Infrastructure Bill [HL]

Lord Jenkin of Roding Excerpts

Tuesday 14th October 2014 Grand Committee

[Baroness Young of Old Scone (Non-Afl)]

My Lords, by way of an aside, it is slightly surreal to be debating an amendment to an amendment on something that does not appear in the Bill. I should declare an interest as vice-president of the Royal Society for the Protection of Birds and president of the Wildlife Trust for Bedfordshire, Cambridgeshire and Northamptonshire.

Biodiversity in our species and habitats is not in a good way in this country. The State of Nature report showed that 60% of species are in long-term decline; that is, 755 species in the UK are in danger of extinction. The 2011 UK National Ecosystem Assessment showed that 30% of ecosystem services—the services that we as human beings get from the natural world and the environment—are in long-term decline. It is not, therefore, an issue about “tweety birds”, things that crawl and flowers but the very basic services on which human life depends.

The water framework directive, that highly important piece of European legislation, was responded to by the UK Government, who said that the percentage of waters achieving “good” status by the end of 2015 would increase from 26% to 30%. Alas, we are now in decline, with 25% of waters achieving “good” status under the directive—not a great story. Some of the most important ways in which to turn that around are about making sure that those nationally and internationally important protected sites are the jewels in the crown of our ecosystem services, conservation and environment, and are properly protected so that species, habitats and waterbody quality are maintained.

My amendment would require shale gas extraction not to be permitted within these special conservation sites. I am sure that the Minister will say that the welcome reassurances we have just heard about the existing protection measures continuing should be sufficient: there is a body of European and UK law that already applies to all these sites. Alas, we see that being breached increasingly frequently. We are seeing the first signs of rise in damage to sites of special scientific interest since I thought we had put an end to that at the end of the 1980s. It is a heartbreaking turnaround.

The Committee will understand why I am concerned about the impact of shale gas extraction. There is a significant land take. The sites last for as long as 20 years. There are about 120 well pads per site. The impacts are well beyond the immediate site of entry into the substructure for extraction. There are issues such as water stress, and a recent AMEC report showed that up to 25,000 cubic metres of water per well could be required. That is not just about the abstraction of clean water, which already has many competing demands from human beings, wildlife and other uses, including industrial use, but results in waste water that has to be disposed of. We certainly do not have the waste water capacity to do that. There is water stress and water pollution. We have to be aware of the propensity to spills. The fluids used for extraction can pick up toxins, heavy metals and radioactivity from existing substances in the substructure.

Perhaps what I worry most about is habitat fragmentation and loss. We already know from our experience in the construction of onshore wind and solar technologies that unless they are very carefully handled, we see fragmentation and loss of habitat on a much wider scale than is absolutely necessary. I am not knocking those important technologies, but they need careful management. Of course we need to be aware that these sites create noise and activity such as traffic access and we run the risk of disturbance of some of the most important species.

Some 15% of the land that is under consideration for the next round of extraction coincides with special protection areas, special areas of conservation under European legislation, Ramsar sites, which are important globally designated wetland sites, and SSSIs, which are the jewel in the crown of national protection sites. An example that is very close to my heart is that 85% of the global population of pink-footed geese winter in the UK, yet two of the four main overwintering sites for pink-footed geese lie within the possible shale gas extraction sites. We have to pay real attention to those important areas. Potential licence areas also cover some of our most sensitive river systems. All nine of the Chilton chalk streams suffer from low flows as a result of overabstraction so further abstraction of water and the potential for water quality issues would be a real worry there.

The Government introduced additional planning guidance advising that there should be no shale gas extraction in national parks, the Broads, areas of outstanding natural beauty, natural beauty and world heritage sites except in exceptional circumstances where a public interest test could be shown. We welcome that, but it is not enough. It is guidance rather than having a legislative basis and does not cover sites of biodiversity importance, and our nationally and internationally important wildlife sites.

