Offshore Petroleum Licensing Bill

Debate between David Duguid and Dave Doogan

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

[David Duguid]

I was not sure if the hon. Gentleman had moved on from his glowing appraisal of the North sea transition deal, but can I take it from his reference to that deal that the SNP’s position is to support and welcome it in its entirety?

[Dave Doogan]

I am not going to meet the hon. Gentleman’s ambition to nail those colours to the mast, but I will tell him that through the Bill, the UK Government are turning a blind eye to the implications of a free-for-all when it comes to emissions and who benefits from revenue receipts. I am sorry if he finds that difficult, but he will to have to deal with it.

The prosperity that comes from oil and gas in Scotland is finite, as we know all too well. We have seen what deindustrialisation with no transition plan looks like—we witnessed it at first hand in the 1980s, when coal, steel and heavy industries were all torn asunder on the altar of monetarism and share prices in the City of London. That is set to happen again for oil and gas, under Thatcher’s willing disciples, the Leader of the Labour party and the Prime Minister. We cannot allow that to happen again. It is therefore essential that north-east Scotland and other areas reliant on oil and gas are afforded the investment required. That is what our amendment speaks to; it is about creating new jobs and transitioning in a managed, strategic fashion to accelerate our post-carbon future.

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[David Duguid]

I rise to speak in support of the Bill and of all the employees of companies right across the country, including in my Banff and Buchan constituency, that will play a critical and successful role in the UK’s ongoing energy transition to net zero by 2050.

I remind the Committee that, for 25 years prior to being elected in 2017, I worked in the energy sector—in the oil and gas sector specifically—in a wide range of roles for several different companies and in various places around the world. I also declare that I have a close family member with a financial interest in one of those companies, which is below the threshold required for registering interests. I can also assure the Committee that that financial interest has never had, and will never have, any bearing on my contributions in this or any other debate.

On Second Reading, I spoke about the potential for increased confidence and certainty that the Bill brings to the energy industry. For many people watching, including a few hon. and right hon. Members in this place, there would appear to be a perfectly polarised distinction between maximising oil and gas on one hand and promoting renewables on the other. The truth exists on a continuum between those two extremes, however. We have in fact been on a transition away from the most polluting of fossil fuels towards cleaner, lower-carbon, renewable sources of energy for a number of decades now. That transition is happening at various rates in different parts of the world, but it is fair to say that the United Kingdom is at the forefront, as the first major economy not only to legislate for net zero but to set the most stringent decarbonisation targets.

The Conservative Government have presided over the UK’s becoming the first major economy to have reduced carbon emissions by 50% from 1990 levels. That compares to only 7% that had been achieved by the time the Conservatives came to power in 2010. We have effectively transitioned away completely from coal power, and continue to reduce our demand for oil and gas and increase our renewable and low-carbon capacity, but not as fast as our domestic supplies will continue to decline, even with new production.

A critical point that needs to be reinforced in considering this legislation is that new oil and gas does not mean more oil and gas—a mistake that I heard in the speech of the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle). Even with new production, the North Sea Transition Authority predicts that UK oil and gas production will decline, not by the 3% to 4% suggested by the International Energy Authority to stay within the global 1.5°C target, but by twice that rate of decline, at around 7%. We are today 75% dependent on oil and gas for our energy needs, and not just for electricity generation, but for heat and transportation as well. Of that 75%, about 50% is produced domestically with the rest having to be imported.

The arguments for producing our own oil and gas closer to home have been well rehearsed. There is the obvious benefit of having that source of energy under our control, not that of other states and countries that are not always friendly. We have also heard how liquefying natural gas for transportation and shipping that LNG halfway around the world to then be de-liquefied back into gas when it arrives in the UK can produce up to four times the carbon emissions of domestically produced gas. We know from the Climate Change Committee that we are likely still to be up to 25% dependent on oil and gas by 2050. It therefore follows that carbon capture, utilisation and storage will be required for the UK to reach net zero by 2050. That includes, of course, the Acorn CCS and hydrogen project at St Fergus in my constituency, and in particular the role it will play in decarbonising gas-fired power generation at Peterhead.

What will also be required to get to net zero are precisely those skills, technologies and supply chains that currently exist and will, no doubt, continue to be developed within the oil and gas industry. However, those critical elements would sadly no longer be available to us if we shut down our domestic oil and gas industry prematurely, which is what would happen if the Opposition parties had their way, whether it is the SNP’s “presumption of no new exploration” for oil and gas—a direct quote of the SNP’s draft energy strategy—or Labour’s “just stop oil” approach.

I am seeing some nods of agreement from across the Floor, but there has recently been something of a war of words between the two main parties—I am referring to Labour and the SNP—in Scotland following Labour’s screeching U-turn on its £28 billion a year green investment plan. Of course, we on the Conservative Benches always saw that plan as undeliverable without massive tax increases. Labour announced that it would not only increase the energy profits levy and make it last longer, but remove the investment allowance.

[Dave Doogan]

Will the hon. Gentleman give way?

