Offshore Petroleum Licensing Bill

Baroness Winterton of Doncaster Excerpts

2nd reading
Monday 22nd January 2024 Commons Chamber

[Jim Shannon]

I thank my hon. Friend—I call him that because I have great respect for him—and agree wholeheartedly with what he has just said. The farming community, the NFU and the Ulster Farmers’ Union are clearly committed to the targets. They are committed to looking at the alternatives, but the alternatives have to be practical. The point I am trying to make is that it is about where things are practical.

There is no doubt that to meet not just our net zero target but, more importantly, our environmental obligations, we need to do a better job of accessing and using renewable energy fuels. However, the fact is we will simply not be there any time soon and, in the meantime, it is vital that we secure safety and security for our constituents. I support the aims of the Bill, which would enhance the procedures currently in place, and note that no financial hardship should be passed on through the Bill. That is vital as I know that households are struggling with the current pressures. No longer is it a matter simply for households in poverty, working families with decent wages are being affected.

It is a transition. It is about meeting our net zero targets and increasing green energy and renewables, which my hon. Friend the Member for Brighton, Pavilion (Caroline Lucas) referred to. At the same time, the Bill gives us the opportunity to progress those renewables in a way that is positive in the short term.

The Library briefing makes it clear that licensing rounds are run when the NSTA decides they are necessary. However, it should be highlighted that they have been held broadly on an annual basis up to the 32nd licensing round, which opened in 2019. The latest—33rd—licensing round was launched in October 2022, following the introduction of a climate compatibility checkpoint in September 2022. In October 2023, 27 new licences were awarded as part of that licensing round. That is not onerous, but it is necessary not just to safeguard our industry by enhancing investor and industry confidence, as the Government have highlighted, but to ensure that we do not see families scraping pennies together to afford heat.

My contribution to the debate is clearly for those who are in energy difficulties. Today, the papers referred to food bank referrals being up some 30%. The food bank in my constituency of Strangford in my major town of Newtownards saw a 30% increase in referrals over December and early January from people who are middle class who are finding it difficult to deal with energy prices.

I know of several young families who usually enjoy a few days away when the kids are off at Christmas, and they told me that they were just not able to do it this year. People may say, “For goodness sake, they can’t go on holiday…” I am not saying that because it is their right to have that break, but I am highlighting the knock-on effect for families of increased prices is that they cannot afford to sow into the local economy in the way they used to. That means the little 20-bed hotel they usually visit does not get their business. The knock-on effect is that they do not hire the cleaner for as many hours. Her income drops, and she cannot spend the way she usually does, so the knock-on effects continue.

We need the people who spend locally to do so, and for them to do that, energy bills need to be manageable. We are failing when it comes to energy provision. If the Bill helps safeguard our provision as we continue to find better ways to source reliable renewable energy, I support that. When the Minister or Secretary of State sums up, if they could give us that reassurance, I would be a whole lot happier about this debate. Of course, we need to explore tidal energy, but safeguarding domestic production can go hand in hand with that. Indeed, it must do so. I am committed to renewables, green energy possibilities and net zero targets because the farming community that I live in want to commit themselves to that as well.

I support our families, our vulnerable, ill and elderly, and those living in cold, damp homes because they cannot afford to do otherwise. Therefore, at this stage, I support the Bill on behalf of all those struggling to heat their homes and keep their families warm. We must commit ourselves to more renewables and ensure that the renewables percentage rises. If it rises, we can reduce gas and petroleum usage. By doing so, we can balance the process. That is what I am hoping for from the Minister’s reply; I hope we can deliver that.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Before I call the shadow Minister, I want to emphasise again, and I will do so when he has finished, how important it is for those who have contributed to the debate to be here for the wind-ups. I call the shadow Minister.

