Michael Fallon
Main Page: Michael Fallon (Conservative - Sevenoaks)(10 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text
Andrew Jones (Harrogate and Knaresborough) (Con)
5. What steps he is taking to promote the exploration of UK shale gas resources.
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
The Government have taken a number of recent steps to promote shale gas exploration. We confirmed fiscal measures in the autumn statement to incentivise exploration activity, we published a regulatory road map in December setting out clearly for operators the regulatory requirements for shale gas projects, and the Prime Minister announced 100% business rate retention for local authorities for shale projects on Monday. We are also consulting on the strategic environment assessment for a potential 14th onshore licensing round, which would enable further areas of the country to be explored.
Andrew Jones
I thank my right hon. Friend for that answer. Does he agree that, far from being a bribe, the decision to allow councils to keep 100% of business rates is about ensuring that local communities and local people can benefit and get a fair share of the development in their area?
Michael Fallon
Yes, it is important that the benefits of shale gas exploration should not just go to the economy more widely, or to the companies doing the exploration or, indeed, wholly to the Chancellor of the Exchequer. It is important that local people and local communities share in those benefits as well.
Graham Jones (Hyndburn) (Lab)
The Prime Minister has said the Government are going all out for shale, but the Treasury is taking a whopping 62% while offering a minuscule offer with business rates. The Minister’s Department will have received a letter last week from Lancashire MPs—united, cross-party—and Labour-controlled Lancashire county council opposing the business rates offer. I think he received comments from Members on his own side, too—from the hon. Member for Wyre and Preston North (Mr Wallace) saying it is “pathetic and insulting” and from the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw), who said it is simply not enough. When is the Minister going to address this issue of fairness?
Michael Fallon
We will, of course, reply to the letter from the hon. Gentleman and his colleagues from Lancashire. However, the decision to give local authorities 100% business rate retention could mean up to £1.75 million a year per well site, and the decision to allocate 1% of the revenues to local communities could mean up to £10 million for a well site. These are formidable sums, and I think it is right that local communities share in any of the benefits that arise from shale.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
Can my right hon. Friend confirm that nearly 200 wells in this country and over 2 million wells worldwide have used hydraulic fracturing technology and not a single person has been poisoned by contaminated sub-surface water supplies and not a single building has been damaged by the resultant minuscule earth tremors?
Michael Fallon
I can certainly confirm that hydraulic fracturing is a well-established technique. It has been used the world over. We also have experience of onshore drilling in this country for nearly 100 years now, since the end of the first world war, and hydraulic fracturing will be permitted only if it is safe not only for those involved but for the environment and the local community.
Caroline Lucas (Brighton, Pavilion) (Green)
On Tuesday the Prime Minister said people objecting to shale gas on climate grounds are irrational, yet climate scientist experts and investors all warn that the vast majority of existing fossil fuel reserves must remain underground—they are unburnable if we are to avoid catastrophic climate change—and just today we hear of the BP report that shale gas will not help cut emissions and that essentially fuel switching does not make a difference as coal just gets exported and is emitted elsewhere. In the light of that, will the Minister tell us whether he agrees with the Prime Minister: does he think climate scientists are irrational as well?
Michael Fallon
I think it is wise for all members of the Government to agree with the Prime Minister. Shale gas is one of the greener fossil fuels, and the hon. Lady certainly ought to support its extraction rather than that of coal. We need to reduce our dependence on volatile wholesale international prices for gas and oil, and we need more home-grown energy here under our own control.
Martin Horwood (Cheltenham) (LD)
A recent American report has suggested that, apart from the absolute volumes of water used in fracking, 90% of the water used remains beneath the surface and is removed from the local water cycle. Has that environmental impact been assessed by the Department, and if not, can it be?
