Draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024
Roger Gale Excerpts(4 weeks ago)
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Sir Roger Gale (in the Chair)
Members may remove their jackets if they wish to, if they are hardy or foolhardy enough.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)
I beg to move,
That the Committee has considered the draft Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2024.
As always, it is a pleasure to see you in the Chair, Sir Roger. The draft order was laid before Parliament on 22 October 2024. To give a bit of background, the UK emissions trading scheme was established under the Climate Change Act 2008 by the Greenhouse Gas Emissions Trading Scheme Order 2020, as a UK-wide greenhouse gas emissions trading scheme contributing to the UK’s emissions-reduction targets and net zero goal. The scheme is run by the UK ETS Authority, a joint body comprising the UK Government and the devolved Governments. Our aim is to be predictable and responsible guardians of the scheme and its markets.
We have introduced this statutory instrument to enable several important changes and improvements to the scheme. It resets the UK ETS cap to be in line with the top of the net zero-consistent range. The cap sets a limit on how many allowances can be created over the trading period, which runs from 2021 to 2030, and in each year. That level reduces over time to drive down total emissions. When the scheme was established, the cap for the legislated period of the UK ETS—from 2021 to 2030—was set at 5% below the UK’s expected notional share of the EU ETS cap for the same period. However, that was not consistent with the UK’s net zero trajectory for the traded sector. This statutory instrument brings the overall UK ETS cap in line with our net zero target and carbon budgets under the Climate Change Act.
The statutory instrument also reduces the industry cap, which is the total number of allowances that can be made available to existing installations for free if no cross-sectoral correction factor mitigation is applied. The SI reduces the absolute level of the industry cap while increasing its proportion of the overall cap. While the share of allowances set aside for this purpose will increase from 37% to 40%, the reduction in the overall UK ETS cap means that the industry cap will fall. That will help to mitigate the risk of carbon leakage across participating sectors while maintaining an effective incentive to decarbonise.
The statutory instrument creates a flexible reserve of allowances for maintaining market stability and sufficient carbon-leakage mitigation. In addition to allowances specifically created for the reserve, unallocated free allowances from the industry cap and designated free allowances that are returned by operators due to changes in participant eligibility or activity level reductions will also stock the flexible reserve. The flexible reserve can be used to increase the allowance supply for market-stability purposes if the cost-containment mechanism is triggered. The flexible reserve can also mitigate the application of the CSCF through a uniform reduction to all eligible existing participants’ free allocation if the eligibility for free allocation exceeds the industry cap.
I will move on to venting and flaring. Under current legislation, carbon dioxide released through flaring in the upstream oil and gas sector is included in the UK ETS, as it is within the scope of the regulated activity of combustion. This SI introduces CO2 that is released through venting in the upstream oil and gas sector into the scope of the UK ETS for installations already covered by the scheme. That means that such emissions will also be subject to a carbon price.
The controlled processes of venting and flaring can sometimes be essential for safety purposes. They are also used in more routine situations where the oil and gas hydrocarbons are unable to be used, exported, or reinjected without CO2 being removed. The removed CO2 can then be released in the process of flaring, when waste gas, including the stripped-out CO2 as well as combustible elements, is ignited, or in the process of venting, when unignited gas is released through a vent. The legislation will remove a perverse incentive whereby operators could routinely vent gas that contains carbon dioxide without it being subject to a carbon price, even though it would, if flared, constitute reportable emissions for the purpose of the scheme.
I will now move on to Northern Ireland. In line with the original policy intent, the statutory instrument extends legislative amendments made by the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2023 to Northern Ireland. The amendments include capping the aviation free allocation at 100% of emissions, clarifying the treatment of carbon capture and storage plants, and freeing the allocation rules for electricity generation.
In 2022, a memorandum of understanding between the UK and Swiss Governments was signed, setting out the intention to include flights from the UK to Switzerland in the UK ETS. Such flights were brought into the UK ETS scope on 1 January 2023 by the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 3) Order 2022. The statutory instrument extends the scope to cover flights that depart from an aerodrome in Northern Ireland and arrive at an aerodrome in Switzerland.