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[Mr Sheerman]

On a point of order, Madam Deputy Speaker. I have been in this House longer than most people, and it is a courtesy to the House in a winding-up speech to give way in an even-handed way. This Minister has given way to a Conservative Member, but he refuses to take any interventions from the Opposition.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I thank the hon. Gentleman for that point of order. It is up to the Minister to decide to whom he gives way. It would be slightly more usual for him to give way to Members who had been in the Chamber throughout the debate. However, it is up to him to decide. And I really do not like points of order in the middle of winding-up speeches.

[Graham Stuart]

Thank you, Madam Deputy Speaker.

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[Graham Stuart]

If the hon. Gentleman, who has hardly been here, would sit down, I will fortunately be able to come to a close.

The amendment put forward by His Majesty’s Opposition suggests that maximising the falling production from the North sea will put us at the greater mercy of petrostates. That is so obviously untrue that I hope they would hold their heads in shame about it. That has been at the heart of the Opposition’s approach to this Bill.

The Bill is designed to send a signal to the industry that we have its back. It is all about ensuring that we get to net zero in the most efficient and effective manner possible, and it will underpin this Government’s continued leadership on climate now and for many years to come. I urge the House to support the Bill.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Well, that was lively. [Laughter.] Now that I have Members’ attention, I want to emphasise how important it is for those who have participated in debates to get back in good time for the winding-ups speeches. When the wind-ups come up early, please just keep an eye out for them and make sure to come back, because people who have participated will be mentioned in the wind-ups and it is courteous to be here to hear them.

[Mr Sheerman]

On a point of order, Madam Deputy Speaker. Could I just make it clear to the House that I was not here for the main debate, but came in for the wind-ups, because I was chairing a committee looking at the future of hydrogen? I apologise to the House that I was delayed. Thank you.

[Madam Deputy Speaker]

I thank the hon. Gentleman for that clarification. Nevertheless, it is true that it is up to the Minister to decide to whom he wants to give way.

Question put, That the amendment be made.

Offshore Petroleum Licensing Bill

Baroness Winterton of Doncaster Excerpts

Committee of the whole House
Tuesday 20th February 2024 Commons Chamber

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

I beg to move amendment 12, page 1, line 3, at end insert—

“(1ZA) The OGA must not invite any new seaward area production application licences until the Secretary of State has by regulations brought into effect a ban on flaring and venting relating to new offshore installations other than that required in an emergency.

(1ZB) The Secretary of State must by regulation make such provision so that the OGA is only permitted to invite seaward area production application licences after 2030 once a prohibition is in place on routine flaring and venting for all offshore installations operating in UK waters.

(1ZC) A statutory instrument containing regulations under subsections (1ZA) and (1ZB) is subject to annulment in pursuance of a resolution of either House of Parliament.

(1ZD) In subsection (1ZA) and (1ZB)—

‘flaring’ means the burning of hydrocarbons produced during oil and gas extraction;

‘venting’ means the release of un-combusted hydrocarbons directly into the atmosphere.”

This amendment prevents the invitation of new seaward area production application licences until the Secretary of State has introduced a ban on flaring and venting by new offshore installations. It also requires the Secretary of State to prevent licensing rounds from 2030 if a wider ban is not in place.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

Amendment 15, page 1, line 3, at end insert—

“(1ZA) The OGA must not invite any new seaward area production application licences until the Secretary of State has by regulations brought into effect a requirement that—

(a) all new seaward area production application licences require a specific field commitment of a net zero carbon footprint reached through developing the Carbon Capture Utilisation and Storage network or such other means as deemed appropriate; and

(b) a percentage, to be specified in regulations but not less than 30 per cent, of all new seaward area production application licences specifically align petroleum extraction with the refining of petroleum at the Grangemouth oil refinery.

(1ZB) A statutory instrument containing regulations under subsections (1ZA) is subject to annulment in pursuance of a resolution of either House of Parliament.”

Amendment 7, page 1, line 4, leave out “in each relevant year” and insert “on a case-by-case basis”.

