Oil Refining Sector

Harriet Cross Excerpts

Thursday 11th December 2025 Westminster Hall

[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.

[Harriet Cross]

I absolutely will, so I will end on that point. I thank the hon. Gentleman for his intervention. I find the what-aboutery from Government Members extraordinary. They seem to think that because something has happened in the past, it is okay for something else to happen now. The Government are shutting down the UK oil and gas sector because they keep taxing it. Jobs such as those lost at Grangemouth are being lost every single week across the country as a result. If the hon. Member thinks that is okay, he should say so, but I do not think it is okay, and that is why I am fighting against it.