Fossil Fuels and Cost of Living Increases

Graham Stuart Excerpts

Wednesday 11th January 2023 Westminster Hall

[The Minister for Energy and Climate (Graham Stuart)]

I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing this important debate and I thank the other hon. Members who have taken part for sharing their constituents’ thinking on fossil fuels and the cost of living.

However, listening to quite a lot of the contributions to the debate, I felt as if we were in some sort of parallel universe, away from the reality of the world we live in today. Three quarters of our energy comes from fossil fuels. That is the reality now. The cost of living crisis is driven by a global shortage of fossil fuels, which is driving up their price. We are moving faster than any other G7 country to decarbonise, which no one would have understood from listening the contributions from those on the Opposition Benches. We led the world in passing legislation for net zero, and in putting in place the Climate Change Committee and the rest of it to keep the Government honest on the route to getting there, which is a tough one.

The reality is that this economy, like every developed economy, is dependent on fossil fuels today, and it will be all the way through to 2050 on net zero, when we will still be using a quarter of the gas that we use today and we will still need oil products. That is the context, which people just absolutely would not have got a glimpse of from the contributions by Members on the other side of the Chamber today. We heard them all pat each other on the back on their ideological opposition to nuclear and their objection to a source of baseload energy that is clean—for what reason? We heard an absurd world view, co-ordinated between the SNP, the Greens and His Majesty’s Opposition. Frankly, it is bizarre. Get real about where we are actually at.

To talk, as the hon. Member for Glenrothes (Peter Grant) did, about the crisis and its impact on the most vulnerable people in his constituency and not be honest about the context or the need for oil and gas in the meantime, and not to engage with the fact that producing oil and gas from our own waters with ever-higher efforts to reduce the emissions from that production, is simply wrong. And for the hon. Member for Bristol East (Kerry McCarthy) to say that it is laughable to suggest that burning domestically produced gas with much lower emissions attached to it, when we must burn gas and we will be doing so under net zero in 2050, is somehow not the right thing to do is, again, frankly absurd.

I hope to return to my actual speech, but I must address the reality of the impact on ordinary people and the most vulnerable. Those people are ill-served if we do not recognise the actual realities of the economy and society that we live in today and, instead, just pose to the public in a kind of virtue signalling.

The hon. Member for Lancaster and Fleetwood (Cat Smith) totally condemned every action by this Government, as though nothing the Government have done has helped in the journey to net zero or in tackling climate change. This Government have done more than any other and taken action on the woeful situation on energy efficiency in homes. We are still way behind where we need to be, but where were we in 2010? I will tell people where we were: just 14% of homes had an energy performance certificate of C or above. If people want something risible or laughably poor, that is it. What is that figure today? Forty-six per cent. We heard nothing but condemnation from the hon. Member for Bristol East, who spoke for the Opposition, about the “shambles” of this Government’s policy. Well, under our policy, we have moved from 14% to 46%.

This Government are committed to setting up an energy efficiency taskforce—further details will be coming soon—precisely to deal with the points that my hon. Friend the Member for St Ives (Derek Thomas) was so right to raise. His contribution was grounded not in the unreal parallel universe presented by Opposition Members but in a real understanding of his constituents in Cornwall, their homes and the rules and barriers that stand in the way of those people being able to have more energy-efficient homes. Those rules and barriers need to be identified and removed to ensure that those people who can and will invest themselves to green their homes are better able to do so.

That is what we need—practical, focused, real and honest engagement with the challenges. People have to accept the wider context, and they have to recognise what this Government have done after the woeful performance previously, which can be seen in all the numbers. Where were we on renewables in 2010? Practically nowhere. Where are we now? Leading Europe. I did not hear that in a single contribution from the Opposition Members who say they care so much about this issue, but care insufficiently to share any of the vital facts.