I welcome the amendments that we will debate shortly that other noble Lords have raised to introduce stronger environmental regulation around shale gas extraction and I appreciate that the Minister was keen to stress that the rights of owners of surface land and the protection of surface land remain. But additional measures are needed, hence my amendment. Removing these sensitive areas from the 14th licensing round would reduce the total area being offered for licence by just 12%. That is not a huge sacrifice in order to ensure that our most important sites remain protected and that we do not see an increase in the threat to our most globally important wildlife sites that we are already beginning to see from other pressures. I beg to move.

[Lord Jenkin of Roding (Con)]

I thank the Minister for her powerful explanation of the case for developing shale gas. She also mentioned the fact that this legislation and, indeed, the whole consultation extended to geothermal energy. It is about that that I would like to say a few words in support of the amendment which I have tabled to the Government’s first new clause.

I totally support the case for extending the right to underground access. It is essential, and equally essential for both shale gas and geothermal energy. One of the advantages of the Recess was that the Government’s response to the consultation was published when we had a bit of time to look at it. I have read it from cover to cover. I have to say that it was not a particularly interesting exercise. I admire very much the detailed attention which was given to the public’s replies to the consultation, and I was not in the least bit surprised that the exercise was used by large numbers of people not to address the main questions the consultation was about. It evoked a torrent of opposition from organisations and people who have declared themselves totally opposed to any form of shale gas development. One thing that rather amused me was the criticism made by some of the people who put in a response about the inclusion of geothermal energy in the same consultation, as if somehow the Government were spoiling their protest by adding something which they probably supported. Conditions about underground access and the need for a simpler process, which I totally support, apply equally well to both. That is made perfectly clear in the impact statement about geothermal activities, which says:

“Operators wishing to extract geothermal energy have to negotiate with landowners for underground access. This is a time consuming, uncertain and potentially costly process. If a landowner refuses access, that project cannot continue”,

or would go ahead only after a lengthy and expensive process.

One thing I gained from the report, the Government’s response and the consultation is just how much more needs to be done by the industry and the Government to make the case for the development of shale gas. The Government have made it perfectly clear—indeed, my noble friend repeated it this afternoon—that over the next 20 or 30 years gas is bound to play a significant role in our energy supplies and how much better that we should have indigenous sources rather than being increasingly subject to the vagaries of a flexible and perhaps unpredictable international market.

I have discussed this with the trade association that represents onshore gas developments. It entirely recognises the problem, but I was left a bit unclear about what it is planning to do about it. It is something that has to be done, and the Government certainly have to take a lead on that.

Geothermal energy is important in this context. When I started reading the paper, I was aware that I did not know nearly as much about geothermal energy as I should. I know that my noble friend Lord Teverson is very knowledgeable about it—he has geothermal in his part of the country, Cornwall—but I was not, so I asked a number of people to explain to me what the potential is, how it should be developed and what they were doing about it. I found that immensely interesting.

I do not propose to use this speech to deliver a lecture to noble Lords, but I will make three short points. Geothermal energy promises to be part of the future energy mix of the United Kingdom. It offers a supply of secure, low-carbon energy without the variability of wind and wave. It is derived from heat radiating from the centre of the earth and must not be confused with ground-source heat from solar warming. That is quite important: one is talking about sources of heat that may be a kilometre, a kilometre and a half or even two kilometres deep.

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Tabled by

[Lord Jenkin of Roding]

95ZBD: Line 16, after second “of” insert “heat and”

[Lord Jenkin of Roding]

My Lords, I am completely convinced by my noble friend’s reply and am interested to know that the Government are in discussion with the Scottish Government about heat being used. I think that we need to follow this up, but in the mean time I am very happy not to move this amendment.

Amendment 95ZBD (to Amendment 95ZBC) not moved.

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[Lord Young of Norwood Green (Lab)]

My Lords, I wanted to address this series of amendments not because I am opposed to any of them but to make a plea for looking at the genuinely objective evidence that is available. Durham University is conducting a lot of independent, objective analysis of fracking incidents and the potential threats. I agree with my noble friend Lady Worthington that there is a need to build public trust, but sometimes it is hard to do that when certain organisations are totally hostile to fracking applying in any circumstances whatever. They make allegations that are, quite frankly, unsubstantiated. That is my concern. When we look at evidence, we need to look at evidence that is substantiated.

