Offshore Wind Developments

Debate between Mike Weir and Mark Lazarowicz

Tuesday 6th January 2015 Westminster Hall

[Mr Weir]

I am sure that the hon. Gentleman will be gobsmacked to know that I do not agree. I will mention that later. No doubt, he will make his own points on that subject.

When I served on the Energy Bill Committee, I raised concerns about the changeover process from renewable obligations to the contract for difference regime. That seems to be part of the problem that we are experiencing. The renewables obligation comes to an end in 2017. The difficulty arises because of the way that the CfD process is being introduced, particularly in respect of whether and at what level funds will be available in future years.

Two developments off the shores of my constituency have a combined total of 1,234 MW and both are bidding in the first round of contracts for difference. The Government are currently considering that first round of CfDs, which are due to be allocated, I understand, around the end of March. Therein lies part of the difficulty. New projects have to bid for contracts for difference through a competitive auction process, and offshore wind projects will compete not only with each other for the budget, but against other renewable energy projects. Offshore wind has been grouped with wave, tidal, biomass, combined heat and power and Scottish island wind. There is a total budget for all these technologies of £235 million, which is split between £155 million for 2016-17 and £80 million from 2017-18.

RenewableUK has estimated that this would be enough to bring forward around 700 MW of capacity—just over half of what could be produced by the two developments off Angus alone, never mind any others that might be in the pipeline. RenewableUK has estimated that up to 3.5 GW of capacity could have entered into the current allocation round, and by the time of the second allocation round, expected towards the end of this year, the number could rise to over 9 GW.

I am told that the amount of money allocated to the first round, which is under way, is significantly less than the industry expected, and that is causing considerable unease in the industry. It can be seen from the figures I have quoted that there is no way all three Scottish entrants could achieve a CfD. Indeed, given that there will certainly be bids from other parts of the UK, there is no guarantee that any of them will get a contract at all. That leaves the industry facing a dilemma. As Gordon Edge, director of policy at RenewableUK, put it:

“There is enough money on the table for 700-800MW in this allocation round if all the money in the ‘less established’ pot goes to offshore wind”,

which he considered likely. He said:

“There are a number of large offshore wind projects coming forward that are significantly larger than this. Developers of those projects are left with the choice of carving out a piece of their development to fit—which is likely to make the economics more challenging—or sitting it out in the hope of a better opportunity later. If the budget for the next allocation round is the same as the first round, then less than 10 per cent of capacity we project will be eligible to bid can secure a CfD. It can take hundreds of millions of pounds to get offshore wind projects through consent, which is why the industry is getting very hot under the collar.”

There is a real danger that some developers will begin to consider whether they are prepared to continue to pump large sums of money into projects if there is not at least a real chance that they will secure a contract for difference.

I raised that issue with the Secretary of State at the last Department of Energy and Climate Change questions. I said:

“Many offshore wind developers have expressed concern that owing to the structure of the current contracts for difference allocation round, only one development will be given a CfD, imperilling many of the others. Can the Secretary of State give them any reassurance that there will be greater consideration of offshore wind in future CfD allocations?”

The Secretary of State responded:

“First, it is worth putting it on the record…that Britain leads the world in offshore wind”—

that is perhaps true, and is welcome—

“with more offshore wind farms installed than in the rest of the world combined. In the current round of CfD allocations—of course, it has not been completed yet, so I cannot talk about the details—we have ensured that we have sufficient allocation for offshore wind, but we have also ensured that the levy control framework includes further allocations for it, so that the consumer can benefit from dropping prices.”—[Official Report, 18 December 2014; Vol. 589, c. 1551-1552.]

The difficulty with that is that the allocations for future rounds are not clear, and that is causing a great deal of concern in the industry.

What the Secretary of State said is all very well, but there is no certainty about the future budget, because the Government are giving no market signals about what the budgets are likely to be in future allocation rounds, and in future years, and there is no visibility beyond the current delivery plan, which extends to 2018-19. That uncertainty will almost certainly lead to developers looking again at developments. Without the confidence that budgets will be available, it is impossible for them to assess the allocation risk, and that will act as a deterrent to investors. Uncertainty could increase the cost of development, rather than create the savings that the Government are looking for.

For those projects that are not successful in the current round or whose capacity is too large to be supported within the available budget—the only definite figures that are available are under the current budget—lack of foresight could increase uncertainty yet further. The industry has suggested that it needs clarity on the frequency of allocation rounds and foresight of at least two allocation budgets at any time. Will the Minister say whether the Department is considering or is prepared to consider that in the near future?

