Energy Bill [HL]

Lord Teverson Excerpts

Monday 19th October 2015 Lords Chamber

[Baroness Liddell of Coatdyke (Lab)]

My Lords, it seems to be “Kick the Minister” time, but I do not particularly want to do that, since I know how he feels—I once had to take through a utility Bill that ended up with 1,000 amendments. However, I think everyone would acknowledge that this Bill has been a bit of a dog’s breakfast.

Further to the points made by the noble Lord, Lord Howell, the uncertainty facing the North Sea oil and gas industry is considerable at the moment, and there is speculation about perhaps another 10,000 jobs being marked to disappear. I ask the Minister to get some indication of certainty about what is going to happen about the OGA. We cannot go on with this miasma of uncertainty, with changes to amendments and perhaps even further amendments going through to the House of Commons, at a time when there is such a feverish atmosphere around the North Sea.

While I am on the issue of uncertainty, is the Minister aware of the comments by Professor Jacqueline McGlade from the United Nations this morning about the impact of uncertainty on those who are investing? She was talking primarily about the renewables industry, but it also has an impact on oil and gas, particularly in relation to decommissioning.

[Lord Teverson (LD)]

My Lords, I echo the comments by the noble Lords, Lord O’Neill and Lord Foulkes, surrounding the tsunami of amendments that we have had to the Bill so far, with more to come on Wednesday, with very little notice indeed. That makes it very difficult for this House to do what it sees as its core activity in this sort of legislation.

I have no issue at all with the managerial nature of the amendments, but I echo the comments by the noble Baroness, Lady Liddell. While I agree wholeheartedly with the Minister that the key factor here is that we should be able to continue to benefit from our own oil rather than import it, which is important with regard to both energy security and the environment, I hesitate more and more as we go through these energy conversations when it comes to the Minister’s and the Government’s confidence about our ability to meet our own climate change targets, which we all passed into law with the Climate Change Act with cross-party agreement in this House and the other place, and which we all still say we support. We are far from being able to be confident about achieving those targets a few years hence, let alone by 2050. We have to look at all these debates on Report as part of that challenge, whether it is from the United Nations special scientific advisers or from our own Committee on Climate Change. The writing is on the wall that we are moving in the wrong direction, and I think that we should take this concern very seriously.

[Baroness Worthington (Lab)]

My Lords, I am grateful to the Minister for his introductory comments. As we start the first day of Report on the Bill, it is welcome to hear from the Government a reiteration of their commitment to action on climate change and to decarbonising the UK economy.

I add my voice to those of noble Lords who have spoken ahead of me in reflecting on the way in which the Bill has been conducted. I am probably not alone in not having had much of a weekend; I am sure that the Minister has had similar issues to deal with. I take these issues incredibly seriously, as people know, and it makes me genuinely unsettled and discomfited to know that I am not able to do the best job that I can because of the timescales that we are working under. I think that many noble Lords share that feeling. As I have said before at the Dispatch Box, we are where we are—but it could have been so different.

In these opening comments on Report, I want to reflect on the question of why we are making such haste. Why is such an important body as the OGA being created in such a piecemeal way, with amendments coming forward and new issues arising in a very febrile and fast-changing environment? There seems to be no time for the Government to take stock and review. It is because the timing of the Bill is not about the major portion of it, which is the OGA, but Clause 66 which closes the RO a year early. It was closing anyway in 2017, so we are in rather a rush to make that deadline in order for this not to be a complete waste of our parliamentary time. That is why we are racing through. That is why we have not had enough pre-legislative scrutiny and why there are so many fundamental issues that have not been properly addressed in Committee. That is why we are facing an inundation of amendments now. It is a very regrettable situation and one that I personally take very seriously, as I am sure the Minister does, too. I only wish that perhaps people in other parts of the Government took this issue as seriously as those who are represented here today, because it is not good enough.

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[Lord Spicer (Con)]

I have not spoken on this subject for 25 years. I do not intend to make up for it now—in fact, my intervention will be very short. The reason that I have not spoken for 25 years is that I have been rather too close to the industry for comfort. I was a Minister for Energy in the late 1980s and took through the Electricity Bill. Subsequently I have been chairman and president of Energy UK and of the Association of Electricity Producers. I have therefore been close to the industry. It is not until now, when I have been released from those happy burdens, that I feel that I can say at least a short work about energy matters.

In the present context, two things matter to the energy industry, particularly the petroleum industry in the North Sea. They are, first, certainty and stability, particularly in government policy, and, secondly, less rather than more regulation. On the question of certainty, we have to recognise that the petroleum industry in the North Sea is very fragile. My noble friend Lord Howell has mentioned that at the moment it is also very poor. There are questions as to how many more burdens it can bear.

I was thinking about the question of certainty just now when it comes for instance to the nuclear industry. We have now got the Chinese beginning to enter the fray. My mind goes back to when I talked to the Americans about flogging off bits of our privatised nuclear industry to them and got into terrible trouble with the Prime Minister at the time, Lady Thatcher. It is slightly ironic to me that we are now talking to the Chinese about the same subject.

