Energy Bill [Lords]

Debate between Lisa Nandy and Jeremy Lefroy

Monday 18th January 2016 Commons Chamber

[Lisa Nandy]

I am grateful to the hon. Gentleman for that question, which the Secretary of State will have heard. I am sure that either she or the Minister of State will attempt to respond to it later in the debate.

It is clear that there are still substantial remaining oil and gas reserves in the North sea, and future investment must absolutely not be limited to decommissioning activities. We remain the second largest producer of oil in Europe, after Norway. There are 300 fields currently in production, and it has been estimated that as many as 20 billion barrels of oil and gas remain to be exploited in UK waters. Much of that is understood to be in hundreds of small and marginal fields, which are much more difficult and expensive to exploit, so it is important that the newly independent Oil and Gas Authority is able to maximise investment in those fields if we are to seize that potential. That will require strong powers to encourage collaboration within the industry, resolve disputes between firms, and drive greater efficiencies to make further extraction viable, including consideration of costs.

[Jeremy Lefroy]

Does the hon. Lady also agree that it is not just a matter of extracting the remaining oil from around the United Kingdom but about the huge oil and gas support services industry, which does so much around the world, contributing to the balance of payments and to jobs in the United Kingdom?

[Lisa Nandy]

Yes, I agree. In particular, the ripple effect of what we do now in relation to North sea oil and gas will be felt not just directly by the workforce employed there, but by the UK workforce as a whole and around the world.

The Wood review also noted that carbon capture and storage has the potential to be of huge benefit.

--- Later in debate ---

[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.

[Jeremy Lefroy]

I am grateful to the hon. Lady for her generosity in giving way. Does she agree that there are a lot of opportunities for exporting CCS technology around the world and that they should be taken up?

[Lisa Nandy]

I do agree with the hon. Gentleman. There is also an opportunity for us to make sure that the British workforce benefit from the skills to be gained from investing in that technology, so that we can export around the world not just the technology but the skills and knowledge of our workforce. That short and medium-term investment would be for our long-term gain, and it is important that we see it as such.

Experts at the Energy Technologies Institute have estimated that, without CCS, by 2020 the costs of reaching our climate targets could be in the order of £40 billion to £50 billion a year more than if CCS were deployed. Ruling out technologies that can cut the cost of low-carbon transition is bad news for bill payers and for taxpayers.