Energy Bill [Lords]

James Heappey Excerpts

Monday 18th January 2016 Commons Chamber

[Lisa Nandy]

We were keen to explore the future potential for the North sea for two reasons, one of which is the potential for the oil price to rise in future. While we have a rigged infrastructure worth a substantial amount of money still standing there, now is the time that we ought to explore the use to which we could put that infrastructure in the short term while trying to predict longer-term trends.

The fourth recommendation in the Wood review was that the Government need to work with industry to develop strategies in different areas, including for carbon capture and storage. Lord Deben, one of the Government’s own chief advisers on energy policy, argued that

“it would be very odd to produce legislation that did not allow specifically for the transportation and storage of greenhouse gases.”—[Official Report, House of Lords, 7 September 2015; Vol. 764, c. 1227.]

Lord Oxburgh, the former head of Shell, said:

“We need some kind of strategic framework within which private industry can operate in the CCS area.”—[Official Report, House of Lords, 19 October 2015; Vol. 765, c. 483.]

They are absolutely right. Some of the infrastructure in the North sea could be used to create an entirely new maritime industry with very many new jobs. This would also help us to realise the commitments on climate change that the Prime Minister and the Secretary of State recently agreed, rightly, at the Paris summit.

[James Heappey (Wells) (Con)]

While the shadow Secretary of State may indeed be correct that there is an opportunity for a new industry, does she not agree that to include it in this Bill would be to put an unnecessary burden on the industry at a time when it is challenged in an international market?

[Lisa Nandy]

The Wood review pointed to the need for the Oil and Gas Authority to be able to take a strategic view. It also pointed to the need for us collectively, including Government, to consider a long-term strategy for carbon capture and storage. In our view, unless the Oil and Gas Authority is tasked with considering the future of carbon capture and storage, it will not form part of the plan. As I said to the hon. Member for South Suffolk (James Cartlidge), now is the time that we ought to be considering what the long-term future of the North sea is. That simply cannot afford to wait. We also believe very strongly that this should not come at the cost of jobs in the North sea in the immediate term. However, we should not let our urgent need for short-term solutions preclude longer-term thinking. In future, CCS could become a huge new North sea asset. That is why we propose that consideration be given to the opportunities that exist to use North sea infrastructure for CCS where that is economically viable.

Unfortunately, since the Bill was discussed by peers in the autumn, resulting in the one now before us, the Chancellor took the reckless decision to axe the £1 billion fund that he had promised to support new CCS projects during the course of this Parliament. That is one of the clearest examples yet of how this Government are damaging confidence among the people we need to invest in this country’s energy system by once again chopping and changing energy policies without any notice. The mishandling of the Government’s CCS programme means that the public will most likely pay, as companies understandably seek to recover costs relating to the CCS projects in Yorkshire and Scotland that they progressed in good faith but that will now not proceed. That is why I have written to the head of the National Audit Office to ask that he launch an investigation so that we can fully understand the cost to the public of the Chancellor’s sudden decision. It is also why we will seek to amend the Bill to require the Secretary of State to bring forward a new carbon capture and storage strategy within a year.

There used to be consensus on this. The Prime Minister used to be a strong supporter of CCS too. Back in 2007, he said:

“even though in the UK we have the depleted oil and gas fields that are ideal for testing this technology, not a single pilot is yet taking place in Britain. We cannot afford this kind of delay.”

He was right then, and he is wrong now. The UN’s Intergovernmental Panel on Climate Change has stated that if we do not have CCS on a global scale, we are likely to see the costs of achieving targets on climate change being double what they would be otherwise. These targets may even be put out of reach entirely.

--- Later in debate ---

[Oliver Dowden]

I have great sympathy with the argument that local people should have a say, whatever the circumstances. Indeed, my constituency has faced a terrible situation with the Radlett rail freight terminal, in which local decision making has been overridden by national planning policy. I know that adverse sentiments persist for a very long time after such decisions so, wherever possible, one should give priority to local feeling.

As my hon. Friend the Member for Beverley and Holderness (Graham Stuart) said, a lot of the anger about onshore wind farms has come about because local people have not had their say. That is why they have become the cause of such political contention, which was not the case previously. Local communities feel that wind farms have been forced upon them when it has patently been against their interests.

The second principle that the policy reflects is economic viability. There has been much debate about the exact amount of subsidy, but there is clearly large public subsidy for onshore wind. Whether the figure is £20 million or, at the higher end, £270 million, it is still money that is being paid by individual energy consumers, and those individual energy consumers are the least able to pay it. Since every consumer pays pretty much the same amount of subsidy, aside from variations in the size of their house, the impact on the poorest members of society is far greater than on the richest. It surprises me that Opposition Members do not take into account the regressive effect of subsidies on individual energy bills.