Another website that is worth looking at is that of the US Environmental Protection Agency. It frequently asks questions such as: why does there need to be a two-year analysis of what is going on, and why can we not say now that fracking is terrible, ruins the environment and so forth? The response is that that is not the case. There have been some quite dreadful things. To my eternal shame, a BBC programme endeavoured to show that fracking was the cause of methane contamination, which meant that you could light the gas as it came out of the tap. My plea is that of course we should have proper safeguards and we need to build public trust, but we also need to ensure that we are not repeating unsubstantiated allegations and that we look at objective evidence. Of course fracking will not be the total solution but there is no doubt that, certainly in America, it has substantially cut emissions and it could have a role to play here, although the environment is somewhat different.

[Lord Jenkin of Roding]

My Lords, I do not think that any of us is in any doubt about the importance of baseline monitoring for the purposes of environmental control. I totally agree with much of what the noble Lord, Lord Young of Norwood Green, said about the misrepresentation that is going around on the whole question of fracking. This must be scientifically based. To my mind, that is where both the Government and the industry have so far failed to convince the public of the case for fracking. As the noble Baroness, Lady Worthington, said in her opening speech, my noble friend Lady Verma made the case for the need for shale gas on environmental grounds. That is the case we need to go on pressing.

With regard to the amendment moved by the noble Baroness, Lady Worthington, an enormous amount of work is being done by the British Geological Survey on the baseline monitoring of contaminants of various kinds, and on the protection of water. This has been sparked by examples in America, where there never has been any proper baseline monitoring. That is an example of the imperfections of their system of regulation, of which our people have taken full account. They recognise that if we are to control contaminants—it is very important that that should be done—we need to know where we are starting from. That is the heart of the noble Baroness’s amendment.

I am told that the British Geological Survey is about to publish a further study. It originally put in the 12-month period on the grounds that there might be seasonal variations. Its latest work on the contamination of drinking water has shown that there are no seasonal variations: there is no evidence of that at all. I would not be in the least surprised if, in its further report—this is the advice I have had—it finds the 12-month period to be unreasonable and that the best method of assessing baseline monitoring for methane should be scientifically based. The work that is done by the BGS in this country is, for the most part, to the highest standard. The Government are entirely justified in putting their faith in it.

I do not know what the Minister will say in response to the amendment, but I would guess that everything the noble Baroness, Lady Worthington, is asking for is, in one way or another, already being achieved or will be achieved by the Government’s existing policy. I am interested to hear my noble friend’s reply. I share the view of the Committee that baseline monitoring is absolutely crucial if we are to have effective regulation.

[Baroness Young of Old Scone]

My Lords, I shall comment on baseline monitoring. We need to learn from other monitoring schemes that are already in place as a result of regulatory regimes and the planning system.

There are two issues here. First, the 12-month period may not be required for methane monitoring but it certainly is for biodiversity monitoring, which is also mentioned in one amendment in the name of the noble Baroness, Lady Worthington. Too often, I have seen planning appeals and inquiries get hideously beached as a result of inadequate 12-month monitoring of biodiversity impact. If a species is present only at certain times of the year, it is quite difficult to do a baseline account of it if you are doing that in a season when the species is not present and is not expected to be present. That causes delays in planning processes. It is important to make it very clear that some of these impacts and baselines can be dealt with only on a 12-month basis.

I accept the commendation by the noble Lord, Lord Jenkin, of the work done by the BGS and other statutory agency baseline surveys and ongoing monitoring processes. However, the other point of principle we ought to regard as important is the need to make commercial organisations that want to undertake commercial activities responsible for ensuring that the baseline monitoring that needs to happen before they begin is undertaken—and undertaken at their expense. That is an important principle commonly adopted in many regulatory regimes and in much of the planning system. We must not move away from that. It is important that the commercial organisations get their heads around what the issues of their impact are before they start to put forward their propositions, rather than relying on somebody else’s baselines and not really understanding, when their propositions come forward, what they will need to monitor and how they will need to monitor it. That is an absolutely fundamental principle.