Scheme regulators are responsible for enforcing compliance, including operational functions such as the issuing of penalties. The statutory instrument makes a number of amendments to the levels of scheme penalties to ensure the consistency and proportionality of enforcement for all operators. It also introduces a new deficit notice, with an associated penalty, to strengthen the enforcement of the fundamental scheme obligation to surrender allowances equal to an operator’s annual emissions.
Finally, the statutory instrument makes several corrections and clarifications to existing legislation. The changes follow appropriate and comprehensive consultation with stakeholders. In the “Developing the UK Emissions Trading Scheme” consultation in 2022, the UK ETS Authority considered proposals on changes to the rules for sectors covered by the UK ETS to ensure that more greenhouse gas emissions were covered by the scheme, along with changes to the cap.
The authority response to the consultation was published in two parts, in August 2022 and July 2023. A majority of respondents agreed with the UK ETS Authority proposals on creating a flexible share reserve of allowances, on bringing venting in the upstream oil and gas sector into the scope of the ETS, and on the addition of a new penalty and deficit notice. Several respondents expressed concern regarding the reduction of the cap and the changes to the industry cap; an assessment of these responses informed the decision to set the cap at the top of the net zero-consistent range.
Between 23 February 2024 and 8 March 2024, the UK ETS Authority ran a targeted consultation on the minor penalty amendments. The responses to this consultation were in broad agreement with the proposals, or noted that they were not affected by them. The authority response has been published in advance of the laying of this statutory instrument.
The changes in the draft order will deliver on commitments made by the UK ETS Authority and improve the operation of the scheme. The alterations to the UK emissions trading scheme will support its role as a key pillar of the UK’s climate policy. They show that we will take action to extend and improve the scheme where necessary. I commend the draft order to the Committee.
Byers Gill Solar Farm
Roger Gale Excerpts(9 months, 2 weeks ago)
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Mr Deputy Speaker (Sir Roger Gale)
Order. I have no notice that the hon. Gentleman has asked permission to take part in the debate. Do the owner of the debate and the Minister agree that Mr Howell should speak?
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)
indicated assent.
Paul Howell
I apologise, Mr Deputy Speaker; you should have had notice. That was an oversight by my office and me.
I thank my hon. Friend the Member for Stockton South (Matt Vickers) for highlighting the scale of the problem, which is clear from the fact that we are both here speaking about this matter. I am sure that if my hon. Friend the Member for Darlington (Peter Gibson) were able to be here, he would contribute, too; he is another constituency neighbour aware of the concerns about this proposal.
As has been said, the proposed Byers Gill solar farm would cover land between Bishopton and Brafferton in the Sedgefield constituency. I am particularly familiar with the area, as I was married in Bishopton nearly 39 years ago. The farm would cover over 1,200 acres of land, and in the nearby region, there are further proposals from other developers that would increase the land affected to well over 2,000 acres. Residents have approached my hon. Friend the Member for Stockton South and me with significant concerns about the scale of the developments individually and in aggregate, as well as concerns about the “consultation process” that has been followed. To be fair, the proposals were refined after an initial round of consultations, and changes were made, reflecting some concerns.
I would like the Minister to be cognisant of the following critical points. Consultation must be real. I got into politics because I felt that the local Labour council was paying lip service to consultation; it was basically just telling people what was going on, instead of engaging and trying to consult properly, so I am particularly sensitive when I hear concerns about poor engagement. After my last meeting with the residents action group, I reached out to the developers to discuss the concerns. They have agreed to meet, but unfortunately I had to postpone the scheduled meeting. I will be catching up with the developers in the next few weeks, and I hope they will listen to what is going on today and react to the concerns. After all, it is not what the developers say to me that matters; it is what they say to my constituents and the people affected at the sharp end. My residents’ feedback concerns me massively, and I will be raising it again when I meet the developers.
