Finance (No. 2) Bill

Debate between Sarah Olney and Caroline Lucas

Committee of the whole House
Tuesday 18th April 2023 Commons Chamber

[Sarah Olney]

I welcome the Scottish National party’s support for our new clause.

I ask the Government to accept the Liberal Democrat amendment proposing an impact assessment on the changes to R&D tax credits. It is essential that this policy is kept under review and its impact on the UK’s tech industry and long-term economic growth is monitored if we are to ensure that the UK becomes the powerhouse of technical innovation it so badly needs to be if we are to drive the productivity we need to increase growth across all economic sectors.

[Caroline Lucas]

I rise to speak in support of new clause 10, which stands in my name and addresses the decarbonisation allowance first announced by the Chancellor in the autumn statement and now legislated for in this Bill. Although in principle the decarbonisation allowance may sound innocuous or even useful, it is in fact an outrageous subsidy that sees the taxpayer paying companies to decarbonise their activities.

Under this scheme, a company spending £100 on so-called “upstream decarbonisation”—in other words, reducing emissions from the process of extracting oil and gas that then goes on to be burned—is eligible for £109 in relief. We should remember that these companies have themselves admitted that they have

“more cash than we know what to do with”,

and earlier this year they recorded obscene, record profits, with BP’s profits more than doubling to £23 billion and Shell reporting annual profits of more than £32 billion, all while millions of UK households face unbearable choices between basic needs and desperately struggling to make ends meet.

In his Budget statement, the Chancellor recognised what he called the enormous pressures on family finances, with some people remaining in real distress, yet even with the decision to freeze the energy price guarantee at £2,500 as of this month, bills will still rise by almost 20% and 7.5 million households will be in fuel poverty. It is utterly perverse that in this context the Government have decided to hand the climate criminals—those who have profited from the spoils of war—yet another subsidy. These are, at bottom, political choices.

The Chancellor may say, in response to my amendments, that we should be endorsing the decarbonisation allowance to cut emissions from the oil and gas sector, but that ignores the economic reality of the situation and the reality of our planetary boundaries, with upstream decarbonisation doing nothing to mitigate the end result of the fossil fuels choking our precious planet. I am afraid that, in the face of worsening climate impacts, paying companies to power oil rigs with wind turbines or to monitor emissions to detect leaks simply does not cut it. Even more alarming is the provision in the Bill for the decarbonisation allowance to support carbon capture. That UK taxpayers would pay oil and gas companies to capture their emissions in order to allow them to continue production—essentially, to continue business as usual—is a shocking violation of the “polluter pays” principle.

If the Government were seriously looking at reducing production emissions, they would, for example, be looking to bring forward an outright ban on flaring by the end of 2025 at the very latest—I remind Members that flaring has been banned in Norway since 1971—or they would be strengthening the lamentable targets in the North sea transition deal from a 50% reduction in emissions by 2030 to at least a 68% reduction, as proposed by the Committee on Climate Change in its balanced pathway, both of which have been called for by the Environmental Audit Committee, of which I am a member. Yet in their response to the EAC’s report on “Accelerating the Transition from Fossil Fuels and Securing Energy Supplies”, the Government roundly rejected both recommendations, maintaining that the existing targets in the North sea transition deal are “sufficiently ambitious”.

This is not a Government who are serious about cutting emissions from production, and they are certainly not serious about the climate crisis. New clause 10 recognises that the decarbonisation allowance is just one of the handouts to fossil fuel companies that have been introduced under the energy profits levy. It would require the Government to produce an assessment of the cost of the decarbonisation allowance to the Treasury and, crucially, its impact on overall investment in oil and gas production. It would also reveal how much money would be raised through the energy profits levy without the enormous gas giveaways in the form of both the investment allowance and the decarbonisation allowance, as well as assessing their impact on delivering our crucial climate targets.

At this point, I would like to say a few words in support of new clause 6, which would require the Chancellor to conduct a review of the decarbonisation allowance and its impact on public finances, although it is important to note that the amendment is somewhat narrower in not requiring an assessment of climate impacts as well. The Government are very transparent about the fact that the investment allowance is directly aimed at encouraging companies to pump more money into oil and gas extraction in the UK by allowing them to claim £91.40 for every £100 invested. That policy runs directly counter to the advice of the world’s leading scientists on what is needed to keep 1.5° within reach, with the UN Secretary-General calling for a cessation of

“all licensing or funding of new oil and gas”

at the recent launch of the Intergovernmental Panel on Climate Change’s “AR6 Synthesis Report”, and the report itself being clear that emissions from existing fossil fuel infrastructure already exceed the remaining carbon budget for 1.5°.