Be that as it may, the question of certainty is terribly important. That brings me to the amendment. The noble Baroness fears the threat of privatisation. I do not see the point of setting something up for the purpose of privatisation. We have already been told that there are probably too many players in the industry in the North Sea at the moment and that they are too stretched. Therefore, my suspicion is that we are talking about more regulation. I cannot understand the argument of the noble Baroness at all on this point. I hope that it is not about more regulation and that the Minister will tell me that it is not. However, I think that it has to be about regulation. That is why I agree with my noble friend Lord Howell that if, as I think, it is about more regulation we have to be fearful about whether the industry can sustain the costs, particularly in the North Sea. Therefore, I have the opposite view to the noble Baroness and I hope that my noble friend will be able to reassure me on this point.

[Lord Teverson]

My Lords, I was pleased to add my name to this amendment. I agree with the noble Lord, Lord Spicer, that we do not want any more regulation than we need, but I do not see this as bringing forward greater regulation.

In my business career I learned three things in particular. The first was that you should concentrate and keep your mind on your core activity. I felt a certain resonance when the oil and gas industry wrote about this amendment that actually that was the imperative thing that needed to happen because—as I know from my extended family—at the moment that industry is under threat. There is great retrenchment and difficulty, so the OGA needs to concentrate strongly on its responsibilities for the oil and gas industry.

Having said that, the second thing that I learned from practice was that you can concentrate as much as you like on the business that you are in but the most important thing is to follow the market. That is not exactly what you can do here, but what is clearly true is that the future will be about carbon capture and storage. This is a core part of government policy and all of our policy on climate change and carbon emissions. Therefore there needs to be a real future for this sector and these facilities. That is why it is important that that element is brought into this part of the Bill and will be there for the future. I take perhaps the naive example of Beeching and the railways; now down in the south-west we are trying to reopen one or two of the lines that were closed back in the 1960s. If we thought more about future uses and what happens after our actions, we might moderate and think more about decisions for the longer-term future.

The third thing I learned from business was “right first time”, which is the best thing to remember as a principle for running any organisation. It seems to me that getting it “right first time” on this issue would be to make sure that we take into consideration carbon capture and storage, and what that offers in terms of solving our climate change issues, as well as to use the facilities, the network and the vital assets that are currently in the North Sea. We need to include that in legislation now rather than in the future.

[Lord Bourne of Aberystwyth]

My Lords, first, I thank the noble Baroness for setting out the non-government amendments relating to this part of the Bill. Amendment 11 would replace the principal objective in Part 1A of the Petroleum Act 1998 of,

“maximising the economic recovery of UK petroleum”,

with an objective to maximise the economic return on UK petroleum while, first, retaining oversight of the decommissioning of oil and gas infrastructure and, secondly, securing its reuse for the transportation and storage of greenhouse gases.

I understand the purpose of this amendment. Indeed, I have detailed significant positive amendments from the Government—which we will discuss more fully elsewhere—to ensure that both CCS and decommissioning are given a prominent focus in the Bill. Indeed, the amendments that I have tabled ensure that the OGA will have a strong role on decommissioning, to ensure both that costs are controlled and that reuse of assets, including for CCS development, is given full consideration before decommissioning begins. The Infrastructure Act 2015 refers to abandonment, which of course is the technical term used in the Act for decommissioning.

I hope that noble Lords will agree that the Government’s decommissioning amendments achieve the same effect as the reference to decommissioning in this amendment, rendering it unnecessary. I have tabled a large number of amendments to ensure that CCS developments will be a firm and important consideration for the Oil and Gas Authority. My noble friends Lord Howell and Lord Spicer, and others, referred to the fragile nature of the industry, and we do not want to add more costs to it. This will be particularly relevant in looking at some later amendments, but it is relevant here, too.

Bringing CCS into Clause 4 and maximising the potential synergies, as we have done with the amendments we have tabled, will be much more effective than trying to give the Oil and Gas Authority a new and separate objective on CCS. The amendments that I have tabled are meaningful, and I hope that they will be sufficient to satisfy noble Lords that Amendment 11 is not necessary. The noble Baroness suggested that the review was limited to the Oil and Gas Authority’s performance for each review period. That is not strictly true. Subsection (4) of the new clause in Amendment 26 says:

“A review must, in particular … assess how effective the OGA has been in exercising its functions, and … consider the OGA’s functions under … Part 2, and … Chapter 3 of Part 1 of the Energy Act 2008 (storage of carbon dioxide), with regard to their fitness for purpose and scope”.

Amendment 11 is therefore broader than the noble Baroness was suggesting. It would create a significant expansion of the OGA’s responsibilities, which would have consequences for the OGA and industry.

Notwithstanding the difficult challenges that the industry is facing, the recommendations of the Wood review remain as important as ever. They continue to attract strong industry support, and I have been pleased to note the continued cross-party support for them throughout the passage of the Bill. The Wood review envisaged an Oil and Gas Authority focused on maximising economic recovery, and the recommendations made by Sir Ian Wood hold that principle front and centre.