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

I congratulate the hon. Gentleman on securing the debate. Given that there are some technologies for which the Government are prepared to agree contracts for many decades into the future, does he agree that the Minister should indicate whether they will take a similar approach to renewables?

[Mr Weir]

I should perhaps introduce the hon. Gentleman to the hon. Member for Christchurch (Mr Chope), who mentioned nuclear energy, and they could have a small debate on that point, which I will come to shortly.

Fracking

Debate between Mike Weir and Mark Lazarowicz

Tuesday 25th November 2014 Westminster Hall

[Mr Mike Weir (Angus) (SNP)]

I am pleased to speak under your chairmanship, Mr Gray, and I congratulate the right hon. Member for Lewes (Norman Baker) on securing this important debate.

I should make it clear at the outset that I do not support fracking, for all the reasons set out by others, which I will not repeat. Even in Denton, Texas, the home of fracking, in a recent referendum people voted to end it. Other states in the USA are turning against it because of environmental concerns. We should take note of these. If, even in the wide open spaces of the American west, there are concerns about the impact of fracking, how much more should there be in the densely populated UK?

A large area of central Scotland, stretching through to my constituency in Angus, has been identified as having potential for shale gas extraction. I shall confine my remarks to particular problems relating to the powers involved. Much of the power in respect of such developments lies with the Westminster Government rather than the Scottish Parliament. Westminster has the power to grant licences under the Petroleum Act 1998 to search for and develop shale gas, whereas local authorities and the Scottish Parliament have power in respect of planning matters, which clearly gives them some powers to restrict fracking.

I asked the Minister at the last DECC questions to confirm that the UK Government do not intend, whether through the Infrastructure Bill or otherwise, to change the planning powers in respect of fracking. I did so because I have become increasingly concerned about what exactly the interaction is between the powers under the Petroleum Act and those under the Planning Acts. This is very important, because the UK Government seem determined to have fracking and, with the changes made by the Infrastructure Bill, they are removing the right of landowners to object to fracking under their properties. It was also reported this week that the UK Government were funding the British Geological Survey to make investigative boreholes to demonstrate the viability of fracking. Will the Minister confirm that?

[Mark Lazarowicz]

Does the hon. Gentleman agree that one way of dealing with the confusion between UK and Scottish Government responsibilities would be for the responsibilities under the Petroleum Act to be devolved to the Scottish Parliament—hopefully, under the Smith commission proposals due shortly?

[Mr Weir]

The hon. Gentleman anticipates what I was going to say.

As well as giving the right to grant licences to persons seeking to explore for shale oil, section 7 of the 1998 Act provides:

“Subject to the provisions of this section, the Mines (Working Facilities and Support) Act 1966 shall apply (in England and Wales and Scotland) for the purpose of enabling a person holding a licence under this Part of this Act to acquire such ancillary rights as may be required for the exercise of the rights granted by the licence.”

The 1966 Act includes a right to

“enter upon land and to sink boreholes in the land for the purpose of searching for and getting petroleum”—

the definition of petroleum in the Act includes gas—and to use the land for specific purposes, such as erecting buildings, laying pipes, and so on, and provides for ancillary rights. The 1966 Act covers such rights, including lowering the surface, conveyance of gas or oil and a right to occupy the surface of the property, among other things. These are quite extensive rights that a licence holder would have and, rightly, these ancillary rights need to be set out by a court if agreement cannot be reached by the landowner.

My problem with all this is that I am not at all clear about planning in relation to fracking. If someone has, say, a lease from the UK Government to seek shale gas in a specific part of Angus, would they be entitled to go on to ground to do so, even if the landowner objected to it? Would these rights override planning permission or would they still need planning permission from the local authority and, if so, where does the landowner stand in all this? Is his only right the right to object to the planning permission? It seems to me that planning could only, in any event, cover the area on which the infrastructure for boring was placed, as it would be difficult to be sure about where drilling was being done, or how far into adjoining land it would go, until the operation was under way.

I would welcome the Minister’s providing some clarity about this. It seems to me that, even if the clauses in the Infrastructure Bill are defeated, the adjoining landowner would still be in a very weak position in relation to those wishing to frack, since they could at best delay development under their property, not stop it. There is a specific concern relating to Scotland, because this would override parts of Scottish land law, which is in fact devolved. There are already things in Scottish land law to do with minerals, including working with them, which would contradict some of this.

