Energy Update

Debate between Greg Hands and Stephen Flynn

Monday 5th September 2022 Commons Chamber

[Greg Hands]

The French analogy is a bit of a misnomer, and the hon. Gentleman and I probably disagree on it. I think he is celebrating the nationalisation of the French energy industry, but I am not sure that is a good answer either for this country or for others. He says that further action is needed, and that is what I have pledged at this Dispatch Box. I ask him to look at the amount of money—£37 billion—that this Government have already put in to assist consumers with energy bills; I think it compares favourably with other European countries, up until the previous rise in prices.

[Stephen Flynn (Aberdeen South) (SNP)]

In Scotland, we produce six times as much gas as we consume, yet the energy price cap has already increased by 40%. In Scotland, gas accounts for just 14.4% of electricity production, yet the energy price cap is about to increase by a further 80%. In Scotland, our annual electricity production comes almost entirely from renewables, yet households and businesses are being crippled. Surely even the Minister must accept this blatant failure of UK energy policy. Is it not time we recognised that Scotland does not just have the energy; we badly need the power?

[Greg Hands]

The hon. Gentleman will not be surprised to hear that I strongly disagree. When it comes to energy, it is the UK Government’s reserved energy policy that is working well for the people of Scotland. Had we followed the SNP’s energy policy of being against both nuclear and Scottish oil and gas, we would be in a terrible position and would probably be dependent on the good will of Vladimir Putin.

North Sea Oil and Gas

Debate between Greg Hands and Stephen Flynn

Wednesday 9th February 2022 Commons Chamber

[Greg Hands]

My right hon. Friend was a brilliant Exchequer Secretary.

As a former Treasury Minister, I can say how well he was regarded in Government and in this House for the important work that he did at HM Treasury. He is right: this is not in itself a debate between gas and renewables. The current debate is whether we get the gas that we currently need from the UK continental shelf or import it from abroad. Foreign imports come at a higher price in regard to emissions and our energy insecurity.

It is worth reminding ourselves that 50% of UK gas comes from the UK continental shelf; that is a good position to be in. An additional 30% comes from Norway, which I regard as a very good, stable and secure source. On the investment picture, he is also right—and the Chancellor was absolutely clear on this in his statement on Thursday—on the importance of more investment coming into the North sea, not just for the short term but for the transition going forward.

[Stephen Flynn (Aberdeen South) (SNP)]

I welcome this urgent question because it gives us all an opportunity in this Chamber to reflect upon the fact that when the UK Government need to meet their energy demands and their financial demands, the first thing they seek to do is to turn the tap on in Scotland and exploit our natural resources. Whilst they are willing to do that, they are simultaneously unwilling to deliver carbon capture and underground storage in the north-east of Scotland, unwilling to match the Scottish Government’s £500 million just transition find, and of course unwilling to finally end the renewables robbery that is the TNUoS—transmission network use of system—account charging scandal. May I ask the Secretary of State a very simple question: when is he going to show similar haste on those important issues?

[Greg Hands]

I listen to the hon. Gentleman week in, week out, claiming that the UK Government, when it comes to energy, are doing down Scotland. The exact opposite is the truth. We are very supportive of Scottish nuclear, which he is opposed to. The Hunterston nuclear plant closed just a few weeks ago, which had provided, at low cost, zero-carbon energy to all of Scotland’s homes on an equivalent basis for 31 years. We heard not a peep out of him. We hear the Scottish First Minister recommending that particular fields not be given approval. How does that land among the 200,000 people in this country who are dependent on the oil and gas sector, of which about 40%—80,000 or so—are in Scotland, particularly north-east Scotland?

On CCUS, the hon. Gentleman knows that the Acorn cluster is the reserve cluster, and has significant UK Government support. I have met with Storegga and many other participants in recent weeks. The transition review is led by Ofgem and of course we will look at cost and affordability in relation to transition.

I am afraid that the hon. Gentleman’s ideological opposition to nuclear, and now the increased opposition to oil and gas and the North sea transition, shows that the SNP is not fit to run an energy policy for Scotland, and the people of Scotland will be thankful that the matter is reserved.

