Humber, which has been christened “the UK’s Energy Estuary”. In recent years, the Humber has become a world-leader in the offshore and renewable energy sector—something we are proud of locally. However, while the Humber is full of opportunity for offshore and renewable energy and will play a significant role in the UK’s net zero efforts, we must not overlook the UK’s carbon energy needs as we make the transition to cleaner energy sources. We must face the fact that a significant portion of our total energy consumption still comes from oil, gas and coal and will continue to do so. The UK’s annual total primary energy consumption is around 130 million to 140 million tonnes of oil equivalent; fossil fuels made up roughly 79% to 81% of that in the year 2022-23.

The Humber has played a significant role in ensuring that that demand is met. Until the crisis at Lindsey oil refinery in my constituency earlier this year, the Humber could boast of producing a third of the UK’s refined fuel, with two of the UK’s six major oil refineries based in the Humber region. Now, as we approach the end of 2025, only four operational refineries remain in the UK, following this year’s closure of Grangemouth, with significant job losses, and the uncertainty at the aforementioned Lindsey refinery where over 400 people are employed. Even more striking is the fact that the number of refineries is down from 18 in the 1970s.

Sadly for the oil refining sector, most people do not even realise that it exists or appreciate its importance, yet the sector is a vital part of the UK’s energy security. A number of our crucial sectors rely on it, including the transport industry and defence sectors. All Members will know that oil refineries produce products that are essential for our critical energy needs, such as petrol, diesel, jet fuel and fuel oil. The Lindsey refinery has a capacity equivalent to around 35% of British petrol consumption and 10% of British diesel, and also supplies aviation fuel to Heathrow via pipeline.

Yet the House of Commons Library states:

“Refinery output in 2024 was 48 million tonnes. This was 55% below the 1973 peak.”

Output in 2024

“was around 14% below levels from the late 2010s and more than 40% below output from the start of the century.”

That is worrying considering that refineries supply 47% of the UK’s final energy demand, as 100% of aviation, 97% of road and 61% of rail transport still relies on liquid fuels. The refineries also support 100,000-plus jobs across the UK, with 4,000 directly in the refineries. We collect £37 billion annually in tax—that is duty and VAT—from them, and they deliver low-carbon fuels that have an impact equivalent to removing 3 million cars from the road each year. That is not to mention the fact that ours are among the lowest-carbon refineries globally—in fact, 80% of the UK’s top import partners have a higher carbon intensity—yet despite their importance we have seen the closure at Grangemouth and the uncertainty at Lindsey.

What does the future hold? UK oil refineries continue to face a number of challenges. Of course demand for refined products will decrease as the country continues to reduce its emissions in accordance with the legally binding commitment to achieve net zero emissions by 2050, though that target may change. Moreover, energy is the single largest cost of operating a refinery. The industry faces high energy costs, and carbon costs negatively impact the competitiveness of UK refineries. UK refineries are essentially competing with one hand tied behind their back while their competitors pay little or nothing in carbon costs. That is on top of the issue of unequal access to decarbonisation opportunities.

Our route to lower emissions must not come at the price of deindustrialisation or at the expense of our energy security. As an editorial in The Times today points out, some in the Government are so hostile to fossil fuels and so beholden to the green ideology that they are willing to sacrifice our future income and tolerate the jobs that are being lost. We must put the national interest first. Moreover, our climate targets are still some way off, so in the meantime we must continue to rely on the products that refineries produce.

The sector remains vital for today’s economy, yet our refineries are closing. We must realise that closing UK refineries does not reduce demand; it merely shifts production abroad. That, of course, often leads to higher emissions. We are thereby exporting jobs outside the UK while failing in our efforts to cut emissions. Losing further capacity would therefore leave the UK increasingly dependent on imports and the unpredictability of global politics, relying on other nations that often have weak rules on environmental protection, labour rights and safety.

Moreover, once a refinery closes, it does not return. The skills, infrastructure and investment are lost permanently. We must also consider the impact on the local economy and local people that closures cause. At Lindsey, over 400 people are directly employed on the site, and well over 1,000 rely on it through the supply chain. As North Lincolnshire council said in its position statement on Lindsey oil, the implications of any closure of the site will have far-reaching consequences for the local economy and the people employed directly and indirectly.

