Offshore Petroleum Licensing Bill

Matt Western Excerpts

2nd reading
Monday 22nd January 2024 Commons Chamber

[Sir Alok Sharma (Reading West) (Con)]

I refer the House to my entry in the Register of Members’ Financial Interests.

I agree with the Secretary of State, who I hold in high regard, that the United Kingdom has been a leader in climate action internationally. We have cut our emissions in half over the past 30 years, faster than any other major economy in recent years. We have set ambitious domestic emission reduction targets, in particular ahead of COP26. Through our COP26 presidency, we managed to get over 90% of the global economy signed up to net zero. Just about every G20 nation signed up to a net zero commitment. We led on climate action domestically and we translated that into leading the world on climate action.

Just a few weeks ago at COP28, the UK, alongside other nations, signed up to transition away from fossil fuels. On his return from COP28, the Minister for Energy Security and Net Zero, my right hon. Friend the Member for Beverley and Holderness (Graham Stuart) welcomed that global agreement from the Dispatch Box. He spoke about the importance of listening to the voices of the most climate-vulnerable island nations, who, as we know, wanted the world to agree to stronger language to phase out fossil fuels. Indeed, my right hon. Friend himself tweeted at COP28:

“There must be a phase-out of unabated fossil fuels to meet our climate goals.”

I commend the work that he and the whole UK team did in Dubai.

But today we have a Bill before the House, the sole purpose of which is to double-down on granting more oil and gas production licences. I do not believe, and it pains me to say this, that the Bill will advance that commitment to transition away from fossil fuels. I also do not believe that those climate-vulnerable nations my right hon. Friend referred to will think the Bill is consistent with the pledge that we, along with every other nation, made in Dubai.

As for the substance of the Bill, I think that, as currently drafted—and it pains me to say this—it is something of a distraction. I do not think it is necessary. The North Sea Transition Authority can already grant licences annually, or, indeed, when it considers it necessary. It has been doing that regularly for the past few years. The Department’s own explanatory notes make that clear by stating:

“ The NSTA will remain free to grant licences outside this new annual duty in the usual way, whether or not the new statutory tests are met.”

As for those two statutory tests, they seem to override the already non-binding climate compatibility checkpoint, and I have to say that I think they have been designed in such a way that the computer will always say yes to new oil and gas licences. Overall, the ability of the NSTA to grant new licences will not change materially as a result of the Bill.

Sadly, however—this is my opinion, and others will have theirs—what the Bill does do is reinforce the unfortunate perception of the UK’s rowing back from climate action, as indeed we saw last autumn with the chopping and changing of some policies, and that does make our international partners question the seriousness with which we take our international commitments. I said “it pains me to say this” because I know that the Government have been coming forward, under this Secretary of State, with commitments to try to tackle climate change and deliver on a clean energy transition.

We have heard that the Bill is about improving domestic energy security, but I think we all understand that the oil and gas extracted from the North sea is owned by private enterprises and the Government do not get to control to whom it is sold. Moreover, I think it is acknowledged that the Bill would not necessarily lower domestic energy bills in the UK, given that the price of oil and gas as a commodity is set internationally. I think that the best way to enhance our energy security, and ultimately bring down bills, is for the Government to continue to deliver on their ambitious plans for expanding home-grown clean energy, to which I know the Secretary of State and her Ministers are absolutely committed. That means more wind power, more solar and more nuclear as part of a diversified clean energy mix, and I back the Secretary of State in the work that she and her team are doing in delivering that clean energy mix.

We have heard that the Bill will secure 200,000 jobs. Of course people’s jobs and livelihoods matter, and we must ensure that we secure those jobs, but we must recognise that we are in the process of an energy transition. I support an orderly transition; for me, this is not about turning off the taps overnight on oil and gas. We must also acknowledge that more than 200,000 jobs, supported by the oil and gas industry, have been lost over the past decade, despite hundreds of new drilling licences being issued. We know that many of the skills used in the oil and gas sector are transferable to clean energy—to offshore wind and geothermal. If we want to truly turbocharge a clean energy transition, we need to help, support and retrain the workers who are making the transition, over time, from the fossil fuel sector into the many tens of thousands of jobs that are being created in clean energy as a result of the work that the Secretary of State and her team are doing.