[Caroline Lucas]

I thank the Minister for giving way. I want to say how utterly disappointed I am by the tone that he has taken. I think that we have all been pretty constructive this morning. We have given the Government credit where some progress has been made, but the Minister cannot stand there and pretend that either the green deal or the green homes grant were successful—we know that they were a disaster. He cannot keep going back to 2010 and suggesting that somehow history was frozen at that point. Any other Government would probably have done a hell of a lot more than this Government have since then.

The suggestion that we are virtue signalling, when we are the ones who are saying that our constituents are living in freezing homes right now—some are actually dying from hypothermia—in a country that exports more energy than it uses, is intolerable. Why is the Minister suggesting that we are on the wrong side when we say that gas is eight or nine times more expensive than renewables? That is what is hurting our constituents. Will he really stand there and defend the Rosebank oil development? That is for export; even if we do get more oil and gas out of the sea ourselves, it does not necessarily get used here, and Rosebank certainly will not be used here. Will he address that point and some of the other real points that we have been making this morning?

[Graham Stuart]

I thank the hon. Lady. The cost of living crisis is because of the global position on the price of gas, driven by supply and demand, as every market is. She speaks as if there is a switch, and a wilful failure by people in my position to press the button that ends all fossil fuel. We hear careless suggestions—“From your friends in the City of London to your friends in the oil and gas industry”—as if there is some button we have not pressed. That is not true. This economy, like every developed economy, is dependent on fossil fuels, and it is a transition to get out of that. Pretending it is not does not serve those people who are suffering as the hon. Lady said.

The Government are driving a reduction in our demand for fossil fuels, and we have achieved a lot on our road to net zero already. Between 1990 and 2019 we grew the economy by 76% yet cut our emissions by 44%, decarbonising faster than any other G7 economy. But oil and gas will remain an important part of our energy mix, and that needs to be recognised. People should not suggest that there is some button that we are wilfully failing to press. We cannot switch off fossil fuels overnight and expect to have a functioning country. If we do not have a functioning country, we will have more people who cannot afford to heat their homes properly. That is the reality, and I do not think that has been properly reflected by Opposition Members today.

Supporting our domestic oil and gas sector is not incompatible with our efforts on decarbonisation when we know that we will need oil and gas for decades to come. What is laughable is to suggest that it is somehow morally superior to burn liquid natural gas imported from foreign countries, with much higher emissions around its transportation and production, than gas produced here. Why would we want to do that?

[Peter Grant]

rose—

[Graham Stuart]

There are 120,000 jobs, most of them in Scotland, dependent on oil and gas. I was delighted to witness the signing of a memorandum of understanding with three major oil and gas companies looking to decarbonise their operations west of Shetland and bring down their production emissions. Emissions from oil and gas production in this country—remember how fast it is waning—are still around 4% of our overall emissions. The idea is to incentivise companies that are massively taxed to invest in electrification of their production. We need oil and gas for decades to come. If we can, we should produce it here rather than import it from somewhere else, and we should incentivise and ensure that production here is as green as possible. That is why it is not incompatible.

[Peter Grant]

rose—

[Graham Stuart]

We are a net importer of oil and gas, and we will continue to be. New licences simply help us manage a fast declining basin. Even with new licences, the production is falling by around 7% a year, and I think the IEA suggested that it needs to fall by 3% to 4% globally.

It is a bizarre argument made by the Scottish nationalist party. The hon. Member for Glenrothes is right to say that it is not popular. It is not popular in Scotland because it is insane. It does not make any sense for us to import oil and gas, because we are going to be burning it. There is no button to stop us burning it. If we are going to keep burning it, we should burn oil and gas that we produce here if we can, and we should incentivise our producers here to operate to the highest environmental standards. That is the right thing to do morally, for the environment and economically, and it makes sense. That is why the SNP’s policies, as re-announced this morning, are so completely out of kilter with reality.

[Peter Grant]

I am grateful to the Minister for finally giving way. I tactfully point out him that that he has seriously misrepresented the position of those of us on this side of the debate. Nobody is suggesting that we should turn off oil and gas production immediately. What we are saying is that we have to stop the headlong, insane rush towards more and more oil and gas production.