Amendment 2, page 1, line 6, at end insert—

“(aa) the climate test (see section 4ZD)”

This paving amendment, together with amendment 3, sets out the climate test to be applied by the Oil and Gas Authority before inviting applications for seaward new production licences.

Amendment 8, page 1, line 6, at end insert—

“(aa) the energy and job security test (see section 4ZD)”

This paving amendment, together with Amendment 9, introduces a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 10, page 1, line 6, at end insert—

“(aa) the just transition test (see section 4ZD)”

This paving amendment, together with Amendment 11, introduces a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 13, page 1, line 6, at end insert—

“(aa) the just transition plans test (see section 4ZD)”

This paving amendment, together with Amendment 14, introduces a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 17, page 1, line 6, at end insert—

“(aa) the climate change test (see section 4ZD)”

This paving amendment, together with Amendment 18, sets out the climate change test to be applied by the Oil and Gas Authority before inviting applications for seaward new production licences.

Amendment 22, page 1, line 6, at end insert —

“(aa) the home energy efficiency test (see section 4ZD).”

This paving amendment, together with Amendment 24, introduces a home energy efficiency test to be applied by the OGA before inviting applications for seaward area production licences.

Amendment 23, page 1, line 6, at end insert—

“(aa) the Energy Charter test (see section 4ZD).”

This paving amendment, together with Amendment 25, introduces an Energy Charter test to be applied by the OGA before inviting applications for seaward area production licences.

Amendment 19, page 2, line 1, after “of” leave out “liquefied”.

This amendment, together with Amendment 20, would require the carbon intensity of domestic natural gas to be assessed against the carbon intensity of all natural gas imported into the UK.

Amendment 20, page 2, line 7, leave out “liquefied”.

This amendment, together with Amendment 19, would require the carbon intensity of domestic natural gas to be assessed against the carbon intensity of all natural gas imported into the UK.

Amendment 21, page 2, line 24, at end insert—

“(4A) Within six months of the commencement of this Act, the Secretary of State must produce and lay before Parliament a report on the effect of amending the definition of “carbon intensity” as set out in subsection (4) according to section 93 of the Climate Change Act 2008.”

This amendment requires the Secretary of State to report how the carbon intensity test is affected if the definition of carbon intensity were amended to include emissions of gases other than carbon dioxide in line with the carbon dioxide equivalent measure in section 93 of the 2008 Climate Change Act.

Amendment 3, page 3, line 23, at end insert—

“4ZD The climate test mentioned in s 4ZA

The climate test is met in relation to a relevant year if the Intergovernmental Panel on Climate Change finds that current global fossil infrastructure will not emit more greenhouse gases than is compatible with limiting global heating to 1.5 degrees Celsius.”

Amendment 9, page 3, line 23, at end insert—

“4ZD The energy and job security test mentioned in s 4ZA

The energy and job security test is met in relation to a relevant year if the OGA assesses that new licences will—

(a) lower energy bills for households;

(b) deliver energy security and reduce reliance on imported fuel sources for domestic consumption;

(c) enhance sustained job security for the oil and gas workforce in areas of the UK economically reliant on the oil and gas sector;

(d) guarantee funding for domestic refineries to increase capacity to process sustainable fuel sources; and

(e) help the oil and gas sector meet commitments set out in the North Sea Transition Deal.”

This amendment sets out a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 11, page 3, line 23, at end insert—

“4ZD The just transition test mentioned in s 4ZA

The just transition test is met in relation to a relevant year if the OGA assesses that—

(a) new licences will support the delivery of the North Sea Transition Deal’s greenhouse gas emission reduction targets of 10% by 2025, 25% by 2027 and 50% by 2030 against a 2018 baseline, to meet the sector’s aim of a net zero basin by 2050; and

(b) the Secretary of State has provided funding to support the development of the renewable energy sector, in areas of the UK economically dependent on the oil and gas sector, equivalent to tax revenues collected from UK oil and gas production.”