The third principle, which is one that we do not talk about enough in this House, is the value of the landscape, the general wellbeing of people who live in beautiful places and the need to preserve those beautiful places. Many of the most beautiful parts of this country have been defiled by ghastly, ugly, enormous wind farms that nobody has consented to. [Interruption.] Opposition Members mention fracking from a sedentary position. A fracking station tends to be a small building and most of the work is done underground. The ghastly great wind farms are often dozens of feet high and block the landscape for miles around. It is not a sensible comparison.

The important point is that if Members are arguing that we should protect our environment in the long run —I agree that we must do so if we believe the scientists that there is a threat, and I have to accept the overwhelming balance of evidence—why should we destroy what we so love in the short term by failing to conserve some of the most beautiful parts of this country?

The important point about these principles is that one cannot take one individual element, as Opposition Members have tried to do. One cannot say, “We agree with giving local people a say on the planning element, but we disagree with the removal of the subsidy.” The two are part of a coherent policy that has been developed over a number of years in opposition and then in government. Most importantly, those policies have been voted for. They were clearly flagged in the Conservative party manifesto and the Conservative party won a majority. The extraordinary thing is that the people who were defeated in that election—principally the Liberal Democrats—have used their superior force in the other place to defeat the elected will of this Chamber.

[James Heappey]

Will my hon. Friend join me in expressing astonishment that the Liberal Democrats have chosen not to attend this debate at all? It is about three hours since their one representative left the Chamber.

[Oliver Dowden]

I agree with my hon. Friend entirely. From being a party that long advocated the abolition of the other place and its replacement with an elected Chamber, the Liberal Democrats seem to have become the party of the unelected other place who seek to impose their will on this democratically elected place.

I wish to address the idea that these measures are somehow extreme. That is quite extraordinary when one looks at the amount of onshore wind we already have. We are on track to generate 30% of our energy from renewables. Renewable energy capacity has trebled under the coalition Government and this Conservative Government. At the moment, there is Government subsidy worth £800 million for renewable onshore wind, with 490 farms and 4,751 turbines. Onshore wind farms already account for a large part of the energy mix in this country. They have an important part to play, but they really should not play a dominant part. That is why it is important that we start to scale back the level of subsidy that is given to them so that we have a balance between different renewable technologies.

Onshore wind has many flaws. We have heard that it is not reliable and often requires large amounts of back-up. It is often in the wrong place, far distant from the industry that requires the energy. That means that further pylons and other forms of transmission are required to get it from where it is generated to where it is needed, which further adds to the subsidy that is required. It is often against the wishes of the local community.

In conclusion, I argue that the Government’s policy is a reasonable proposition. It has the support of the British people, as reflected in the general election. We should resist attempts by unelected Members of the other House to force a view that is not shared by the British people on this place. I urge Members to support all the measures outlined in the Conservative manifesto when they are reintroduced by Ministers, as I hope they will be.

--- Later in debate ---

[James Heappey]

Be that as it may—US shale production might be about to fall—but the US has not yet started to export what it has. When it does, it will undoubtedly have a big impact on the liquefied natural gas markets both in Europe and the far east.

[James Cartlidge]

I hope that that is the case. The point I was about to make is that there is no doubt that US shale has had the single biggest impact on the falling oil price, although it is not the only factor—there are many factors. I am grateful for that because the economic impact will be huge. Many in the other place said in that debate that, because the oil price was so low and energy prices were falling, we should use the opportunity to introduce new charges for renewables or whatever. First of all, we know those prices will not be temporary. Secondly, energy prices are low but there are other, negative impacts of the energy crisis, such as loss of jobs, lack of confidence and the up and down in the stock market. In effect, falling energy prices are an automatic economic stabiliser—they relieve economic pressure and help the economy to keep growing, supporting the consumer and so on.

I support the Bill because I believe it will give stability and a future to an industry that is struggling. That is the single most important part of the Bill. I also support the measures on the renewables obligation. I look forward to going through it thoroughly in Committee.

--- Later in debate ---

[James Heappey (Wells) (Con)]

The bishop will be delighted that the Members for Bath and Wells should speak so soon one after the other.