Michael Fallon
We will certainly look at all reports and international expertise in this area, but Water UK—the industry body for water—has looked at the management and treatment of water. Let me reassure the House that hydraulic fracturing will be allowed in this country only if it is absolutely safe for the environment, and that of course includes the protection of ground water supply.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
First, may I thank the Secretary of State and the Minister for their kind words about our friend and colleague, Paul Goggins, whose funeral takes place today? He was a regular contributor to these questions, and he was as assiduous in standing up for his constituents in fuel poverty as he was on so many other issues during his time in the House. As you will be aware, Mr Deputy Speaker, my right hon. Friend the Member for Don Valley (Caroline Flint) and my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) are absent this morning, along with many other Members, in order to attend the funeral mass. I know that the whole House will join them in remembering Paul’s tremendous record of public service, and in sending our deepest condolences to his family and loved ones at this very sad time.
May I ask the Minister to tell the House how many jobs he expects to arise from shale gas extraction in the UK?
Michael Fallon
The survey conducted by the Institute of Directors estimated that more than 70,000 jobs could be created by the shale gas industry. We are in the initial stages of the industry, and we expect to have two to three years of exploration, so it is not possible at this stage to make a firm forecast of the number of jobs, but that is the Institute of Directors’ best estimate. In other countries where shale gas has been successfully extracted, however, there have been huge benefits to the economy and reductions in household and business bills.
Tom Greatrex
I thank the Minister for that reply, repeating the figure that was used by the Prime Minister, by Tory central office and by others earlier this week. Does the Minister understand that addressing the legitimate environmental concerns about shale gas will require the Government to be careful, proportionate and responsible regarding what they say about a yet unrecovered energy source? In that context, will he explain why neither he nor—as far as I am aware—his Secretary of State has referred this morning to the findings of the detailed strategic environmental assessment undertaken by AMEC on behalf of his Department? Those findings put the likely figure for full-time equivalent jobs at between 16,000 and 32,000 during peak construction in the next licensing round.
Michael Fallon
There have been a number of estimates, but, as I have said, it is far too early to be sure about the pace of shale gas extraction when we are still at the exploration stage. We have seen estimates from AMEC, and I have quoted the estimate from the Institute of Directors.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
6. What steps he is taking to help households with their energy bills.
Tim Farron (Westmorland and Lonsdale) (LD)
9. What estimate he has made of the number of jobs that will be created in the renewables industry as a result of the provisions of the Energy Act 2013.
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
Directly, and indirectly through supply chains, the Government’s electricity market reforms could support up to 250,000 jobs by 2020, the large majority of which will be in renewable electricity.
Tim Farron
In Westmorland, we are extremely proud of having one of the largest and most important hydro manufacturing firms in the world in Gilkes of Kendal, which is a reminder that, unlike other energy sources such as nuclear and shale gas, 95% of the supply chain of the hydro and tidal energy industry is British. Given that and the almost infinite potential of the industry around this island, will the Minister commit to creating tens of thousands of British jobs by making hydro and tidal energy the centrepiece of Britain’s energy policy?
Michael Fallon
I will certainly commit to supporting renewable technologies and a mix of renewable technologies. My hon. Friend will have seen that we have confirmed the strike price for tidal and wave power in the final electricity market reform delivery plan that we published in December.
Julie Elliott (Sunderland Central) (Lab)
Investment in low-carbon energy has halved under this Government, costing jobs and threatening our energy security. Does the Minister agree that the two best things that the Government could do to improve their woeful investment record is to set a 2030 power sector decarbonisation target and stop the internal Government rows that are creating uncertainty and killing confidence?
Michael Fallon
I must tell the hon. Lady that this country has more offshore wind than any other country in the world. We have seen half a dozen large offshore wind farms commissioned and operating, and another four are under construction this year. We are leading the way in the deployment of renewable technologies, and those renewables contributed around 15% of our electricity in the third quarter of last year.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
10. What assessment he has made of the effectiveness of recent investment in the UK’s energy infrastructure.
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
Since 2011, 8% of our generating capacity has closed under European legislation, and a further 10% to 12% of current generating capacity is due to close over the decade to 2023. We must continue to invest across the energy landscape to ensure that we maintain robust infrastructure. We have agreed terms for a new nuclear power station, the first in a generation, at Hinkley Point C, and we are also ensuring that new and existing gas generation stays on the system by establishing the capacity market under the Energy Act. We will run the first auction for that later this year.