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That is not a situation we wanted to see coming out of the Energy Bill. We have an opportunity here to look at it again. We have tabled this amendment now simply to say that this is no longer theoretical. These auctions are happening now. We, as the Opposition, do not want to inherit a problem in 2015 that has come about because of the combination of the effects of the capacity market and the lack of an EPS. Let us take this opportunity. Let us revisit this. I am very much looking forward to hearing the Minister and other noble Lords, who I am sure will remember the debates we had and who perhaps took part in the votes on this issue which we ultimately won in the Lords, only to be overturned in the Commons. We said there was a problem. I think the evidence now is that there is a problem. We need to take a backstop policy to address it, otherwise we will be remiss and will not be giving the signals that investors need to ensure that we get the right investments in the long-term future of the low-carbon economy. I beg to move.

[Lord Jenkin of Roding]

I listened to the noble Baroness with great interest. I had not interpreted this amendment as being directed at the question of whether coal-fired plants should be able to apply under the capacity mechanism. I, too, have been rather disturbed to see that as a possibility not only for coal-fired stations in this country but for those in other countries as well, which will be able to apply. If this is indeed the case, we need to look at this very carefully.

What puzzles me is the connection with the amendment that the noble Baroness has tabled. I understood that we had always been in favour of attaching abatement technologies to coal-fired stations that may have some life left in them to reduce nitrogen oxide, sulphur dioxide and other toxic gases. The noble Baroness is right to say that it puts up the price; a very good example of that is the difficulties that Drax has been having over recent years, where abatement plants were put in years ago. For the life of me, I find it very difficult to understand why attaching that sort of plant to an existing power station should necessarily be an occasion for the exercise of the powers under the Energy Act, to which she refers—a question of abatement of the emissions limit. Perhaps the fault is mine. The amendment is one that I had not studied before, so I listened to her with great interest. Bearing in mind that we have always encouraged the addition of abatement plant to coal-fired power stations, I would have thought that to make it a trigger in the further reduction in carbon emissions would be counterproductive. I see the noble Baroness shaking her head at me; it may be that I have completely misunderstood her purpose.

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Moved by

[Lord Jenkin of Roding]

96ZA: After Clause 28, insert the following new Clause—
“Part 4AImpact of infrastructure spending on costs for consumersProvision of impact data
(1) The Treasury may by regulations make provision for the regulators to provide data, in a manner prescribed by the regulations, about the anticipated impact of infrastructure spending on the cost of products for consumers.
(2) Regulations made under subsection (1) may prescribe—
(a) the type of infrastructure spending about which data must be provided;(b) the nature of the data to be provided;(c) the methodology for collating and manipulating the data, including assumptions that should be made; (d) the form in which the data should be presented;(e) the persons that should receive a copy of the data.(3) The regulations may make different provision for different regulators where necessary.
(4) The Treasury must scrutinise data provided under subsection (1) and assess—
(a) the cumulative impact of infrastructure spending on the cost of products for consumers;(b) the affordability of any anticipated increases in the cost of products for consumers, taking into account factors other than infrastructure spending that are also likely significantly to impact the cost of products; and(c) differences in affordability between different groups of consumers, if any.(5) The Treasury must publish data provided under subsection (1) and the assessment made under subsection (4) in such manner as it reasonably deems appropriate.
(6) The Treasury must take into account the assessment in subsection (4) in making decisions about the extent, prioritisation or timing of infrastructure spending.
(7) In this section—
(a) “consumer” means any business, individual or household of individuals that purchases a product or products;(b) “product” means a good or service the provision of which is regulated by a regulator;(c) “a regulator” means any of—and “the regulators” means all of them.”(i) the Northern Ireland Authority for Utility Regulation;(ii) the Office of Communications;(iii) the Office of Gas and Electricity Markets;(iv) the Office of Rail Regulation;(v) the Water Industry Commission for Scotland; and(vi) the Water Services Regulation Authority,and “the regulators” means all of them.”