It is an honour to rise to speak in this debate, not least in my capacity as a member of the Energy and Climate Change Committee. The Bill is relatively limited in scope, but the energy challenge faced by the Government generally is significant. For too long, the energy policy of previous Governments has focused exclusively on climate change and not on the cost to consumers and on energy security. I therefore applaud the current Front- Bench team for their work on rebalancing that so that all parts of the energy trilemma receive equal prominence.

As we transition from mostly carbon generation to carbon-free generation, it is important to recognise that, while that is absolutely the target of this Government, we must employ technologies of some sort—gas and biomass seem the most obvious—to bridge the gap until the renewables sector is fully ready to stand alone to meet the needs of this nation. We cannot risk the lights going out by jumping to that too soon. I entirely agree with the Government that coal’s race is run. However, it is important to understand that an enthusiasm for gas generation, biomass and any other bridging technology that we employ is not mutually exclusive from continuing to promote and invest in other renewable technologies that are available.

Much has been made of the reductions in subsidies to the solar industry, but members of the Committee have been struck by the fact that other things hamper the industry just as much, not least the European Union’s insistence that British consumers pay more to Chinese producers of photovoltaic cells for their solar installations, which results in price inflation. There is also an insistence that VAT is charged on solar cells, as if they were a home improvement rather than necessary energy generation. As we have heard, tidal, wave and offshore wind offer opportunities, although there is a clear challenge in making sure that those technologies are cost-effective before they can be employed and charged to the bill payer.

Onshore wind forms a big part of the Bill and I make no apology for having been involved in some successful campaigns to keep wind turbines off the Mendips and the Somerset levels. The Conservative party—now the Government—made a manifesto commitment to deliver a reduction in onshore wind, so I urge the Government to reinstate the original clause 66 so that we in this elected Chamber of Parliament can vote on our manifesto pledge without the intrusion of the Liberal Democrats, who seem to have abandoned this Chamber altogether and are instead using the Lords to do whatever it is that they have left to do.

I encourage my Front-Bench colleagues to be similarly enthusiastic about pushing on with the development of large-scale storage; the digitisation of our energy system, particularly the roll-out of smart meters; and the decarbonisation of the transport system. I think that every member of the Committee has been struck by the collegiate way in which the Secretary of State has dealt with her colleagues in the Department for Transport, even though they might not be running at her desired pace.

The green technology about which I have a reservation is carbon capture and storage. Undoubtedly, the technology is exciting and the Government have invested £130 million in research into it, but the reality is that it is simply too expensive to push on with at present. To require our oil and gas industry to maintain spent wells in the North sea for the purposes of carbon capture and storage would be a wholly unnecessary complication for and, indeed, additional burden on the industry at a time when it is struggling enormously. I therefore hope that clause 8 will be removed.

Ditto clause 80, where the House of Lords has been most unhelpful in adjusting the carbon trading legislation. It would make no sense for us to account for the totality of our carbon emissions when, under the EU trading scheme, anything that we do not use will simply be used by another country. We would make no saving whatsoever in carbon emissions by employing clause 80 as drafted by the other place.

I want to conclude by speaking briefly about security of supply, the reinvigoration of the oil and gas industry in the North sea, which I applaud, and my reservations about the onshore oil and gas industry. Both the Secretary of State and the Minister have been very kind in working with me to deal with the concerns of my constituents and to help me to fully understand what recent legislation will mean for them. There is an inconsistency, however, whereby the localism that we advocate so strongly for wind turbines is not being extended to fracking and gasification, so I hope there might be some scope for incorporating that.

None the less, I think that our push for a fracking industry may be premature, given that there is already a surfeit of liquefied natural gas on the European and Asian markets. A significant amount is also being stored in the United States, which is awaiting the opportunity to export it, and that will serve the European market further. Moreover, the Iranian rapprochement gives an opportunity for even more oil and gas to flow.

[Graham Stuart]

How does my hon. Friend square his argument? He is in favour of maximising returns from the North sea but cannot see the same argument for maximising gas on land, to keep money here and avoid handing it to a foreign regime.

[James Heappey]

I square it simply by having a profound concern for how the industry might affect the areas in which it is sited. Some areas will have a geology and a community that support it, and that is for them to determine, but my plea is that Ministers extend to fracking the same localism as we advocate so strongly for wind.

To conclude, the Lords amendments are unhelpful, so I would be grateful if Ministers could strike them out and bring back the original Bill. More than anything, however, it is important that the Bill makes quick progress from here onwards. The delay is causing great uncertainty, which is having an impact, in particular, on our oil and gas industry, which can ill afford it at this moment. If the Government can restore clause 66 and remove clauses 8 and 80, they will have my full support thereafter.