Offshore Petroleum Licensing Bill

Jerome Mayhew Excerpts

2nd reading
Monday 22nd January 2024 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

We are no strangers to hyperbole in this Chamber, but I think the exaggeration of the importance of this Bill in the debate has surprised even Government Members. To hear Opposition Members, we would think that the Government have made a bold announcement to reject their policies on climate change, to deny the science and to minimise the impact of climate change, and to say that we are no longer committed to decarbonising by 2050. None of that is even remotely true.

Nothing has changed in relation to the Government’s policy on climate change, and decarbonisation in particular. In fact, the Prime Minister recently reaffirmed that. The United Kingdom recently passed the substantial marker of being the first of any major economy to more than halve its emissions. That is a huge milestone, and that is the kind of climate leadership that is important; not making virtue-signalling announcements in this Chamber or elsewhere. Countries around the world look at us because of what we do, and we are decarbonising and leading by example.

I will take no lessons from the Labour party. I looked this up during the debate: in 2010, on Labour’s watch, the economy emitted 495.8 million tonnes of CO₂ equivalent; now it is 320 million tonnes and declining. That is as a result of Conservative policies in action, where we accept the science on climate change but take positive actions on the really important thing: it is the amount of oil and carbon we use that is important, not where it comes from.

The Conservative record is incredibly strong, but we still recognise, as does the Climate Change Committee, that we need oil and gas as part of our long-term future. Currently, as my hon. Friend the Member for Banff and Buchan (David Duguid) pointed out, about 75% of our energy comes from hydrocarbons—oil and gas. That is reducing, but it is on a trajectory to get to about 25% even in 2050 and beyond.

[Caroline Lucas]

The hon. Member is taking the Climate Change Committee’s name in vain. It does not say that we need new oil and gas. It says categorically that new explorations of oil and gas are not compatible with our net zero obligations. I do not understand why he is claiming something that is different from what the committee says. He compared emissions under a Labour Government with those under a Tory Government. I am no apologist for the Labour Government, but I wonder whether he put consumption emissions into those calculations. Did he work out whether emissions have gone down in the UK because we have outsourced even more of our manufacturing to countries on the other side of the world?

[Jerome Mayhew]

I am grateful to the hon. Lady for that intervention. The Climate Change Committee gives us the science, and the political decisions are taken in this House. We are not talking about an increase in exploration; we are talking about a managed reduction of 7% per annum.

Moving on, the question is not whether we have oil or gas, yes or no. We need oil and gas, certainly for the transition period between 2024 and 2050, and even beyond—according to the Climate Change Committee, around 25% of our energy will still come from oil and gas. The question is: where should that oil and gas come from? If we need to supply this economy with oil and gas, it is my belief that we should use UK oil and gas, and there are reasons for that. The first is that the industry employs 200,000 people. I would prefer that employment to remain in the UK economy, rather than export it to Russia, Qatar, Saudi Arabia or other oil and gas producing countries. That is a reasonable position, given that our consumption is required for the future.

The second reason is geopolitical. We need an alternative to Russian gas, and not just in this country. I accept the point made earlier by Opposition Members: that oil and gas is a global market, and that 80% of North sea oil is exported to Europe. But emissions are global and so are the geopolitics. It is right, and in our strategic interest, that Europe should have a viable alternative to Russia for the supply of hydrocarbons. We have seen in the last two years the awful consequences of an overreliance on the Russian supply of hydrocarbons, and more so in Europe—Germany, in particular—than in the United Kingdom. We have become a net exporter of gas to mainland Europe—a little from the North sea, but a lot from Milford Haven. Qatari liquid natural gas is imported into our country and transported by the connectors to mainland Europe. The Europeans are sucking up very polluting liquid natural gas because they do not have a viable, cleaner alternative, which North sea gas would provide.

[David Duguid]

It has been pointed out to me that gas in Qatar is produced at a broadly equivalent carbon footprint to ours, but the compression into liquid, the transportation and the de-liquefaction when it gets into this country quadruple that carbon footprint.