The Scottish Government have powers over planning in Scotland and have taken a much more cautious approach to the issue than the UK Government. They have called in the application from Dart Energy in Falkirk, have introduced changes in planning guidelines for unconventional oil and gas, and have—the right hon. Member for Lewes might be interested in this—introduced a concept of buffer zones in this regard. These measures have been welcomed by Friends of the Earth, among others. Hon. Members might be interested to hear that they have also convened an expert scientific panel to review the scientific evidence on fracking.

All powers relating to fracking, and indeed to everything else, should of course be moved from Westminster to the Scottish Parliament. I indicated to the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) that all powers to do with fracking should certainly go to the Scottish Government. Later this week the Smith commission might surprise us and include powers over fracking in its remit. It would be right and proper for all such aspects to go to Scotland, where the Government of Scotland should reflect the views of the communities in Scotland where fracking may take place.

UK Constituent Parts (EU)

Debate between Mike Weir and Mark Lazarowicz

Wednesday 21st November 2012 Westminster Hall

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

I congratulate my hon. Friend the Member for Glasgow North (Ann McKechin) on securing this important debate today. It is not surprising that those who have different views on the relationship between Scotland and the UK should also try to find different arguments to support their position about Scotland’s relationship within the European Union. There are arguments on both sides that draw on various legal authorities. The arguments put forward by people such as my hon. Friend the Member for Glasgow North East (Mr Bain) are much stronger than those that have been put forward by the SNP. None the less, I accept that arguments can be found from various sources to support different positions in the debate. Of course this is not just a legal and constitutional argument. Ultimately, whatever the legal position is, it is also a political issue that the European Union will have to face if Scotland were to become independent. Whatever side of the argument one takes, it is inevitably the case that if Scotland were to be independent, whether or not one regards it as one of the successor states to the UK or as a new state, there would have to be a new treaty. That is undoubtedly the case whatever one’s legal analysis of the position.

The new treaty would require a negotiating process, and we have heard today a number of the issues that would have to be clarified and resolved in that process. There are the institutional relationships and structures of the EU, internal matters such as the rota for which country takes over the presidency, and the number of MEPs and the number of votes. Even those matters have in the past been the subject of many years of negotiation in relation to new treaties.

There are also much weightier issues, such as the UK rebate and whether Scotland would succeed to some share of that, which would require substantial negotiation. There is also the common fisheries policy. Given the SNP’s position on fisheries issues over recent years, one assumes that it would want to see the repatriation of the common fisheries policy towards an independent Scotland. One cannot imagine that that is something that can be simply agreed within negotiations in a matter of weeks or months. It will clearly require considerable and lengthy negotiations as part of a new treaty. The same could be said of many other issues that have been referred to in this debate.

Such issues may eventually be resolved. However, in trying to resolve them, there are two factors that will have to be taken into account. As a strong supporter of UK and Scottish membership of the EU, I can say that the EU does not do things quickly. We all know that it does not resolve outstanding issues quickly, because it is a complex organisation with many member states.

[Mr Weir]

Following the precedent of Greenland, will the hon. Gentleman not accept that even if he is correct and there will have to be negotiations, those negotiations will be done not outwith the EU but within, as happened with Greenland when it wanted to leave the EU. Scotland will still be a constituent part of the EU after independence until negotiations are complete.

[Mark Lazarowicz]

That is an arguable position. I will not go into that debate now. My point is that there will have to be lengthy negotiations whatever happens. Moreover, wherever those negotiations take place in an organisational sense, they will be the subject of horse-trading and of give and take. Let us take, for example, the fisheries policy. If the SNP wanted to achieve its objective in relation to the fisheries policy, another country somewhere in the EU would demand something else. If the SNP were to get the opt out of Schengen, which it seems to want, someone else in the EU would want to achieve something else. Even with goodwill on all sides, which may be a matter of some question given that other member states might not wish to encourage easy secession, to put it mildly, from another member state, this is a process that will be lengthy and complex. That is why it is right to point that out and right to ask the question, “At the end of the day, would the benefit from leaving the UK be worth the substantial negotiations and the period of time that would be spent in undertaking those negotiations?” More importantly, it also means that it is only reasonable to ask another question: “What would be the outcome of this process?”