The council has stated that the potential closure of the refinery will have a significant impact on local market confidence, particularly following the turmoil at British Steel earlier this year. As such, failure to properly support the businesses impacted could multiply exponentially the impact of the closure. Moreover, the south Humber bank, where the site is located, relies on the interconnectivity of its industrial supply chains. As such, the refinery is not an isolated operator but an integral node in a wider network that supplies products to downstream users, and disruption at one site can quickly ripple across the regional economy.

These integrated clusters work in tandem, reflecting the modern industrial model, and our economic resilience relies on the system being maintained, thereby ensuring long-term industrial sustainability in the UK. I note the Scottish Affairs Committee’s conclusions on the handling of Grangemouth, which can be found in the Committee’s recently published report on Scotland’s oil and gas industries. I am sure the Chair of the Committee, the hon. Member for Glasgow West (Patricia Ferguson), will delve more deeply into the detail of the report, though let me quickly say now that the report stated that both the UK and Scottish Governments should have acted sooner to prepare for the crisis in Falkirk.

[Euan Stainbank (Falkirk) (Lab)]

I hear the hon. Member on the strategic importance of oil refineries; we have seen it in Grangemouth for over 100 years. Back in February 2024, in response to a question from the former Member for East Lothian, the right hon. Member for Richmond and Northallerton (Rishi Sunak), the then Prime Minister, described the closure of Grangemouth refinery as “obviously a commercial decision”. Does the hon. Member for Brigg and Immingham (Martin Vickers) agree with that characterisation by the former Prime Minister, who was at the time his party’s leader, given that he is describing—and I agree with him—the strategic role that oil refineries play in his community?

[Martin Vickers]

The hon. Member makes an important point: it is the case that such decisions are not solely commercial; the Government must consider, more widely, energy security and the impact on the economy.

In preparation for this debate, I received representations from various interested parties that are dependent on the oil refining sector. They have outlined their concerns, some of which I have mentioned already, and the solutions they would like to see put forward. One issue that has been mentioned to me is the expansion of the scope of the carbon border adjustment mechanism to include oil refineries’ products. As Members may know, the CBAM is a tax levied on goods at the border based on their carbon content. Expanding the CBAM to products from oil refineries based overseas, as the Government proposed in their autumn Budget, would enable domestic oil refineries to remain competitive and stop them fighting with one arm tied behind their back.

I mentioned that the refining sector is subject to ever-increasing regulatory burdens and carbon pricing. Sadly, the impact of net zero politics, particularly the UK emissions trading scheme, is driving rapid and sustained deindustrialisation of the British economy. Refining receives substantially lower free allowances under the scheme compared with other industries, such as steel and cement, and ETS costs are one of the highest expenditures in a refinery’s operating budget. Competitors in other regions do not face those costs, which seriously damages the competitiveness of UK refineries. We must realise that the ETS damages our energy security and should be urgently repealed. Longer-term solutions may include bringing refined products fully into the UK CBAM or ensuring that the UK retains control over refineries in any future UK-EU carbon market linkage agreement. If we do not want to let this issue get any more out of control, we must act now.

Before concluding, I refer back to the situation at Lindsey oil, because the company is in administration. We have a situation in which FTI Consulting, acting on behalf of the official receiver, is engaged in discussions with potential buyers and investors. Those talks are rightly confidential, and when questioned, Ministers have repeatedly said that they are awaiting the recommendations from FTI. That inevitably feeds speculation through the grapevine that angers employees and their union representatives. I have held meetings with two consortia that are interested in buying the whole site and continuing operations, and the leader of North Lincolnshire council has held discussions with a third. Do the Government support a deal that would retain the refinery complete? Until now there has been no answer. I again ask the Minister: do the Government favour that option and, if necessary, would they provide some support?