This amendment sets out a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 14, page 3, line 23, at end insert—

“4ZD The just transition plans test mentioned in s 4ZA

(1) The just transition plans test is met in relation to a relevant year if the OGA assesses that all existing seaward area production licence holders have published just transition plans for their workforce that are compatible with limiting global heating to 1.5 degrees Celsius.

(2) For the purposes of this section—

“just transition plans” refer to plans agreed through formalised collective agreements with unions in the workplace for consultation on policy;

“workforce” includes workers, directly and indirectly (sub-contracted or agency) employed, or engaged through day-rate or self-employed contract models.”

Amendment 18, page 3, line 23, insert—

“4ZD The climate change test mentioned in 4ZA

The climate change test is met in relation to a relevant year if the latest reports of the Intergovernmental Panel on Climate Change on the mitigation of climate change find that the granting of additional seaward area production licences is consistent with limiting warming to 1.5°C.”

This amendment sets out a new test to be applied by the OGA before inviting applications for seaward new production licences.

Amendment 24, page 3, line 23, at end insert—

“4ZD The home energy efficiency test mentioned in s 4ZA

The home energy efficiency test is met if the median rating in current Energy Performance Certificates in the United Kingdom falls within or above Band B.”

This amendment sets out the home energy efficiency test to be applied by the OGA before inviting applications for seaward area production licences.

Amendment 25, page 3, line 23, at end insert—

“4ZD The Energy Charter test mentioned in s 4ZA

The Energy Charter Treaty test is met if the United Kingdom has made arrangements to withdraw from the Energy Charter Treaty.”

This amendment sets out the Energy Charter test to be applied by the OGA before inviting applications for seaward area production licences.

Clause stand part.

Clause 2 stand part.

New clause 2—Duty to introduce spatial prioritisation policy—

“After section 4 of the Petroleum Act 1998 insert—

‘4ZAA Duty to introduce spatial prioritisation policy

(1) Before the OGA invites applications for seaward area production licences under this Act the Secretary of State must publish a marine spatial prioritisation policy.

(2) The marine spatial prioritisation policy must establish a process for prioritising offshore renewables, marine protection, fishing activities, oil and gas licensing, and the achievement of relevant targets under the Climate Change Act 2008 and the Environment Act 2021 in any relevant decisions relating to the marine environment made by a body undertaking public functions.

(3) The OGA must comply with the marine spatial prioritisation policy set out in subsection (1) when deciding applications relating to new seaward area production licences.’”

This new clause requires the Secretary of State to publish a marine spatial prioritisation policy, taking into account relevant targets under the Climate Change Act 2008 and the Environment Act 2021.

[Sir Alok Sharma]

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

On Second Reading, I said that this Bill was something of a distraction and not necessary on the basis that the North Sea Transition Authority can already grant licences annually or, indeed, whenever it considers it necessary. That will not change with the Bill. I also noted at the time that the two statutory tests in the Bill have been designed in such a way that the computer always says yes to new oil and gas licences, but I also said that I would work with other like-minded colleagues to improve the Bill and bring in further tests that need to be met before any new oil and gas production licences are granted. That is what I and other Members have sought to do.

Amendment 12 seeks to do two things. First, it would stop the invitation of new production application licences until the Secretary of State has introduced a ban on the flaring and venting of methane by new offshore installations. Secondly, it would require the Secretary of State to prevent licensing rounds from 2030 if a wider ban on flaring and venting is not in place. Along with other Members who have signed up to the amendment, I argue that this is an entirely reasonable ask that the Government and all Members should be able to get behind, given that all it modestly seeks to do is put into statute existing guidance on flaring and venting that was issued by the North Sea Transition Authority.

Let me set out the precise wording of the principles that the NSTA expects industry to follow in relation to flaring and venting across all UK continental shelf areas. First,

“flaring and venting and associated emissions should be at the lowest possible levels in the circumstances”.