[David Duguid]

Before I give way, I will gently point out to Opposition Front Benchers—I am not sure whether they are aware of this—that the 78% tax rate they are so keen to copy from Norway comes with an equivalent 78% investment allowance in that country. Labour’s plans would remove the investment allowance, putting future investment across the energy sector even further at risk.

Of course, as we heard earlier, Labour still maintains its position of banning all new oil and gas licences, which has inevitably led to an outcry from the sector in recent weeks. Among others, Offshore Energies UK’s chief executive David Whitehouse has said:

“We remain deeply concerned about what Labour’s proposals could do to our people. If we can’t get companies to invest here, there are no jobs. It’s that simple.”

He went on to describe Labour’s proposals as

“a hammer blow to the energy we need today and to the homegrown transition to cleaner energies that everyone in the UK wants to see.”

That is the key point, which often goes over the heads of so many on the Opposition Benches: the skills and technologies to deliver net zero are not going to appear magically over the horizon, and the talent and expertise in what would become a defunct oil and gas industry will not automatically and immediately transfer across to the renewables sector. More likely, companies and their employees who will find themselves squeezed out of oil and gas in the UK will simply move overseas to deliver someone else’s energy security and someone else’s energy transition—and, no doubt, deliver oil and gas that we would end up having to import.

Of course, the SNP has come out of the woodwork to jump on the bandwagon, criticising Labour’s approach while completely contradicting its previous stance and—more than likely—that of its Scottish Green coalition partners in Holyrood. SNP leader Humza Yousaf said last September that he did not want Scotland to be Europe’s oil and gas capital, presumably wishing to pass that mantle to our North sea neighbours in Norway. A little over a year ago in its draft energy strategy, the SNP stated—I quote again—that there should be a “presumption” against new exploration for oil and gas. I am not sure whether the hon. Member for Angus (Dave Doogan) is still looking to intervene, but I wonder whether he would take this opportunity to answer that question.

[Dave Doogan]

I am grateful to the hon. Gentleman for taking my intervention, even though it was about five minutes ago on a different subject. He made a really interesting point in his speech: that new licences do not mean more oil and gas. Conversely, having a more circumspect and rational approach to licence issuance—taking it out of the political arena and putting it into the bureaucratic space—does not mean less oil and gas. I am sure the hon. Gentleman will accept that if that is true for one, it is true for the other. Does he not agree with my position, and that of my party, that as the oil and gas industry continues on its journey to its natural conclusion of a much reduced industry, for whatever reason—the transition to renewables, or depleted resources—it is much more important, and in fact elegant, to make sure that those tax receipts are invested in the energy of the future, not squandered by His Majesty’s Treasury?

[David Duguid]

I find myself looking for a point that I might agree with in the hon. Gentleman’s intervention, and sadly failing. However, his point about the decline of oil and gas in the UK has been made time and time again. Ever since 2004 we have been a net importer of oil and gas, so my point about new oil and gas not being more oil and gas is about managing that decline to make up for the fact that we are not replacing that oil and gas generation with renewables as fast as we would like. I will address that point in more detail in a moment.

Those comments from the SNP leader just go to show the staggering hypocrisy and inconsistency of the SNP, but neither the industry nor the electorate are so easily fooled, particularly in the north-east of Scotland. If asked whether they support new oil and gas licences, as we have seen today, some SNP Members—and, I dare say, some Labour Members as well—may find it difficult to commit to a position, particularly when facing their constituents in the north-east of Scotland. However, this Conservative Government and, in particular, the Scottish Conservatives have maintained consistent support for the oil and gas industry—the companies, and the tens of thousands employed from right across the UK. We recognise, as this Bill does, the potential for the people in this industry not just to keep our lights on and keep the economy moving in the near term, but to lead the world in showing how a successful energy transition from oil and gas to renewables can be done. Sadly, as has been confirmed a couple of times today, all His Majesty’s Opposition seem able to offer is to lead the world in virtue signalling.

Making Britain a Clean Energy Superpower

Debate between David Duguid and Dave Doogan

Thursday 9th November 2023 Commons Chamber

[Dave Doogan (Angus) (SNP)]

This Gracious Speech serves as a stark reminder that the Westminster Government cannot be trusted to deliver for the people of Scotland—certainly not in terms of energy. It is ludicrous that people living in energy-rich Scotland are having to grapple with unaffordable energy bills. As a solution, we have a King’s Speech that does nothing to address that. The only energy-related Bill that was referred to in the King’s Speech on Tuesday was the Offshore Petroleum Licensing Bill, which the Secretary of State herself admitted just a few days ago would not bring energy bills down. It is therefore incorrigible that, at a time when a record number of households are facing fuel poverty, the only concrete proposal mentioned in the King’s Speech is one that, by the Secretary of State’s own admission, will not help cash-strapped households across these islands. It could though, she says, release funds to support households with energy bills—the operative word there being “could”. But even in this vaguest of commitments, the mask slips. Let me reinterpret that comment. It basically means that, in the absence of additionality to the Exchequer, this Government will stand idly by while people freeze.