I also remind the Minister that his country is a big importer of energy and my country is a big exporter of energy. On that point, will he answer this question? How is it that a country that has more gas than it needs—a country that is an exporter of an increasingly scarce, and therefore increasingly valuable, natural commodity—is becoming poorer when something that we have an excess of has become more valuable?

[Graham Stuart]

As we know, the price of oil and gas has gone up, and hopefully it will go down again and become more affordable. Scotland is an integral part of this United Kingdom, which is why the hon. Gentleman is present in this United Kingdom Parliament. That is why we are in it together. That is how we are able to support Scottish households and families through the power of the Exchequer and the Treasury of this country, which, as he knows, provide much higher levels of public expenditure and support the Scottish nationalist party to take credit for every single penny spent, a large part of which is able to be spent only because of Scotland’s participation in this United Kingdom. We are in this together.

Hon. Members raised the idea that oil and gas firms are being subsidised, but we have raised the level of tax. I think £400 billion has come so far from the oil and gas companies. They are not being subsidised when we encourage them—

[Caroline Lucas]

Of course they are.

[Graham Stuart]

A reduction in tax from a level that is way above that which any other type of company pays in this country is not a subsidy, and anyone who suggests it is is dealing in semantics and not helping. Hon. Members can say they want to tax those companies higher, and they can say, “I absolutely do not want to encourage them to electrify their operations offshore and reduce the emissions around their production,” but they cannot say we are subsidising them.

Even when our net zero targets are met in 2050, we will still need a quarter of our current gas demand. As we have seen, constrained supply and dramatically increased prices do not eliminate demand for oil and gas. We will still need oil and gas, so it makes sense for our domestic resources to retain the economic and security benefits. Most importantly, hon. Members should look at what we are doing in the North sea basin. We are transitioning, but we will need all that offshore expertise. We need the engagement of the major oil players, which have now made commitments to their journey to net zero. We want them to produce the oil and gas that we will be burning for decades to come here in a green way.

We want to retain those 120,000 jobs. We want to retain the people with subsea and platform knowledge, because we will need that for carbon capture and storage, hydrogen and the transition to the green economy. Again, it is an absolute betrayal not only of the interests of those workers in Scotland and elsewhere but of our transition to suggest that there is a kind of brake. It is a transition, and we are moving through it. Thanks to the Climate Change Act and the carbon budgets, we are on track to reduce demand.

That is another point: hon. Members talk as if oil and gas exploration drives the world’s use of oil and gas, but it does not; the demand side does that. Petrol cars need to be filled, which is why we are encouraging electric cars. Methane-burning boilers demand gas, so we need to replace them with heat pumps and green our electricity system. It is the demand side that we need to focus on. I just think the whole conversation nationally has been focused on how oil and gas exploration drives usage, but it does not. Putting the price up massively and having a shortage does not massively drop usage because we are so dependent on this stuff. We are moving as fast as we can to get ourselves off that dependency, and we are leading the world in doing so.

Through our COP presidency, we have encouraged the rest of the world to follow us. Just 30% of global GDP was covered by net zero pledges in 2019, when we took on the COP presidency, and it is now 90%, so the world is following us. We are leading on those policies. We are a world leader in tidal, which was mentioned. I am delighted that we have now been overtaken by China in offshore wind, but we are the leader in Europe. We transformed the economics of it thanks to our contracts for difference—the mechanisms that this Government put in place. The truth is that this country has done comparatively a fantastic job. The data shows—notwithstanding the sometime mis-steps in energy efficiency—that, overall, our performance compared to what came before has been transformative,

I look forward to the energy efficiency taskforce, my colleague Lord Callanan, and a co-chair who will soon be announced taking these matters forward and listening to colleagues’ practical, proper suggestions on everything from getting the right balance between conservation and installing energy efficient windows to looking at issues such as solar installation on homes, planning and other aspects. We are working together on all those things and also ensuring that we take an holistic approach around our coast as we make plans and aim to ensure that we have a strategic spatial understanding of the North sea and its role in the transition.