[Lord Jenkin of Roding]

My Lords, I beg to move the new clause standing in my name. To begin with, perhaps I may say that I was very grateful for the opportunity to talk to my noble friend Lady Kramer about this and for the help that the department was able to give me.

As the heading suggests, this is about the impact of infrastructure spending on costs for consumers. That is an issue that has achieved a rising level of importance. My noble friend Lady Verma said in an earlier debate that the effect of rising prices on consumers is of growing concern in the country.

There is wide support across society for increased investment in infrastructure, but the question of how much of the cost will fall to be borne by consumers is, I have to say, a great deal less certain. The new clause is aimed to get the Treasury to lift the veil, as it were, so that we know more about what it will cost consumers.

That this is primarily a matter for Treasury Ministers rests on two facts. First, the responsibility for projected infrastructure investment is spread right across Whitehall and covers a great many departments. The costs fall to be met in many different ways: investment by private companies, local authorities; government departments; and, no doubt, other ways as well. In most areas, regulators also have a key role, but it is only the Treasury that can cover the whole field, bring it all together and assess the impact on the cost of products for consumers. That is what subsection (1) of this new clause provides.

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I understand those who have said that we need a cumulative number but, unfortunately, that is one of those things that are easy to say; with any good sense, robustness or meaning, it is difficult to deliver. The network is a very effective direction in which to go; I hope that your Lordships will agree and that my noble friend Lord Jenkin will feel comfortable in withdrawing his amendment.

[Lord Jenkin of Roding]

I start by saying that I am most grateful to noble Lords who have voiced their support for the amendment. If we were to debate this in a wider forum, we might find a good deal more support. I certainly have that in mind. We may return to this matter on Report.

Having said that, I am very grateful to my noble friend for spelling out so clearly what she and her colleagues in government see as the difficulty of forming, as she came back to again and again, an aggregate view. I do not think that people are looking for an aggregate; they are looking for consistency and a common approach to find out how much of this investment will actually fall on consumers.

The example that the noble Lord, Lord Berkeley, gave of the Thames tunnel has been very carefully worked out by Thames Water with the help of Ofwat. What the charge is going to be on water consumers—I am one of them—is known, perhaps not over the next 80 years, but over the next two or three years. I do not know how long it will be. That is the kind of example that might well be extended to other interesting investments.

This is the impression I have formed on what the UKRN is going about. I was getting very depressed at one point when the Minister was spelling out the impossibility of doing what we were asking it to do. Yes, the UKRN is a very important innovation. It is a much stronger and more effective body than its predecessor. It is emphasising cross-sectoral issues and looking, as I said a few moments ago, for consistency. It will be able to add considerable wisdom over the next two or three years and help successive Governments to try to make a better estimate of what an investment programme of the size that we now face in this country, running into hundreds of billions of pounds, is going to cost consumers.

[Baroness Kramer]

The language of the amendment is that the Treasury must assess the,

“cumulative impact of infrastructure spending”.

That is why I used words such as “aggregate” and “cumulative”; I am happy to substitute “cumulative”. That is our problem.

[Lord Jenkin of Roding]

I quite understand that. I take that point. Indeed, I read the evidence that was given to the Public Accounts Committee by John Kingman. He made that point very thoroughly. He is an extremely able civil servant and he declared himself very firmly as the chief official in the Treasury concerned with the impact on consumers. He made the exact point my noble friend has made that there are great differences between the industries and the different circumstances.

One is looking for consistency on this—I keep coming back to that word. The UKRN is going to be in the position to throw a good deal of light on this. I was therefore very grateful when my noble friend said its establishment was an important step forward. That is a good start. Parliament is going to have to push this in both Houses. I do not know whether the Public Accounts Committee report and the Government’s response are going to be debated in another place, but we would certainly have an opportunity, in the context of this Bill, to air the matter again on the Floor of the House. We will certainly take account of the points my noble friend has made and perhaps revise the wording of the amendment accordingly. In the mean time, I am very happy to withdraw it.

Amendment 96ZA withdrawn.