Rosebank Oilfield: Environmental Impacts

Debate between Richard Burgon and Caroline Lucas

Wednesday 28th June 2023 Westminster Hall

[Caroline Lucas]

I absolutely agree. In one sense, it is quite exquisite timing to have this debate and this discussion about Rosebank on the very morning of the CCC report, which is not only depressing but frankly damning when it comes to the Government’s lack of action. On leadership, I will quote Lord Deben, the chairman of the Climate Change Committee, who has noted that the Government’s commitment to the ongoing expansion of North sea oil and gas means that they have

“perfectly properly been called hypocrites”.

Let me briefly turn to some of the bogus arguments that Ministers traditionally advance to try to justify the unjustifiable. I have been told time and again in this place that new licences are essential for our economy and for energy security. In reality, nothing could be further from the truth, especially when it comes to Rosebank.

[Richard Burgon (Leeds East) (Lab)]

I congratulate the hon. Member on securing this important debate. Of course Rosebank oilfield should not go ahead, and of course it is an act of climate vandalism for it do so in the context of a climate emergency. Given the bogus arguments we hear from Government Ministers who justify the unjustifiable, is it not the case that oil and gas giants have far too much influence in our politics, and that we cannot solve the climate crisis if our political system and Government are in thrall to the corporate oil and gas interests?

[Caroline Lucas]

To reinforce what the hon. Member said, we know that the president of COP28 is going to be somebody who absolutely comes from that background, so it is not just a question of domestic collusion with oil companies. The big climate meeting happening later this year will be presided over by a president who we know is absolutely involved in the oil industry. We need to get fossil fuels out of politics once and for all.

Rosebank will not improve energy security, because 90% of its reserves are oil, not gas. Like the vast majority of oil from the North sea, it will be put in tankers and exported overseas, because it is not suitable for UK refineries. Let us be really clear: there is no argument around energy security in favour of Rosebank.

Secondly, Rosebank will not bring down our energy bills, because it does not belong to us. Any oil and gas that is sold back to the UK will be sold at global prices. As the then Secretary of State, the right hon. Member for Spelthorne (Kwasi Kwarteng), said in February last year:

“Additional UK production won’t materially affect the wholesale market price.”

Thirdly, Rosebank will not deliver long-term job security. Equinor claims that Rosebank will deliver 1,600 jobs, but the real number is less than a third of that, with the rest being short-term, temporary jobs just during construction. There are far more jobs, as we know, in a green energy future. What we need is a proper, just transition, hand in hand with the unions, for those workers and communities, to enable them to reap the benefits and rewards of those decent green jobs.

Fourthly, Rosebank will not be better for our planet than imports. Stopping Rosebank does not mean that we will import more oil. Let me say it again: the vast majority of oil from Rosebank will be exported. Even if Rosebank’s oil did reach UK refineries, the development plans submitted show that it is likely to be more polluting than the oil and gas produced in Norway, our largest import partner. More oil production means more oil consumption, less oil production means less oil consumption—it is basic economics. What will bring down imports is reducing fossil fuel dependence across our energy system.

As if all that were not evidence enough, Rosebank is also disastrous for our marine environment. As the Minister will know, the pipeline required to transport Rosebank’s tiny gas reserves would cut through the Faroe-Shetland sponge belt marine protected area, a precious and fragile ecosystem that is home to myriad species. How can the Government possibly reconcile this development with their commitment to protect 30% of land and sea by 2030, especially in the context of Equinor’s assessment of potential damage to coral gardens having been questioned by the regulator? The development would lay infrastructure through a vital ocean habitat, and an oil spill from Rosebank would be potentially catastrophic. The UK already has the most fossil fuel developments in nature-protected sites in the whole world. Let us not add yet another.

There are also plenty of economic arguments against Rosebank, since the development would be staggeringly costly to the public purse. In the words of the UN Secretary-General, investing in new fossil fuel infrastructure is

“moral and economic madness”.

It is madness, because if the Secretary of State fails to stop this project going ahead, the British public will carry almost all the costs of developing Rosebank, while the Norwegian owner, Equinor, gets to pocket the profit. To be specific, Equinor would receive more than £3.75 billion in tax breaks, thanks to this Government’s subsidy regime. Will the Minister explain to me in what world it is acceptable to hand billions of public money to a climate-wrecking company that last year raked in record profits of almost £24 billion, let alone in the midst of a cost of living scandal when the NHS is on its knees, mortgage rates are going through the roof and parents cannot afford to feed their children?

Energy (Oil and Gas) Profits Levy Bill

Debate between Richard Burgon and Caroline Lucas

Committee stage
Monday 11th July 2022 Commons Chamber

[Richard Burgon]

That is an important point well made by my hon. Friend. That is what this is really about. It is a political choice that we are discussing.