This country is doing a fantastic job, and the vision for the future is that we should be an exporter of electricity. I hope to see us being an exporter of hydrogen. I see us as being potentially able to export, as it were, our carbon storage capability to our European friends and allies, and recently I was delighted to witness the signing of a memorandum of understanding on North sea co-operation with all the other countries involved in the North sea. That shows that we are working constructively with our EU allies.

On so many fronts, this country—and this Government, I am proud to say—is doing a brilliant job in leading the world in understanding the importance of getting to net zero, in tackling the reality of the transition from our dependence on fossil fuels, and on the need to keep producing those things in the greenest manner possible while doing everything we can to drive down demand, because it is the demand signal that we need to eradicate, rather than worrying about whether Rosebank, Cambo or anything else goes ahead. We have ensured through the climate change checkpoint that we look closely at that, and I am confident that our approach is compatible with the journey to net zero.

[Caroline Lucas]

Several of us around the Chamber have said that the vast majority of the energy extracted from Rosebank is for export, so will the Minister stop pretending that it will somehow address any of the crises that we face in the UK? He has painted a picture suggesting that none of us on this side of the Chamber has talked about the demand side. The vast majority of what all of us have been talking about has been energy efficiency, which is precisely about reducing demand. Will he start to address some of the points that I made in my speech, and which many other hon. Members did too?

For example, will the Minister address the issues around prepayment meters? Will he address whether there will be a much ramped-up energy efficiency programme? Will he address the questions I asked about how the £6 billion will be used? Will there be more money coming? Lots of questions have been asked in a constructive spirit—believe me, we could have been an awful lot less constructive if we had chosen to be—and I would be grateful if the Minister did us the courtesy of answering them.

[Graham Stuart]

rose—

[Sir Robert Syms (in the Chair)]

Order. The Minister will complete his concluding remarks and the hon. Lady will get a few minutes at the end of the debate, which I am sure she will wish to use.

[Graham Stuart]

To deal with prepayment meters, which the hon. Lady raised, Ofgem has rules in place that restrict the forced fitting of prepayment meters on customers who are in debt, except as a last resort, but prepayment meters do have a role to play in helping people to ensure that they do not go into debt. There are strong rules about that, and Ofgem is engaging with, and has done a review of the performance of, suppliers in supporting vulnerable customers and seeking to ensure that those suppliers fulfil their licence requirements.

In 2021, the Government published a progress report on the delivery of the EPC action plan. We aim to complete all actions by the middle of this year, following necessary amendments to legislation. That, to answer the point made by my hon. Friend the Member for St Ives, is in hand. On the issue that came up around warrants, clearly, the legal side of that is a matter for His Majesty’s Courts Service and the Ministry of Justice, but following the debate I will raise the matter with colleagues at the Ministry of Justice, ask them to look at it and go from there.

On the energy efficiency taskforce, we will come forward—I hope pretty soon, in answer to the hon. Member for Brighton, Pavilion—with the terms of reference, the membership and so on. Things will then become clearer. We do not want to prejudge how the taskforce will inform policy making in order to deliver the best use of the additional £6 billion, which I am sure Members welcome, in addition to the £6.5 billion being spent on energy efficiency in this Parliament.

I will make a final point and then sit down before you force me to, Sir Robert. We need top-down, we need the high-level policy and we need the funding. We have that from His Majesty’s Treasury, and we have the commitment on the energy efficiency taskforce, which has a positive role to play, but it also needs to look at how we galvanise the real will and desire there is across different parties running councils across the country, in different communities, to have a bottom-up approach to empower and enable communities and regions to do their bit to tackle net zero. A big focus of their work will be energy efficiency, understanding and surveying their housing and other building stock to come up with plans to build the required skills base, ensuring a career for people who enter that world. Through that, we can make a real difference.

At Government level, local government level and local community level working together we can accelerate the reduction in demand. Hon. Members did not mention the Chancellor’s announcement setting a target of reducing energy demand by 15% by 2030. I hoped that might have been commented on and welcomed; I certainly welcome that.