Have the Government instructed FTI to prioritise jobs? A letter from Unite the Union to the Secretary of State throws that into doubt. In the letter, Unite says:

“In this vein you informed me and the Unite reps for the refinery on two occasions that you had advised FTI that bids which save the jobs should be prioritised and that if needed, there could be government money for a viable bid which saved the site.”

Is Government money available? The reply seems to throw doubt on all of that. The reply from the Minister for Energy to Sharon Graham at Unite says that the Government

“have made repeatedly clear that long-term and sustainable employment is a priority for the Government”,

but that does not necessarily mean it is a priority that has been passed on to the official receiver.

At a meeting with me and the hon. Member for Great Grimsby and Cleethorpes (Melanie Onn), the Minister for Energy assured us that if the worst came to the worst and the refinery were to close, or there were to be large- scale job losses, one option would be for the Government to work with MPs, local authorities and other agencies to form a taskforce to consider what help and support would be available to revive the local economy. Is that offer still open? My understanding is that the Government have said that there will be no further redundancies until the end of March, which I welcome. Could today’s Minister clarify whether the Government are meeting the cost of that, or whether the costs will be taken into account by the administrators and the amount available to creditors adjusted accordingly?

The future of not just Lindsey oil but the whole oil refining sector is at stake. The Government must review their current position and act to secure the industry for the future.

--- Later in debate ---

[Euan Stainbank (Falkirk) (Lab)]

It is a privilege to serve under your chairship, Mr Western. I congratulate the hon. Member for Brigg and Immingham (Martin Vickers) on securing this important debate, and I agree with his comments regarding the strategic importance of oil refineries for their communities—if only colleagues who were previously in government had grasped that before the decision by Petroineos to close Grangemouth in November 2023 was announced.

As has been remarked by colleagues, 2026 will mark the first year since, I believe, 1850 that Scotland does not have an oil refinery. This year marked 101 years since the start of oil refining in Grangemouth, and the date that refining ceased in April 2025 was a devastating time for the community I represent, the community of my hon. Friend the Member for Alloa and Grangemouth (Brian Leishman), the whole of Scotland and the United Kingdom. I remember sitting in the Falkirk council chamber when the announcement was made. The implications were obvious immediately: the loss of many of the highest-paying jobs in the Falkirk area, and the loss of a substantial tax base for Falkirk council and the Scottish and UK Governments. The announcement was completely unexpected for those of us in opposition parties, who were not in the know.

The failure of Government, as my hon. Friend the Member for West Dunbartonshire (Douglas McAllister) has articulated on behalf of the Scottish Affairs Committee, to prepare our community or have a plan in place for a no job loss transition at Grangemouth refinery has become symbolic of a similar story happening across industrial communities for decades. It was infuriating to find out from the Scottish Affairs Committee report that, through late 2023 and 2024, when it would have mattered, many of the decision makers failed to act to prevent the unjust transition at Grangemouth.

Petroineos confirmed to the Committee in April 2025 that, in the years prior to the announcement in November 2023, the then UK and Scottish Governments had requested information from the company, and subsequently chosen not to make an investment decision that would have saved the refinery. It was engaged for years with Government and no one lifted a finger to stop the path to the closure of refinery operations. Although I wish we had grasped the reality of the situation far more clearly in the transition from opposition to entering government, I welcome the determination of Ministers to get investment into Grangemouth quickly so that we can deliver that new industry to the community.

Today—two weeks after the Chancellor allocated further Government funding to Grangemouth to speed up investment decisions—marks an exceptionally positive announcement for the area. Up to 310 jobs are coming to Grangemouth to support the construction and operation of MiAlgae, a Scottish biotech success story. That does not, however, diminish the fact that many high-paid, high-skilled jobs have been lost, and the constant worry that they and the industry will never come back is justifiably the primary emotion that still grips my community.

We have an obligation not to repeat the mistakes of the past. We do not want the workers at Grangemouth, many of whom have not found employment since the closure in April, to be lost to the middle east, America or Norway. There is still a future for high-skilled refining workers at Grangemouth. That is why I welcome the Skills Transition Centre, announced back in February, funded out of the Falkirk and Grangemouth growth deal, which this Labour Government enhanced by £10 million when we came to power. However, the college that contains the skills centre is facing an existential financial crisis. One of the three campuses that constitutes Forth Valley college—the Alloa campus, in the constituency of my hon. Friend the Member for Alloa and Grangemouth —is directly jeopardised by the 20% real-terms cut inflicted on colleges since 2021 by the SNP Government.