[Matt Western (Warwick and Leamington) (Lab)]

The right hon. Gentleman is making some powerful points, and I have huge respect for him when it comes to this topic. Does he agree that we are in real danger of turning off the interest and the investment appetite among many other nations, such as Korea and Japan, which see the UK as having vast expertise in offshore wind development sites, and that legislation of this kind will undermine that market?

[Sir Alok Sharma]

There was some commentary expressing concern about investment appetite following some of the statements that were made in the autumn, but I think we must acknowledge that, over the last few months, the Government have managed to secure billions of pounds of extra investment committed within clean energy to the UK.

Turning to the carbon intensity test for granting new licences, I have to say again that I am not sure that the Government recognise the whole picture of where we get our imports from. The majority of the gas that the UK imports comes via a pipeline from Norway. It is not imported LNG. The carbon intensity of Norwegian gas production is around half that of UK domestic gas. If that is the test that the Government want to apply in deciding whether to issue new licences, I think they should take into account the average carbon intensity of all imported gas, not just LNG. Given that around 70% of remaining North sea reserves are oil, perhaps the tests should also include the carbon intensity of UK-produced oil, which is higher than the global average.

--- Later in debate ---

[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.

--- Later in debate ---

[Matt Western (Warwick and Leamington) (Lab)]

It is a pleasure to follow the hon. Member for South Dorset (Richard Drax).

The irony will not be lost on you of all people, Mr Deputy Speaker, that we are reduced in number in Parliament today by the impact of Storm Isha, the origins of which lie in climate change, yet we are debating the Government’s desire to increase the global supply of oil and gas. It is also damning that the Government’s net zero tsar, Chris Skidmore, felt compelled to resign, having spent three months researching his report and travelling the length and breadth of these isles. He said that he could

“no longer condone nor continue to support a government that is committed to a course of action that I know…will cause future harm.”

To pick up the point made by the hon. Member for South Dorset, 10 years ago, when I was a councillor, I was talking about how we needed to create energy resilience in Warwickshire, how we needed to consider the future needs of our communities and how we could best use our pension funds to help to drive that agenda.

The Government claim that the Bill will not add undue burdens on households. “Undue burdens” is a pretty strange phrase. The Secretary of State has also admitted that new licences will not necessarily bring down energy bills. Let me put that into context. This is the same Conservative Government who ripped up the zero carbon homes policy announced by Chancellor Gordon Brown in 2006 and produced by my right hon. Friend the Member for Leeds Central (Hilary Benn) and my hon. Friend the Member for Llanelli (Dame Nia Griffith).

That legislation would have meant that all new homes built from 2016 onwards were zero carbon. Just imagine: we would have built 1.2 million zero-carbon homes by now. There would be thousands of new zero-carbon homes in my Warwick and Leamington constituency on the Mallory Grange, Priors, Montague Point, Myton Gardens, Chesterton Gardens and Victoria Point estates, and many others. My constituents would be benefiting from next to no energy bills, and they would be doing the right thing, but they were denied that choice by the Conservative Government who ripped up that legislation.

The next generation will not thank this Government for what they have done. They will not be thankful for one of the highest levels of debt we have ever seen, the greatest tax burden since the war, the stagnant economy and, I dare say, the moral bankruptcy of this Government.

We have had nine named storms so far this year, with the 10th coming down the track. We had just 11 named storms in 2015-16. The flooding is reaching into all corners of the United Kingdom, creating economic damage, damage to people’s homes and businesses, and distress to all. There has been damage to infrastructure, crops and food production. Waterlogged soil means that seeds and crops cannot be harvested.

A report from Ernst & Young says that last year was the worst year for insurance underwriting in decades, pushing up premiums by at least one third in the next two years—an expected increase of 36%. Amanda Blanc, the chief executive of Aviva, has said that new oil and gas drilling

“puts at clear risk the jobs, growth and the additional investment the UK requires to become more climate ready.”