On the Government’s major loophole that I referred to, which gives a 91p tax saving for every £1 invested by the oil and gas companies, we need to be clear that it is a subsidy to oil and gas giants. It takes money away from supporting families and encourages further fossil fuel production when we need to be ending all new oil and gas production to avoid climate catastrophe.

With another huge spike in energy prices now expected, much more needs to be done to help families. The Government should start by accepting my amendment and others that would see less going into profits for oil and gas firms, and more into bailing out people facing the biggest crisis in living memory.

[Caroline Lucas]

It is a pleasure to follow the hon. Member for Leeds East (Richard Burgon), whose new clause 1 I am happy to support. I rise to speak in favour of new clauses 8 to 10 tabled in my name.

First, new clause 8 would require the Government to produce an assessment of the revenue that would be generated if the level of taxation on oil and gas companies were permanently raised to the global average of 70%. That is 5% higher than the total level of taxation with the addition of the Government’s levy, but it would be permanent.

I know the new Chancellor may be disinclined to increase taxation on the oil and gas industry, given that he has benefited so handsomely from it in the past, previously earning £1.3 million from his executive position at Gulf Keystone Petroleum, including a whopping £285,000 settlement payment when he stepped down from that role in 2018 after becoming a Minister. However, it is important to understand that the level of taxation that this new clause proposes on oil and gas would simply bring the UK into line with countries such as Angola and Trinidad and is backed by 63% of the public. By way of comparison, it may be interesting to note that the UK’s North sea neighbour, Norway, has a taxation rate of 78%, and that does not seem to have done it any harm. I therefore hope that the Government will recognise that this is a very reasonable amendment that it should be easy for them to support.

The reason I am proposing a permanent taxation level is that the UK currently has the lowest tax take in the world from an offshore oil and gas regime. That is not a badge of honour; it should be a badge of shame. Indeed, Norway’s tax take from a barrel of oil in 2019 was over 10 times the equivalent here in the UK. The amendment would simply require the Government to assess the impact of ending that shameful state of affairs. Greenpeace estimates that a tax at that level would generate an additional £13.4 billion for the Exchequer in comparison with the status quo—money that, in addition to providing immediate support to households to cope with the cost of living scandal, could be used to invest in much-needed energy efficiency, quite literally insulating households from escalating costs.

To date, the Government have spent £37 billion on short-term financial support. Although that support is of course very welcome, gas prices are likely to remain high for several years, and a more long-term approach is necessary, especially when the CEO of Ofgem is warning that the number of households in fuel poverty could reach 12 million in October when the energy price cap rises again. The think-tank E3G estimates that the average household with an energy performance certificate of D or lower will be paying what it calls an inefficiency penalty of £916 per year for adequate heating compared with households with an EPC of C or higher. Investment to kick-start a local-authority-led, street-by-street home insulation programme would save cash-strapped families money not just this year but every year. It would also rectify a glaring omission in the Government’s approach so far, with the Climate Change Committee saying clearly in its 2022 progress report to Parliament:

“Given soaring energy bills, there is a shocking gap in policy for better insulated homes.”

New clause 9 would require the Government to produce an assessment of how much revenue would be generated by the energy profits levy if the investment allowance were removed. I also support the Labour Front-Bench amendment that would simply delete the clause on the investment allowance, which is nothing less than a scandal. As the Chancellor and his team very well know, it will come at huge cost to the taxpayer. Analysis by the New Economics Foundation suggests that the investment allowance will cost £1.9 billion a year because any subsidised oil and gas projects will not start to return a profit until after 2025—the date of the sunset clause in the Bill.

New Wealth Taxes

Debate between Richard Burgon and Caroline Lucas

Tuesday 14th June 2022 Westminster Hall

[Richard Burgon]

That is absolutely right. The increase in national insurance contributions was iniquitous, regressive and absolutely outrageous, but from this Conservative Government, it was no surprise.

We currently have the scandal where income derived from wealth is taxed below income derived from work. For example, someone living off share dividend payouts would pay less in tax than someone who earns the same amount by getting up each and every day and going out to work. How on earth can that be justified? Likewise, capital gains tax, paid on profits when selling assets such as a second home, is paid below income tax rates.

There is huge scope for increasing tax revenues by ending the significant tax discounts afforded to income from wealth over income from work. Simply ending the lower rates paid on capital gains and share dividends, and removing the related exemptions on those taxes, would raise around £22 billion per year. That is a lot more than was raised by the national insurance tax hike on working people that we have just discussed.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I am grateful to the hon. Member for giving way, and I apologise for my voice. This debate is very important. People sometimes say that a wealth tax would not work because wealthy people would just up sticks and leave. Does the hon. Member agree that, actually, it is a matter of political will? If we chose to, we could levy an exit tax on vacating wealthy individuals, as they do in the United States. That would be a big discouragement for people to do that. Put simply, what is lacking here is political will—that is what is preventing us from attacking this obscene level of inequality, both here and around the world.