The pathways for local kids to grasp the new industrial opportunities coming to our community will be actively barred if Government settlements for our further education sector are insufficient. Any consolidation that followed the closure of the Alloa campus would affect the courses available for thousands of young people in Falkirk, Stirling and especially Clackmannanshire. Kenny MacInnes, the principal of Forth Valley college, rightly reminded a conference recently that the college will be an instrumental part of whatever comes next at Grangemouth. The Scottish Government must bear that and Colleges Scotland’s recently published report in mind when they set their budget next year if they ever want to speak credibly about rebuilding opportunities in my community.

[Seamus Logan]

I note the hon. Gentleman’s remarks, but is he concerned about his own Government’s commitment to this important debate, given the row upon row of empty seats on the Government Benches?

--- Later in debate ---

[Euan Stainbank]

I note the attendance, and I welcome the hon. Gentleman’s presence in this debate. However, when we were talking about the Grangemouth refinery at the time that it mattered, in the previous Parliament, I note there was an active lack of interest from SNP politicians, with the exception of the former Member for East Lothian, who is no longer a member of the Scottish National party. I have raised the concern, and I have asked for direct intervention from my Government about skills funding for the college during Treasury questions. I very much welcome the enhancement of the local growth deal, which enabled the skills centre to be built.

I will talk about the future of the refining sector. Since being elected I have repeatedly made the case that the best opportunity for Grangemouth is in refining biofuels, especially sustainable aviation fuel, due to its industrial role as a fuel supplier for Glasgow and Edinburgh throughout history, its equal proximity to Scotland’s two largest and busiest airports, its operational capacity and its proximity to a town that has the infrastructure necessary to host the required contractors.

The £200 million national wealth fund commitment to Grangemouth first proposed by Scottish Labour MPs late last year, fought for by Scottish Labour Ministers and announced by the Prime Minister in February, should be spent primarily on developing a new anchor industry for our community that complements the existing skills profile of refinery workers. Ideally, we would not give private international capital a full stake in the project. Many businesses are interested in investing in refining biofuels at Grangemouth, and they are calling for policy certainty during the transitional phase into sustainable aviation fuel.

Legislative measures such as the SAF mandate and the revenue certainty mechanism go a long way towards that, after the Government picked up the work that was delayed for far too long under the previous Administration. However, I would like the Minister to address the following points. Clarity on the revenue certainty mechanism and the pre-contractual work that can be carried out is crucial. Will the Government enable pre-contractual work to be carried out, as we did through contracts for difference, so that there are no delays once the RCM comes into effect later next year?

Project Willow mentioned a proposal to delay the hydroprocessed esters and fatty acids cap. Despite substantial questioning from me, that has not been addressed yet by Ministers at either the Department for Energy Security and Net Zero or the Department for Transport. Will the Government consider altering, delaying or lifting the cap following that recommendation? Finally, it would be useful to have an update on how the £200 million is being deployed, following the welcome announcement on MiAlgae this year.

--- Later in debate ---

[Luke Taylor]

I completely agree. That is why we are talking about a transition. It may well bring shivers to the hon. Member’s spine to talk about transitions, but it is critical that we talk about them in a reasonable and sensible way, and about how we look forward to the future rather than to the past. Reform’s approach is equally dogmatic and damaging as that of the Green party and has already been found wanting in practice in local government.

We can only make the transition a reality if we grasp the opportunity to utilise our existing oil refining infrastructure to turn to the chemistry of the future, with a diverse set of feedstocks from a wide range of supply points. We should be working with industry on delivering that, but industry leaders tell me that on the critical steps that the Government should be taking, they are going ignored or unheard.