Secondly, there should be

“zero routine flaring and venting for all by 2030”.

Thirdly,

“all new developments should be planned and developed on the basis of zero routine flaring and venting.”

That is a set of NSTA principles with which amendment 12 in entirely consistent.

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[Several hon. Members rose—]

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

Order. We are in Committee, so I remind Members that the Chair should be addressed by name or as “Chair” or “Madam Chair”, as Sir Alok Sharma did, and not as “Mr Deputy Speaker” or “Madam Deputy Speaker”.

Before I call the shadow Minister, I want to make it clear that I will be calling those who have amendments down first and I will then move on to others, going from side to side.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I would like to speak to our amendments 17, 18, 19 and 20, to comment on other amendments before us today and then to place all this into the context of the Bill as a whole by way of what will effectively be a stand-part contribution. This Bill remains an ill-advised, pointless piece of political posturing—

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[Selaine Saxby]

My right hon. Friend makes a valid point. However, for me, this is about opening up that conversation and making sure that these things are considered in the round. If we are going to put an extra pipe in, we should consider what we are offsetting somewhere else.

Polling found that 80% of the UK public believe our ocean protection laws must be strengthened, and I know how important our waters are to the residents of North Devon and the wider UK. We must ensure that we do all we can on this, while understanding the vital role that oil and gas plays and will play in our energy security. Spatial prioritisation is important to ensure that continuing to drive forward our new green energies is not done at the expense of our traditional industries, such as fishing, and gives due consideration to the marine environment, which we on land owe so much to and are still finding out more about. Balance and optimisation are the objective of this amendment, and I hope the Minister will consider this opportunity, so that we really can have it all and decarbonise our energy, improve our biodiversity, support our fishermen and improve our energy security.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

I call the Scottish National party spokesman.

[Dave Doogan (Angus) (SNP)]

I rise to speak to amendments 7, 8 and 10, which have been tabled by the SNP. I note that no substantive changes have been made to the Bill’s provisions since we discussed it some weeks ago in this place; it is no more responsive to the needs of the climate, the energy sector in Scotland or bill payers who are haemorrhaging money on their energy bills. We know, from the appropriation of Scotland’s energy wealth by Thatcher in the 1980s, Cameron’s “Cut the green crap” at the beginning of this Conservative regime, and the weak-minded and politically naive rolling back of the green transition measures by the current Prime Minister, that time and time again, the Tories will never look after ordinary workers, Scotland or the environment.

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[Dave Doogan]

The hon. Gentleman raises an interesting question. There has been a lack of investment, and the network that delivers energy around GB was designed for a small number of very large generators. It is ill-equipped to deal with many smaller systems of generation. That is why we find ourselves switching off wind turbines and, where the demand still exits, replacing them with gas, much to all our constituents’ cost and misery. The failure to transition in the electricity distribution network across GB is exactly the same failure we see in our dependency and desire to keep looking backwards. We should transition from hydrocarbons to renewables in a way that respects communities.

In closing, we should grasp Scotland’s bright future with both hands. In so doing, we will rid ourselves of the mismanagement of successive UK Governments in Westminster.

[The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)]

Before I bring in some of those who may not have tabled amendments, I remind Members that we are at Committee stage, so discussion is of the amendments. However, as we are also discussing clauses 1 and 2 stand part, there is perhaps a little more scope.

[Peter Aldous (Waveney) (Con)]

As I mentioned on Second Reading, the Bill is of particular interest to me because the oil and gas industry has played a significant role as a major employer in the Waveney and Lowestoft area for nearly 60 years. Moreover, the offshore wind industry and other low-carbon energy technologies, such as nuclear and hydrogen, will provide exciting local job-creating opportunities for generations to come. Dame Rosie, I also chair the British offshore oil and gas industry all-party parliamentary group.