Oil and Gas Producers: Windfall Tax

Debate between Greg Hands and Stephen Flynn

Tuesday 1st February 2022 Commons Chamber

[Greg Hands]

We have ourselves raised more than £375 billion-worth of production taxes. North sea oil and gas have been a big success story for this country, and also for our Exchequer. As a former Treasury Minister, I can repeat that of course all taxes are kept under review by the Treasury, and any changes are considered and announced by the Chancellor.

[Stephen Flynn]

Will the Minister give way?

[Greg Hands]

No, I am going to make a bit more progress.

The oil and gas industry and its supply chain are supporting more than 195,000 jobs, but investment in 2020-21 was at an all-time low of £3.5 billion. Meanwhile, there are £11 billion-worth of opportunities awaiting investment. We would be cautious about the potential implications that any change in the tax regime could have on investment, not just in oil and gas developments but in the development of cleaner-energy technologies. Moreover, continuing investment in the UK continental shelf is needed to support production and our security of supply. That is particularly important this winter, but it is also important in the longer term, because UKCS production can help to mitigate potential supply issues.

When it comes to the sector itself, I heard nothing from any of the Opposition Front Benchers about whether they supported our world-leading North sea transition deal. However, we want to support up to 40,000 high-quality direct and indirect supply chain jobs, including jobs in Scotland and our industrial heartlands in the north-east and east of England, generating up to £14 billion to 16 billion of investment to 2030 and delivering new business and trade opportunities to assist our transition to a low-carbon future.

For the longer term, the Government are looking at how policy costs, which help to fund low-carbon energy infrastructure, support vulnerable consumers and ensure security of supply, are distributed between gas and electricity. Investment in renewable and nuclear energy will be key to achieving that, and we have made and are continuing to make massive progress in both those areas since 2010. As of 2020, renewables contributed 43% of our electricity mix, more than six times the percentage in 2010, when the right hon. Member for Doncaster North (Edward Miliband) was Secretary of State. On 13 December, we launched the latest round of our flagship renewable energy deployment scheme, contracts for difference.

Oral Answers to Questions

Debate between Greg Hands and Stephen Flynn

Tuesday 11th January 2022 Commons Chamber

[Greg Hands]

As I have mentioned, I met with Storegga before Christmas, and my hon. Friend and I also talked about this in his constituency in early December. I am looking forward to further engagement with the cluster. I also agree with what he said about oil and gas. We have a North sea transition deal, and the important thing is transition. It would be mad, particularly at this time of elevated gas prices, to do anything to close down the North sea, and it is not our objective to do so. Therefore, we should stick to the transition deal, support our key oil and gas sector in the North sea and absolutely reject a lot of the politics coming out of the SNP, which has turned to be anti-North sea, which is not holding Scotland’s best interests at heart.

[Stephen Flynn (Aberdeen South) (SNP)]

Of course, it is not just on carbon capture underground storage where the UK Government have betrayed Scotland’s interests. As the Minister will be acutely aware, Scottish renewables projects continue to pay the highest level of grid charging anywhere in the entirety of Europe. Indeed, I was speaking to an operator just recently who told me that over the lifespan of his project, he anticipates that it will pay £1 billion in grid charging; meantime, a project in East Anglia will not pay a single penny. Is that a Union of equals?

[Greg Hands]

I am always pleased to take a question from the SNP Front Bench, although I notice that the hon. Gentleman did not say anything about nuclear, the North sea transition deal or the recent announcement of a £20 million funding pot for tidal. He did mention transition charges. He will know that Ofgem recognises the importance of transition charging arrangements, which is why it is currently considering responses to its call for evidence on transition charging reform. That is already being covered, but I would like to hear from the hon. Gentleman—he may have another question—that he is going to change his mind on nuclear and supporting the North sea transition deal.

[Stephen Flynn]

Of course, the Minister’s continual deflection to Ofgem fails to meet the needs of businesses in Scotland. He will also be acutely aware that under the Energy Act 2004—section 185, I believe it is—he could take action to change the status quo, but he chooses not to, and the reason is quite clear. The National Grid is clear that in a couple of years Scottish projects will pay £465 million into the grid, while projects in England and Wales will cumulatively get a subsidy of £30 million—a renewables robbery in plain sight. Is it not the case that while Scotland has the energy as part of this United Kingdom, it does not have the power?