Let us take bioethanol, for example. At the start of 2025, the UK bioethanol sector provided 895 million litres of renewable fuel production capacity and thousands of direct and indirect jobs. It was also a significant market for British agriculture and providing critical co-products such as carbon dioxide for the NHS, and for the food and drink sector. As of December 2025, the industry has been halved, following the US-UK trade deal.

An immediate solution would be to transition that bioethanol to SAF, as the alcohol-to-jet technology being developed in the UK can convert it into jet fuel. Under the SAF mandate rules, however, bioethanol readily produced in the UK—sustainable enough for a car engine—has been deemed not sustainable enough for a jet engine. Will the Minister consider the request of industry to support the UK’s bioethanol industry to continue operations and simultaneously support SAF production by allowing bioethanol use under the SAF mandate? The upcoming call for evidence on the role of crops under the UK SAF mandate should be released urgently, and a pragmatic approach taken.

Similarly, opening hydrogen storage subsidies to include liquid fuel infrastructure would ensure that existing assets could play a role in the hydrogen economy. Hydrogen storage is critical, but hydrogen production and usage are also critical to our future renewable goals and to providing the supply of SAF that will be required to decarbonise aviation. DFT rules state that, to make compliant SAF in the UK, hydrogen must be green hydrogen—rightly—and cannot be supported by the hydrogen production business model, a scheme established by DESNZ to get UK hydrogen production off the ground. That alone is not controversial. However, there is no green hydrogen available in the UK that will not be supported by the HPBM, which means that a portion of SAF using these renewable molecules will be uncompliant and, essentially, very expensive fossil jet fuel, despite it actually being green. I convey to the Minister the ask from industry that the DFT and DESNZ should be urgently working together to ensure interconnectivity with hydrogen policy and SAF policy, so that SAF producers are not penalised for using domestic industry?

[Euan Stainbank]

Project Willow also recommended the delay or lifting of the cap on hydrotreated esters and fatty acids. Would the hon. Member agree with that approach being taken? This is the project and report on the future industrial options at Grangemouth.

[Luke Taylor]

I know that the hon. Member has a lot of knowledge on this issue. I think that looking at all the options that maintain capability is critical. What might come out of this is an ask for this Minister— or potentially the aviation Minister, the hon. Member for Selby (Keir Mather)—to sit down with our APPG, in which there is a lot of expertise, to talk about some of the ways that we can maintain capability but also achieve our transition and net zero goals.

A pragmatic approach could be not to apply the rules to smaller users of hydrogen—for example, where hydrogen accounts for less than 5% of feedstock—while a longer time is taken to consider the impacts for large-scale hydrogen users.

I now turn to our wider ecosystem of logistics infrastructure. Pipelines, storage and distribution networks are essential for connecting supply and demand, especially as the market shifts towards sustainable fuels and as we look to improve our energy security. For example, Exolum, which runs a 2,000 km onshore pipeline network that delivers 40% to 50% of the aviation fuel used for UK flights each year, is transforming its aviation fuel pipeline network to supply SAF.

To unlock further investment in the infrastructure and ensure a just transition, industry is calling for long-term policy signals, such as extending and increasing renewable fuel mandates; targeted incentives like business rates relief and payment holidays for new infrastructure; inclusive subsidy schemes for hydrogen storage; and fast-tracking obligations for renewable liquid heating fuels.

At present, most support for fuel infrastructure is directed towards large-scale production projects. Conversely, investment in storage and distribution infrastructure is increasingly undertaken at an operator’s own risk and often ahead of immediate market need. That imbalance is amplified by a business rates system that can disincentivise new investments and high-end capital projects—including energy transition initiatives—especially when the investment is by overseas companies likely to be looking for more cost-effective placement of funding in countries with more generous and strategic policies. How will the Minister ensure that policy and investment frameworks can support storage and distribution infrastructure, thereby enabling the development of a future-ready energy system, capable of responding to evolving market conditions and minimising supply chain risks?