The bottom line is that our climate simply cannot take any new oil and gas licences. As I have said time and again, new licences would also fail to deliver energy security. With the oil and gas sold on global markets to the highest bidder, they will not bring down bills in the UK and will inevitably come at a huge cost to the taxpayer. Indeed, if we take just one example, Rosebank, the UK’s largest undeveloped oilfield, the costs become clear. Rosebank is enormous. At triple the size of the neighbouring Cambo oilfield, it would produce more emissions than 28 low-income countries combined or, to put it another way, it would produce the carbon dioxide equivalent of running 58 coal-fired power stations for a year. If developed, its owners will be gifted a £3.75 billion taxpayer-funded subsidy from the Government to the estimated £4.1 billion project. The Norwegian state-owned company Equinor, which made a staggering £62 billion last year, contributed just £350 million while pocketing enormous profits.

Decarbonising Aviation

Debate between Sarah Olney and Caroline Lucas

Tuesday 21st September 2021 Westminster Hall

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to serve under your chairmanship, Sir Gary.

I congratulate the hon. Member for Putney (Fleur Anderson), my constituency neighbour, on securing this really important debate. As her constituency neighbours mine, I obviously share many of her concerns about the flightpath, Heathrow expansion and the impact that unrestrained aviation growth might have on the health and welfare of people—not just my constituents, but people across the country.

I can probably do no better than to illuminate further some of the points that the hon. Member has already made so well. I will start with the Government’s jet zero strategy for aviation. She ably pointed out how the delivery of jet zero depends so heavily upon the development of new technology. As she said, what will we do if that technology is not developed? It seems very clear to me, and indeed it was recommended by the Climate Change Committee, that alongside the technological development that we all want to see, either of hydrogen engines or some other form of technology, we really must see some demand management of our airspace, of flights and of aviation.

The last time I had the opportunity to raise this matter with the Prime Minister and to ask him what he wanted to do about the ANPS, I asked him directly if he would amend it to rule out Heathrow expansion. I was very disappointed that he said it was “a private matter”. I do not think that it is a private matter. For all the reasons that the hon. Member for Putney laid out, it is of the utmost importance for everybody across this country that if we are serious about getting to net zero, and if jet zero is going to be a part of that, demand management for aviation has to play a role, because we cannot just depend on the development of new technology. The very first thing we must do, before anything else, is to rule out expansion at Heathrow airport, so I join the hon. Member for Putney and many other MPs—not just across west London, but across the country—in once more asking the Minister to review the ANPS.

However, I am not pessimistic about the possibility of developing new technologies. I have had some really interesting conversations with people who work in this space, and it seems to me that the prospect of hydrogen powering aircraft in the future is not just a very real possibility, but is actually happening. I have also heard tell of electric flights, and have been invited to go on one. I have politely declined so far. I would like that technology to be a little more developed first—I have heard about those heavy batteries.

It seems to me that there is a great opportunity here for the UK to be right at the front of transport technology. We are a developed economy; we are an island, for whom international travel is critical; and we have the technology, the engineering capability and the will to do this. I believe that decarbonised aviation, alongside many of the other technologies that we are developing to meet the challenge of climate change, can be at the forefront of delivering the green jobs that will be so essential to our sustainable economy in the near future.

[Caroline Lucas]

The hon. Lady is making a powerful case about the jet zero strategy. Does she agree that that strategy is overly dependent on carbon offsets, and that increasingly, climate scientists are pointing out that carbon offsetting is actually very limited, given that all sectors in all countries need to get to real zero and there are limitations on how much carbon dioxide forests can absorb? Instead of playing accounting games, we should be treating the climate emergency as a real emergency.

[Sarah Olney]

The hon. Lady is absolutely right. More and more, I hear people talking about adapting to climate change instead of tackling it, and I am really concerned that people are doing exactly that, or thinking about exactly that: operational solutions to enable us to carry on exactly as we are, rather than tackling the problem at its root. This is not just about climate change; it is about biodiversity in all its forms, and it is so important that we come up with solutions that radically reduce carbon, rather than push it elsewhere and pretend it does not exist.

To sum up, the technological possibilities and what they might mean for our economy and skilled jobs right across the country are really exciting, but the Government must publish a proper strategy for how they plan to get there. If they want to prioritise hydrogen, we should make sure that we focus on green hydrogen, and on making sure that the production of hydrogen continues to be as carbon-free as possible. However, what I really want is for the Government to pursue a strategy of reducing demand alongside developing those technologies, and to take the opportunity offered to us by covid—the enforced changes to working patterns, and the facility we have all now gained for using Zoom for all manner of things, including parliamentary debates—to think about our approaches to travel, to really prioritise the travel that is necessary and to think seriously about how we are going to decarbonise aviation.