Stephen Metcalfe
Intergen is keen and ready to build a new super-efficient gas-fired power station in my constituency with Siemens as the contractor. The pension fund and Chinese owners, however, will not commit to the £500 million investment required until Intergen has won a contract to supply at the capacity auction in December. Does the Minister agree that that is causing an unnecessary delay and will he agree to meet me and Intergen to see what we can do to bring forward this important investment?
Michael Fallon
I am certainly happy to meet my hon. Friend and any potential investors and to reassure them that we are now seeing a wave of potential investment under the Energy Act. As I said, we plan to run the first capacity auction later this year, in which we expect considerable interest in gas-fired stations.
Albert Owen (Ynys Môn) (Lab)
Many people who are off grid are in fuel poverty—the figure in rural areas is almost double that in urban areas. DECC’s own figures show that there is potential for 800,000 households to be connected to the gas infrastructure. Would the Minister and his Department consider putting aside some money from shale gas exploration in a levy so that we can extend the gas grid, giving people choice and cheaper fuel?
Michael Fallon
As I explained earlier, money will be made available from shale gas exploration for local communities and it will be up to local communities to decide in which projects to invest it. We are already taking action to improve the position of those who happen to be off grid, as my right hon. Friend the Secretary of State has explained, through better identification and data sharing through the agencies and by encouraging earlier and collective purchasing schemes.
Andrew Stephenson (Pendle) (Con)
11. What steps he is taking to protect the fuel poor whilst seeking to reduce energy bills.
Dr Alan Whitehead (Southampton, Test) (Lab)
12. What progress he has made in developing renewables obligation grace periods for renewable energy developers able to demonstrate financial closure of projects prior to March 2017 but commencing operations after that date.
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
The Government have consulted on grace periods for developers able to demonstrate substantial financial decisions and investments by the end of July 2014, in relation to renewable electricity projects that are expected to commission before the end of March 2017. We are analysing responses to the consultation and will issue a formal response setting out the policy on renewables obligation grace periods in due course.
Dr Whitehead
Does the Minister accept that there is considerable demand for such grace periods? Will he say now that he will agree that all qualifying projects will be given the relevant RO during the grace period? Does he accept that a far simpler way of ensuring that the substantial demand is met would be to extend the transition period between the RO and contracts for difference?
Michael Fallon
The consultation only closed a few weeks ago and we must consider all the responses carefully and ensure that the final policy has considered all views. We want to do that as quickly as possible, but it would be a little premature if I announced any conclusion today.
David T. C. Davies (Monmouth) (Con)
14. Given that the ice caps have not yet melted, tropical islands have not been submerged and there has been no rise in temperatures for 16 years, is it not about time we questioned the entire concept of renewables obligations and started worrying a little more about people going into the red than about all of us going green?
Michael Fallon
We certainly worry about those who are struggling with bills, as my right hon. Friend the Secretary of State has said. We have announced a number of measures to encourage competition and easier switching between suppliers.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Renewable energy developers in my island constituency would be helped if, instead of generators being charged to export electricity and consumers being charged to import it, the reality of a domestic island market for production for local consumption was recognised. Will the Minister and his Department look at that possibility to help ease energy bills on the islands?
Michael Fallon
I am happy to look at that specific proposal. The hon. Gentleman will know that the Department has already been looking hard at the Western Isles project in general.
Sarah Newton (Truro and Falmouth) (Con)
Constituents of mine involved in marine renewable energy are finding that the contracts for difference are attracting developers and jobs into Cornwall. Will my right hon. Friend add his support to the launch of the Plymouth city deal tomorrow, which will see Cornwall working with Plymouth to grow new renewable energy businesses, jobs and prosperity for people across the south-west?
Michael Fallon
I am very happy to welcome the Plymouth city deal, particularly the importance of energy in it. As I have said, we have confirmed the strike prices for all types of renewable energy, including wave and tidal. I think that there are some exciting prospects for the industry in Cornwall.