For the SNP to suggest that even asking those questions is in some sense disloyal to Scotland does a disservice to the people of Scotland, who are asking those questions themselves. They want to know at the end of the process what will be the relationship of Scotland with the EU? To know what that relationship would be, we need to ask the questions and we need to try to get some answers from the Scottish Government and the SNP. We then need to find out from debates and discussions with other European states what the likely response would be to the demands coming from the Scottish Government and the SNP if independence were to be supported in a referendum.

Once we have that information, the Scottish people can decide in the run-up to the referendum whether they should support independence or oppose it because of what I believe is the situation—the fact that we would be worse off in a smaller member state, even if that smaller state were able at the end of the day to enter into and complete negotiations, than if we were part of a larger member state, with all the negotiating strength that we have at the moment and that I would not want to see us lose.

Scottish Separation

Debate between Mike Weir and Mark Lazarowicz

Tuesday 10th July 2012 Westminster Hall

[Mark Lazarowicz]

Indeed. That takes us to a point that I intended to deal with later but will deal with now. We are referring, with respect, to the arguments advanced by the hon. Member for Banff and Buchan, who is from the SNP. She seemed to be arguing at one point that Scotland would have a different approach to taxation and redistribution policy, suggesting, presumably, that it would be a higher-tax, higher-spending type of country. On the other hand, the First Minister is saying, as my hon. Friend the Member for Glasgow North (Ann McKechin) pointed out, that income tax in an independent Scotland would be the same as in the rest of the UK. Of course, for the past six years, the SNP Government could have used the existing powers, if they had wanted to, to increase tax in Scotland and increase public spending, but they have not. The SNP is apparently in favour of a lower corporation tax rate in Scotland, yet it tells us that it would maintain the free movement of labour, services and capital throughout the UK. If that is the case, it is difficult to visualise Scotland having a separate corporation tax rate.

The issue of sterling has been—

[Mr Weir]

Will the hon. Gentleman give way?

[Mark Lazarowicz]

With respect, I had better not, given the time.

The issue of sterling was raised. As we were reminded in an intervention, the Bank of England and monetary policy were of course made independent of politicians by the decision of a Labour Chancellor. However, the SNP Government have said that they want to see a seat for Scotland on the Monetary Policy Committee of the Bank of England. They are trying to have it every which way. There are many areas in which we see that type of contradiction. An important one is, of course, the suggestion that the Bank of England would continue to regulate the financial services industry, even in an independent Scotland. That is incredibly important. The financial services sector is important in Scotland, particularly in my constituency and the constituencies of many other hon. Members.

Decisions such as how banks can advertise financial products and the requirements to maintain stability in terms of their capital base would be regulated by an institution in another country, over which we would have no say if we were a separate, independent state. That leaves aside the question, raised by Scottish Financial Enterprise, of whether it would be legal under EU rules to leave the regulation of our financial services sector to a foreign—as it would then be—country.

We have heard those in the SNP say that they do not want regional pay rates for the civil service, but the biggest regional pay difference across the UK would be if we were a separate country and the rates were negotiated on, presumably, a Scottish basis only. We see contradictions in many areas. Because the SNP recognises that voters and the public do not want full separation, it wants what some describe as independence-lite, but I describe as separation with a major democratic deficit, as my hon. Friend the Member for Glasgow North East (Mr Bain) pointed out.

At best, the new Scottish Government could seek to negotiate with the Government of the remaining UK to have input on matters that affect Scotland’s interests, but they could not do that as a right, and would have to rely on the good will of a new UK Government. There is no reason why there would necessarily be ill will between the two successor states if Scotland separated; but obviously, a UK Government who no longer had Scotland as part of their state would have different interests and perspectives from one that still included Scotland. Scotland has MPs, Ministers and a voice in Parliament, where Ministers and the Chancellor can be held to account—for example, for actions in relation to the Bank of England. All of that will disappear after the separation of an independent Scotland.

It seems to be the worst of all possible worlds—a democratic deficit of no interest to Scotland, with no benefit to Scotland. Let us build on what we have with devolution, as expanded under the Scotland Act 2012 and current proposals, and improve it where we can. Let us get down to using the existing powers and not spend the next few years coming up with a new constitutional arrangement which, at the end of the day, will not even be independence in the full sense of the word, but, given the SNP arguments, will fall well short of it. It would be no good for Scotland or the UK.