The Liberal Democrats urge the Government fully to grasp the opportunities that our industrial capacity and workforce capability offer our country, to lead the world in a transition to next-generation fuels and energy. It is in our blood and our tradition as a country to grapple with these big technological questions, so it should be up to us to show what real leadership on the just transition looks like—not just because great feats of engineering are impressive in their own right, which they are, but because a whole generation of people whose lives and careers have been shaped by our oil refineries and wider energy sector, and future generations, are counting on that leadership. In recent years, the Conservatives abandoned it. We urgently need to get it back and provide stability for the communities most affected.

Home-grown, local renewable energy and fuels can be clean, cheap and popular, and they embed resilience. The Government must work with industry because striving for theoretical perfection, rather than ambitious but deliverable policy, risks choking the sector and neutering this revolution. Our engineers and industry stand ready to deliver, as they have done time and again, the greener economy that we need and that communities up and down the country deserve.

[Harriet Cross (Gordon and Buchan) (Con)]

It is a pleasure to serve under your chairmanship, Mr Western. I congratulate and thank my hon. Friend the Member for Brigg and Immingham (Martin Vickers) on securing this timely and important debate. I pay tribute to him for his work in standing up for workers, not just at Prax Lindsey but across his constituency and his region—his energy estuary. I also thank the Father of the House, my right hon. Friend the Member for Gainsborough (Sir Edward Leigh) for his wise words. We can support all energies; it is not an either/or. We must not run down the oil, gas and liquid fuel sector just for the want of achieving a target.

In 2025 alone, we have lost two of the UK’s six remaining refineries, with thousands of well-paid workers losing their jobs in the supply chain. Grangemouth and Prax Lindsey have closed, but not because we need any less petrol, diesel, jet fuel or heating oil—just as we will not need any less ethylene after the Mossmorran plant closed in Fife, or any less oil and gas when this Government wilfully shut down the North sea, destroying jobs in communities such as mine in Aberdeenshire.

As the Minister knows, we will simply become more dependent on foreign imports, lose billions of pounds in tax receipts that could support our public services, and destroy hundreds of thousands of skilled jobs in parts of the country that need them the most. We will, as the Minister also knows, strangle our domestic production and then import more products from countries with far higher emissions. We will offshore our carbon, offshore our jobs and offshore our security, all so that the Secretary of State can boast of global leadership at COP. No one is going to want to follow our lead if we make ourselves poorer and less secure. We will become a warning, not an example, to the rest of the world. It is ideology over national interest. As Labour’s friends in the unions say, it amounts to exporting jobs in order to import virtue.

The production at Prax Lindsey will now be replaced by imports from other countries. Ineos will retain its ethylene and propylene production at Grangemouth, but will now import ethane on huge diesel-chugging container ships from across the Atlantic. Perhaps the Minister would like to explain how that is going to reduce global carbon emissions.

Rian Chad Whitton has produced a fantastic report for the Prosperity Institute in which he explains in detail how high energy costs and carbon taxes are crippling heavy industry in the UK, but particularly our refineries. We spend a lot of time in this House talking about electricity—as we should, because our electricity prices are the highest in the world, and this Government are locking us and our constituents into higher prices for longer in the upcoming allocation round 7 auction—but what we often miss in our debates is that only a small proportion of our current energy consumption is from electricity. The vast majority of it comes from other fuels such as natural gas, and that is particularly true for our heavy industry and refining sector.

When refineries use natural gas to produce their products, they are subject to a carbon tax on every unit of CO₂ they release. Refineries have no choice but to use natural gas, because no other fuel can do the job that natural gas does in their processes. Many other countries charge a much lower carbon tax, or—when it comes to our competitors for refined products, such as in the US, India or the Gulf—charge no carbon tax at all. The carbon tax imposed on our industry through the emissions trading scheme makes it significantly harder for refineries to do business in the UK, increases costs for consumers and makes our industry less competitive.

Hon. Members do not have to take my word for it; they can listen to the UK chair of ExxonMobil, which runs the Fawley refinery in Southampton. At the Energy Security and Net Zero Committee recently, he said:

“the majority of…petrol and diesel imported into this country, is produced in the US, Saudi Arabia, Kuwait and India…They have lower energy costs, lower labour costs and zero CO₂ costs…Fawley refinery this year will spend between £70 million and £80 million on CO₂ costs alone. In the next four or five years that will increase to £150 million. You tell me of another industry where you can afford to have a £150 million cost burden on a single producing unit and expect it to remain competitive for the long term. It is an absolute catastrophe waiting to happen”.