Today, the country is plunging further into chaos and economic damage. Our transport is disrupted and our businesses are impacted. Colleagues have been unable to get to London to attend Parliament. Two weeks ago I requested a debate on floods and flooding and, on my journey home, my train was delayed by a landslip caused by climate change—yet more irony. We need a wider debate on the impacts of climate change, which is causing not just floods but tidal surges and strong winds.

The Prime Minister speaks of climate “zealots”. Well, the public, and young people especially, must be climate zealots because, I am afraid, they are deeply concerned. They are not zealots. They are realists about the future we face. On my recent visits, nearly every primary school—St Margaret’s, All Saints, St Paul’s, Heathcote, Woodloes, St Peter’s, Coten End and Bishop’s Tachbrook; I could name them all—has raised the critical importance of climate change and how they want us in this place to bring about immediate action.

The young people studying in our colleges understand the future. They can see what is happening, and they have said to me, “The future is electric. That’s why we are training for these skills.” They get it; they can see the future.

We know that 2023 was the world’s hottest on record. Last year was about 1.48°C warmer than the long-term average before humans started burning large amounts of fossil fuels. The eight warmest years on record have occurred since 2014. The global average sea level has risen by 8 to 9 inches. Flooding across the UK, including in my constituency, has damaged 2,000 properties across the country, and 5.7 million properties were at risk of flooding in England in 2022-23. Those facts underline just how irresponsible this Bill is.

We are 18 years on from the Stern report and “An Inconvenient Truth”, which was told like never before by Vice-President Al Gore. Two years ago, the report by the UK’s independent Climate Change Committee said that the best way to ease consumers’ pain from high energy prices was to stop using fossil fuels, rather than drill for more of them. That is part of the great deception that is this legislation: the best way to bring down prices is to reduce demand and the Government are doing next to nothing on that. We also need to bring in cheaper energy sources and to reduce demand by insulating homes. We can put in energy insulation panels that are really not very thick.

The approach being taken in this legislation is a crime and an obscenity, and it is happening because the Government tore up the legislation of the last Labour Government. We need to bring in cheaper energy sources by allowing onshore wind, which is currently the cheapest form of electricity generation. In the 12 months to the end of September 2023, total consumer expenditure on electricity, gas and other fuels used in the home was £62 billion, a figure almost double that of two years before. As my right hon. Friend the Member for Doncaster North (Edward Miliband) said,

“it is precisely our dependence on fossil fuels that has led to the worst cost of living crisis in generations.”

It was clear from the King’s Speech that this Bill will not take even a penny off energy bills. Lord Browne, of all people, the former chief executive of BP—he is also a highly regarded individual across the industry and in the other place, where he is a Cross-Bench peer—said that the proposals are

“not going to make any difference”

to the UK’s energy security. That point was echoed by the former Prime Minister, the right hon. Member for Maidenhead (Mrs May).

In conclusion, energy security has to start at home, but not the home of the international oil and gas majors and their market preferences, and instead the homes of the British people—homes that are better insulated and that can generate and store their own electricity and power. The only thing holding back the British people is this Government, who are weak and capable only of short-term decisions. That is why the country needs Labour’s clean power mission: to make the UK a clean energy superpower.

We have a plan to make energy cheap and secure so that the British public never again face spiralling bills. It is a plan to boost jobs and investment in every region and nation of the country. It is a plan to cut energy bills for good, taking up to £1,400 off annual household bills; to create good jobs by rebuilding the strength of our industrial heartlands and coastal communities, creating more than 1 million jobs in 10 years; and to deliver energy security by using our abundant natural resources for our own citizens. We will do that by establishing “GB Energy”, a new home-grown publicly owned champion in clean energy generation to build jobs and supply chains here at home.

We will also set up the national wealth fund, which will create good, well-paying jobs by investing, alongside the private sector, in gigafactories, clean steel plants, renewable-ready ports, green hydrogen and energy storage. We will also do this through a warm homes plan. The Bill is yet another reason why this country is desperate for a general election and I will be voting against it.