[Jerome Mayhew]

My hon. Friend is right. Opposition Members have no answer to that. In Germany in particular, misguided green policies have led to the extraordinary decision to decommission the low-carbon nuclear industry and replace it with coal-fired power stations. I could hardly make it up. Germany is massively increasing its reliance on imported liquid natural gas, which is much more polluting than the cleaner, more local and geopolitically more stable alternative of North sea gas and oil.

The third reason why I would prefer that we used UK oil and gas is that it pays UK tax. I am not ashamed to say that I welcome that. If we are to extract hydrocarbons that will be taxed, I prefer for that tax to be paid in the United Kingdom, rather than in some other country. Just between 2023 and 2028 it is estimated that those tax receipts will amount to £30 billion. We know how much trouble Opposition Members have trying to explain where they will get their £28 billion of borrowing each year, and how that will raise interest rates, debt and inflation. That would be more than doubled if they got their way and their policies destroyed the North sea oil and gas sector.

[Wera Hobhouse]

The hon. Gentleman mentions what the Government are spending, not spending and taxing, but could he mention how much they actually spend on subsidies for the oil and gas industry—just a number?

[Jerome Mayhew]

A number was mentioned earlier in the debate, but I did not catch it. I am sure that the hon. Lady might have that number in mind. It is right that we support industries in this country, because they create employment, generate economic activity and, in turn, pay taxes. I am not ashamed of that, because it is a good thing.

The final reason why I want oil and gas extraction in this country, if we are to use it, is the balance of payments. That used to be a fashionable economic argument back in the day. When I was a teenager, we used to have announcements on the news about the balance of payments month by month. What has happened to that? The balance of payments is every bit as important economically today as it was back in the 1980s. We run a current account deficit in this country of about £150 billion. That is a huge number, and it will be exacerbated if we choose—and it would be a political choice—not to generate and export a product from this economy to a third economy, but instead choose to import one, exacerbating the balance of payments deficit twice over.

For those four reasons, I am wholly in favour of the ambitions behind this short Bill. Climate change will be solved by reducing demand for hydrocarbons, not by reducing supply. We will solve the demand problem by providing cheap alternatives, which the Government are doing. Members who have contributed were quite right to highlight that. We need renewables.

[Matt Western]

I agree with the hon. Member’s point about reducing demand. The great travesty is that we are still seeing houses built today—I am sure he does in his constituency—where the insulation is not at all deep. That is ridiculous, is it not?

[Jerome Mayhew]

I could not agree more. The future homes building regulations, which require a significantly decreased carbon footprint for modern buildings, come into force in 2025. It is deeply frustrating that they were not brought in earlier. The sooner they come in, the better. We also have the challenge of retrofitting insulation in the 28.5 million existing houses in Britain. Some good points have been made by Opposition Members about the need to improve retrofitting, and there is scope for the Government to incentivise further insulation of private houses, to go with the successful scheme in place already for public sector buildings and housing.

We must also increase our wind power. We have an extremely ambitious target of 50 GW by 2030. The current rate is about 17 GW of renewable wind power generation capacity. We must also increase solar and nuclear, including small modular reactors. We need better technology for carbon capture, usage and storage. We need to accelerate our use of electric or hydrogen vehicles—or, frankly, any other kind of technology that solves the problem—and we need to incentivise the market to step into that area.

We need to take a step back and look at buildings. It is about not just about the operating carbon costs of existing infrastructure, which we are focusing on in both commercial buildings and the residential sector; it is also about the embodied carbon in our construction processes, hence my private Member’s Bill on the measurement of embodied carbon in large buildings and developments. About 50% of the carbon associated with building is in its construction, not its operation.

There are areas where the Government are either ahead of the game or moving in the right direction. They have already been successful in reducing demand for hydrocarbons. I do not understand why Labour appears to put virtue signalling before the economic impact and 200,000 local jobs. I support this eminently sensible Bill.