In his report for the Prosperity Institute, Rian calculates that at Prax Lindsey, in the constituency of my hon. Friend the Member for Brigg and Immingham, the cost of the carbon tax alone amounted to 120% of the operating profit. How on earth can any refinery survive in that environment?

Things would be bad enough, but Ministers are not intent on making them even worse. Their decision to align the UK carbon tax with the EU’s more expensive one has increased the price that our industry pays by about 70% in the space of just a year. Why are they doing this? Ministers talk about EU alignment as if it is inevitable, but it is not. They control the market. They choose how many allowances they release. They could choose not to align with the EU and keep control of our own carbon market.

Increasing the carbon tax is a political choice that is already causing production costs to soar at refineries in Pembroke, Fawley, Stanlow and the Humber, and that has increased the cost of everybody’s electricity bill, too. Labour Members should know that electricity bills have increased by £2 billion this year alone because of the Government’s choice of alignment. The carbon tax is charged on gas-fired power generation too, and it is passed straight through to our constituents in wholesale electricity prices. That is exactly why the Conservatives have said that we will axe the carbon tax as part of our cheap power plan, to cut everybody’s electricity bills instantly by 20%.

The soaring carbon tax is crippling the refining sector. Will the Minister explain how refineries are supposed to survive when the Government are planning to increase the carbon tax between now and 2050? Is it the Government’s plan to have a carbon tax of £147 a tonne in 2030, as set out in the National Energy System Operator report? If not, will she disown her party’s claim that the NESO report shows that the clean power 2030 plan is achievable? Will the Government scrap their plan to align with the EU carbon tax scheme, which would lock us into ever higher carbon prices with no control? Will the Minister commit to increasing the number of free allowances given to the refining sector to shield it from at least some of the burden?

Refining is viable only when the raw product to refine is abundant and cheap. We cannot run a refinery on warm words about net zero and promises of green jobs that never materialise. We need crude oil and natural gas, so let us consider what is happening to the domestic oil and gas sector under this Government. Production is down, and falling at an accelerating rate; the cessation of production and decommissioning is being brought forward; investment is going overseas; 1,000 jobs a month are being lost from producers, operators and the supply chain, and no exploration wells were drilled in the UK North sea last year, for the first time since the 1960s. Why is this happening? Because the Government have banned new licences and continue—choose to continue—to keep the energy profits levy and tax UK oil and gas production at a higher rate than any other comparable basin. How can UK companies possibly compete when paying tax at 78%? There are no longer windfall prices or windfall profits, so why are companies still having to pay windfall taxes?

The Government’s short-term and idealistic policies on the North sea have an impact everywhere: they impact jobs, livelihoods, households, businesses and industries across the country. Does the Minister understand the anger and frustration in communities like mine in Gordon and Buchan, and throughout the energy sector, at the Prime Minister’s words about the EPL last week? People are losing their livelihoods and their ability to support their families because of the Government’s political choice to shut down the oil and gas sector. To hear that the Prime Minister does not even understand the policy that he is imposing, which is causing so much harm, is a complete slap in the face for energy communities across the country. Can the Minister confirm for the record that the Prime Minister was wrong to say that the windfall tax kicks in when there are excessive profits? Will she confirm that there is no longer any windfall left to tax?

[Euan Stainbank]

When the hon. Lady’s party was in power, in February 2024, in response to a question from the former Member for East Lothian, her then party leader said that the future of the Grangemouth refinery was “obviously a commercial decision”, essentially excluding themselves from taking any action. Does she agree or disagree with the former Prime Minister’s characterisation, considering what we have heard from the Conservative Benches—and I agree—about how oil refineries are strategically important? It was not a commercial decision, and something could have been done when her party was in office.

[Matt Western (in the Chair)]

I am sure the hon. Lady will give the Minister enough time for her speech.