John Robertson (Glasgow North West) (Lab)
13. What steps he is taking to increase levels of competition in the wholesale energy market.
Andrew George (St Ives) (LD)
T6. I was interested to see that the Prime Minister confirmed this week that people living near shale gas sites would enjoy an additional financial benefit. Ministers have confirmed the principle that that should be available to those who live near large-scale onshore wind and large-scale onshore solar array projects. Can the Minister confirm that people who live near such projects will definitely, and on every occasion, enjoy that benefit?
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
Yes. What has been proposed for shale gas is exactly the same as what will apply for large-scale wind farms and large-scale solar farms. Local authorities will be able to enjoy the benefits of 100% business rate retention, and it is only right that local people should therefore get some of the benefit.
Mrs Emma Lewell-Buck (South Shields) (Lab)
T4. Last year, the number of additional winter deaths in the north-east hit a 10-year high. Many vulnerable people living in my constituency would have benefited from having better insulated homes, but since the introduction of the Government’s energy company obligation the number of households having insulation installed has fallen by 90%. How does the Minister explain this shocking step backwards?
Michael Connarty (Linlithgow and East Falkirk) (Lab)
T5. May I say, as a humanist and on behalf of the humanist society in this place, that we respect the work that Paul Goggins did and the way in which he was inspired by his faith? His passing is greatly mourned by all his humanist colleagues.Has the Minister visited Sellafield recently to see the wonderful work going on to get rid of the legacy waste from the Windscale nuclear weapons programme? Is he aware that the 10,000 highly skilled workers there are going to lose their jobs as a result of the plan to shut down the reprocessing plant? Will he meet the workers when they come to this place to address the all-party group on nuclear energy?
Michael Fallon
I would be very happy to meet the hon. Gentleman and, indeed, a delegation from that group when they come down to this place. He will know about the significant investment that has gone into Sellafield through the Nuclear Decommissioning Authority. Obviously, we want to see what prospects there are for continuing that work.
Mr David Nuttall (Bury North) (Con)
In order to reassure constituents of mine who are concerned about fracking for shale gas, will my right hon. Friend please set out the range of licences and regulatory approvals any company will have to have in place before it can extract shale gas?
Michael Fallon
The regulatory road map we published in December makes it clear that any developer must have a licence from the Department; planning permission from the local minerals authority; the necessary permits from the Environment Agency; authorisation from the Health and Safety Executive that its method of fracturing is safe and poses no threat to the environment; and, finally, consent from my Department to proceed.
Jessica Morden (Newport East) (Lab)
T7. In the light of the Government’s announcements this week on shale gas, will the Minister give an update on his Department’s current plans for harnessing energy from the Severn estuary?
Michael Fallon
As I said earlier in response to my hon. Friend the Member for Truro and Falmouth (Sarah Newton), we published the final strike prices for both tidal and wave in December. We continue to take an interest in that particular project, which, of course, has to be commercially sustainable. I am sure that those behind the project are aware of what they have to do to bring it to the market.
Tim Loughton (East Worthing and Shoreham) (Con)
Last week a constituent came to my surgery complaining of being bombarded with Government literature urging him to apply for the warm home discount and quoting the Secretary of State assuring the Select Committee that it was available to all pensioners, but, because my constituent is in sheltered accommodation and pays his energy bills via his housing association, he has been told that he does not qualify. Is the Secretary of State aware of this anomaly and is anything being done about it?
Ian Lavery (Wansbeck) (Lab)
The emission level of coal is roughly 820g of CO2 per kWh, and the emission level of natural gas is roughly 430g of CO2 per kWh. Will the Minister say what he expects the emission level of shale gas to be?
Michael Fallon
We have published a study by the chief scientist at the Department on the likely emission level of shale gas. Let me take this opportunity to tell the House that we have of course now signed on the first carbon capture and storage project at Drax, which I hope that the hon. Gentleman will welcome. We hope to follow that with the second CCS project in Scotland very shortly.
Charles Hendry (Wealden) (Con)
Will my right hon. Friend welcome the decision of Chevron this week to allocate at least 75% of the work for the Alder field development in the North sea to companies in the UK supply chain? Will he congratulate his officials in DECC’s office in Aberdeen on how they have worked tirelessly to achieve that outcome, which is a huge boost of confidence in the UK supply chain and will be worth many tens of millions of pounds?