I have not spoken to Sir Ian Wood—it might be unhelpful to ask him to revisit the review and interpret it back to the House—but it is worth noting that he has chaired the interim advisory panel of the Oil and Gas Authority, which is looking into the functions and preparation of the authority before it achieves its enhanced status, so he is very much involved in the process.

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[Lord Foulkes of Cumnock]

My Lords, I want to take up a point made by the noble Lord, Lord Oxburgh, with which he reinforced our concern about this Bill being rushed through and consideration not being made. We have just heard from the noble Lord, Lord Howell, about whether renewables can be equated with carbon production, which he challenges. As the noble Lord, Lord Oxburgh, said, these are the kind of things that could be and should be dealt with in pre-legislative scrutiny in the kind of get-together that he suggested.

I am not a fan of this non-elected House. I want to see a move towards a senate of the nations and regions. When we eventually get a Labour Government, we will move in that direction. However, again and again I hear from those who do like this nominated House that we have lots of experts on various subjects, and why do we not make use of them and get them together to provide that experience, insight and knowledge into the legislative process? If we get things rushed through in the way in which this is being rushed through, we are not able to do that.

We saw that again today at Question Time. Members who were present will have heard my intervention when I got really irate concerning the noble Lord, Lord Prior. I think that it was the noble Baroness, Lady Maddock, who said that it was not for the first time. The noble Lord seemed to be acting like a disinterested observer of what is happening in social care, which is being reduced enormously, and it was as if he could do nothing about it. He seems to forget that he is a member of the Government who is supposed to report to us and supposed also to take our views back to the Government to try to influence what they do. Ministers are not here just to read out the instructions that they get from the Civil Service and from down the corridor. They are here to listen to what Members of the House of Lords say, to take account of it and to pass it on. To be fair to the noble Lord, Lord Bourne, as my noble friend Lady Worthington said, he has taken account of some of the specific aspects that have been raised. But there are others that have been overlooked and I fear that there will be others that will be overlooked. I hope that I am proved wrong on Wednesday and that some account will be taken.

The noble Lord, Lord Howell, is about to disappear but I think even he would agree that, if not a direct equation between CO₂ emissions and renewables, renewables have a high correlation between their development and their expansion, and the reduction of CO₂. Not every renewable energy source is perfect and does not have some carbon emissions in the production of the equipment that it uses and so on, but producing this clean energy must be considered much better than the alternatives and all the ones that we have had in the past.

Incidentally, I should have declared an interest right at the start; I did so on previous occasions. I am a trustee and treasurer of the Climate Parliament. We argue very strongly at every opportunity we have in every parliament around the world to try to ensure that all countries, including the United Kingdom, are doing as much as possible to reduce carbon emissions.

Before I ask a specific question, I must say that the Minister is an eloquent man. As a Welshman, he is, like me, grieving at what happened over the last few days with the rugby results; in our case we were cheated out of a great victory. I have had dealings with him before he became a Minister and I have great respect for him, but even he, with all his Welsh eloquence, cannot argue that there has not been a deep depression in the renewable energy sector with what has happened over the last few months in solar energy—where we have seen and are seeing job losses because of the cutbacks—and now in onshore wind. We will talk more on this on Wednesday.

I ask the Minister one particular question: tomorrow we will hear the wit and wisdom of the President of China. It has been suggested that we should make all sorts of representations to him on human rights and discuss with him a range of issues concerning trade and co-operation in a variety of fields. Specifically, will we talk with him about energy in general, and in particular about the Green Grid alliance? At the United Nations, the Chinese President said that he is in favour of a global energy network for clean energy. The Chinese corporation dealing with this has put a lot of resources and thinking into developing a grid that takes energy from areas where it is produced cheaply and regularly, such as the deserts where solar energy is produced, and channelling it through a green grid to areas where it is used and needed.

I hope that at some point in his visit, Ministers—if not the Prime Minister—will raise with the Chinese President how the United Kingdom Government can co-operate with the Chinese Government on this. They are very far-thinking. They have great resources, a great number of people and great knowledge. I hope that we will pursue this with them, that we will take the opportunity to raise it with him when he is here and follow it up in the weeks and months to come.

[Lord Teverson]

My Lords, I shall speak to my Amendments 15 and 18, and to Amendment 72 in the name of the noble Lord, Lord Oxburgh. I am very pleased that the noble Lord, Lord Foulkes, mentioned the President of China because tomorrow we have to interrupt an Economic Affairs Committee meeting. I suggested that we might ask the President to be a witness on some of these issues, but unfortunately I do not think that that got anywhere.

I welcome a number of the government amendments in terms of their nod to the environment. My amendments look to try to place the OGA and this part of the Bill in the context of the broader climate change and environmental debate. We do not have those amendments completely right. In fact, I rather prefer the amendment of the noble Baroness, Lady Worthington, although I am not sure how far she will press it. As I said previously, although the OGA needs to focus on its prime areas in doing its day-to-day business, it needs to operate within this broader environmental area, as does the whole regime.