[Greg Hands]

I am not sure quite how to respond to that, but I remind the hon. Gentleman that there is a call for evidence on this and we are awaiting the responses to that call. Once again, I remind him of the support being given by the UK Government to renewables in Scotland: the £20 million tidal pot; the quadrupling of offshore wind capacity across the UK over the next decade; support for CCUS—all these things. It is about time he had a word with his party colleagues back in Edinburgh and got them to have a sensible energy policy when it comes to both the North sea and nuclear before he comes here and lectures us.

Net Zero Strategy and Heat and Buildings Strategy

Debate between Greg Hands and Stephen Flynn

Tuesday 19th October 2021 Commons Chamber

[Greg Hands]

Upskilling is very much part of the Government’s agenda. On how the heat pump ready programme will be operating, if I understand it correctly, that is a Northern Ireland-only scheme, but we have seen that scheme in operation and it will help to inform the England and Wales scheme. The scheme will also support the Government’s target of 600,000 installations a year by 2028, which also covers Northern Ireland.

[Stephen Flynn (Aberdeen South) (SNP)]

In 2015, the UK Government pulled the plug on £1 billion of carbon capture and storage investment in Peterhead. Today, they have repeated that same mistake—a betrayal of the north-east of Scotland—by pulling the rug out from underneath the Acorn Project. The Minister knows that Scotland cannot meet its net zero ambitions without carbon capture and underground storage, so why is he shafting Scotland?

[Greg Hands]

The hon. Gentleman might have been here at the beginning of the statement; if a Member wishes to participate in a statement, it is common practice to be here at the start. As he was not here at the beginning, he missed me explaining the basis behind the decision. Government policy has always been clear that there would be two industrial clusters by the mid-2020s, but four by 2030 at the latest. We have announced the Acorn cluster as a reserve. I praise the scheme for meeting the eligibility criteria. It also performed to a good standard against the evaluation criteria. We remain absolutely committed to track 2.

[Stephen Flynn]

Shame on you.

Oral Answers to Questions

Debate between Greg Hands and Stephen Flynn

Tuesday 21st September 2021 Commons Chamber

[Greg Hands]

We, of course, deliver relief schemes to reduce the cumulative impact of some energy and climate change policies on industrial electricity prices for eligible energy-intensive industries and sectors, such as steel, chemicals, cement, ceramics, paper and glass. I know the sector well from my previous role at the Department for International Trade, and of course I would be ready to meet my hon. Friend, the brilliant Stoke Conservative team of other MPs and the British Ceramic Confederation.

[Stephen Flynn (Aberdeen South) (SNP)]

Does the Minister intend to back the Acorn project as a track 1 cluster?

[Greg Hands]

We recognise that this project has good potential, but obviously we need to work through these kinds of projects in a proper and methodical way, to make sure that all of the questions people would expect the Government to look at—value for money, viability and so on—are properly met.

[Stephen Flynn]

We cannot understate the importance of the delivery of carbon capture and underground storage to the UK’s and Scotland’s journey to net zero. Let me be clear: the Acorn project should be in the vanguard of that process. I hear the warm words from the Minister, but warm words only go so far, particularly when we frame them within this Government’s record on sustainable projects in Scotland. If we look at the likes of offshore wind, we see that SSEN—Scottish and Southern Electricity Networks—has produced another report highlighting the fact that Scottish renewables projects continue to pay the highest grid charges in not only the UK, but the entirety of Europe. What is he going to do, as the new energy Minister, to end that renewables robbery?

[Greg Hands]

The hon. Gentleman’s talk of Scotland being short-changed on renewables is entirely wrong. Scotland is a massive part of our renewables offer, today and going forward. Secondly, this is a competitive process. Carbon capture, utilisation and storage is a key plank of the Prime Minister’s 10-point plan for a green industrial revolution. So of course we look at CCUS and the potential it offers, but this is a competitive process and it would not be right at this point to pass specific comment on the project.