Although communication always requires two parties to engage—sometimes people do not listen or hear—I always believe that the primary responsibility for good communication rests with the sender, not the recipient, and I encourage the developers to get on top of their game in that respect. On a slightly linked point, if the Minister caught the farming debate earlier, she will have heard about the concerns of farmers in this space. Farming economics are pushing farmers to accept solar farms on their land when they may prefer to keep farming. It is imperative that this country develops our food resilience, and it is critical that we are robust in our assessment of the land that could be used for solar to ensure that it is not consuming good farming land. I have heard concerns, as has my hon. Friend the Member for Stockton South, that the assessment of land, whether at grade 3a or 3b, is possibly being done by some who may have a vested interest in the process. We must ensure that the assessment has integrity and robustness.
It is of real value to our rural communities that their character is maintained. We need to ensure that the multiplicity of schemes in an area are jointly assessed to be certain that planning creep does not overwhelm that area. As I said, the possibility of more than 2,000 acres being covered in such a small and concentrated area is surely not reasonable.
We also have rules and guidance about the payments made to communities to support them when such schemes are approved; they must be explicitly fair and robust, and not merely bribes for compliance. It is important for the long-term resilience and value of our rural communities that they do not effectively turn into large industrial parks destroying our green and pleasant land. I support solar—it is one of the green power sources that we must develop in the right place—but it cannot be at the expense of the rural community’s way of life.
Energy Bill [Lords]
Roger Gale ExcerptsTuesday 5th September 2023
(1 year, 3 months ago)
Commons ChamberRead Full debate Energy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 5 September 2023 - (5 Sep 2023)
Several hon. Members rose—
Mr Deputy Speaker (Sir Roger Gale)
Order. This will have to be the final two minutes from the Back Benches. I call Jerome Mayhew.
Jerome Mayhew (Broadland) (Con)
Thank you, Mr Deputy Speaker. I am just going to talk about one new clause, new clause 29, which I oppose. It seeks to prevent further licences of North sea oil and gas. The reason I oppose it is that we have a plan for the decarbonisation of our economy and it is policed, if I can put it that way, by the Committee on Climate Change. In the path to net zero by 2050, we recognise that we have a continuing need for oil and gas at least until 2035, when more than 50% of our energy needs will still come from fossil fuels, and actually up to 2050 included, because it is net zero, not absolute zero. We have to have oil and gas, so let’s get it from the most efficient and environmentally friendly source. The most environmentally friendly source is Norway, but that is not an unlimited resource; the CO2 equivalent per barrel of oil there is about 7 kg. The additional oil and gas we use comes not from Norway but from Qatar; it is liquid natural gas and the CO2 equivalent per barrel there is 79 kg, whereas the figure for the North sea is 21 kg—a quarter the level of environmental damage per kilogram of CO2 equivalent. The consequence of closing down the North sea prematurely would be to increase emissions and make our carbon footprint worse. It would be the triumph of virtue signalling over the practicalities of decarbonisation.
Several hon. Members rose—
Mr Deputy Speaker (Sir Roger Gale)
I apologise to those Members who have not been called; a note will be made and a count taken. I call the Minister, Andrew Bowie.
Andrew Bowie
I am delighted to rise. I must apologise in advance of my closing remarks: given the time available, I will not be able to address every single point, question, statement and amendment raised today. [Interruption.] That is the first time I have ever been told to speed up my speaking style. However, I will commit to write to every Member who has raised a question, and certainly questions that are pertinent to how we implement some of the regulations that we are presenting here today and which will be subject to discussion in the Lords next week.
On new clause 47, presented by my hon. Friend the Member for Rutland and Melton (Alicia Kearns), we keep all sanctions under review and she knows that we cannot comment on any potential future designations. We have a global rights sanctions regime, which allows us to take action when the necessary legislative criteria are met and we assess sanctions are appropriate. I can confirm to her that we take an interest in the concerns she set out and will continue to act. We have introduced new guidance on the risks of doing business in Xinjiang, enhanced export controls and announced the introduction of financial penalties under the Modern Slavery Act 2015.
Mr Deputy Speaker (Sir Roger Gale)
Order. I am advised that the bells at No. 1 Parliament Street are not working. I shall extend the Division time by two minutes.