The speech also included reference to help

“attract record levels of investment into renewable sources”

and

“reform grid connections”,

but no Bills were specifically named that set out how that might be achieved. There were no plans, and no detail or funding, to deliver the transition network that is needed to lower bills and ruthlessly dial out gas from our generation systems, thereby protecting consumers. It is utterly hopeless. It is a blank cheque for new extraction based on maximising extraction in abstract, with very little strategic ambition or joined-up thinking, except that of maximising London’s receipts from Scotland’s hydrocarbon endowments. Old habits, it would appear, do indeed die hard.

This ambition also comes with the worst possible greenwashing nonsense as supposedly qualifying criteria, which are entirely permissive, including the carbon intensity test, which seeks to discern whether gas extracted from the North sea will have a lower carbon footprint than gas processed and shipped from around the world— I am pretty sure that you and I, Madam Deputy Speaker, can guarantee that it will. Then there is test that discerns whether the UK remains a net importer of both oil and gas. It seems that that, too, will be a fairly consistent position. It is not even clever or sly; it is almost an indignity to put criteria like that, which is so simple to meet or exceed, in the legislation.

With the same forked tongue that the Government used when they claimed that revenues could go to supporting household energy bills, they also claimed that tax revenues could go towards supporting renewable energy investment. If they meant that, they would be setting out exactly how that would happen; but they have not, because it will not happen under this Treasury or this Tory Government.

In Scotland, we know what the revenues from our oil and gas will be spent on. It is the same thing that they have been spent on by UK Governments over the past 40 years: infrastructure investment in the south-east of England and stemming the economic collapse of broken Brexit Britain. Scotland will not reap any endowment from this latest round of extraction. The Government claim that this is for energy security and to reduce our reliance on foreign oil and gas, when only last month they explicitly decided to prolong that very reliance on gas: through the rollback of the boiler replacement ambition; through the failure of auction round 5, resulting in even more gas generation, which will have to replace the offshore wind that did not happen as a result of that auction round; and through the rollback of the deadline to phase out internal combustion engine cars.

There is no progress on energy efficiency, home insulation, curtailing demand, protecting bills and keeping people safe in their homes—none of it—in this ambition. And the Government are now congratulating themselves on the gas front, because the gas that we will extract from the North sea is marginally less environmentally damaging than that which would have been shipped in from Asia or the middle east. It is the stuff of nonsense.

[David Duguid]

The hon. Gentleman says that the gas imported from overseas is only marginally more environmentally damaging. Does he not agree with the likes of the North Sea Transition Authority, Offshore Energies UK and other experts in the field that estimate that it could be anything between twice as much or up to five times as much the carbon footprint to take liquefied natural gas into this country, deliquefy it and then get it into our system?

[Dave Doogan]

I thank the hon. Gentleman for his contribution. I think that we actually agree: the gas that we extract from the North sea is less environmentally damaging than that which would be shipped in from around the world. The point that I am making, and the point that many other observers are making in this space, is that we should be running as far away as we can from yesterday’s hydrocarbon technologies and throwing everything that we have, including the kitchen sink, at getting into a renewable space, protecting bills and saving the environment from further damage. That is where we should be, so mithering over percentages here or there is not the way for us to proceed.

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[Dave Doogan]

That would depend on what we want to grow. If we want to invest substantially in renewable energy and the technologies of the future, then yes, I do. If we want to invest in Chinese expertise, French reactors and nuclear power plants, then no, I do not. It is very much horses for courses with this Government, and I wish that my constituents, and everyone else in Scotland, did not have to rely on these misguided ambitions any longer than we absolutely must.

[David Duguid]

I want to ask a genuine question of the hon. Gentleman, if he does not mind. He mentioned that he was hoping for between 50% and 60% inflation on the strike price for AR6, as and when it comes around. Could he expand on how that is calculated?

[Dave Doogan]

I do not want to go into the calculation elements of it, but it looks at the disconnect between the strike price that was delivered in auction round 4 and the ambition for auction round 5, wraps it up in the inflation environment that we are in—bear in mind that these are 2012 prices, so it is not actually that number—and comes out with a figure within that range. It is an auction, as the hon. Gentleman will know very well, so there is an element of second-guessing to it. However, after this Government’s failure in auction round 5, we cannot allow something similar to happen in auction round 6, which will create a disinvestment in offshore wind that we cannot allow to happen.

Scotland is a well-established net exporter of electricity. In 2020, we created 31.8 TW of renewable electricity in Scotland, equivalent to powering all the houses in Scotland for three and a half years. That was in 2020, and we are now generating even more. Calls in Scotland are growing louder and louder, asking how it is possible that in our country of 5.5 million people, where we produce six times more gas than we consume, a staggering 50% of Scottish people aged 55 to 64 are living in fuel poverty. It is as well that they ask, because the answer lies in being handcuffed to Westminster.

Scotland is currently leading the world on floating wind, but only by a very slim margin. We need strategic ambition and significant investment to leverage our intellectual, engineering and geographic advantage into a systemic lead on this technology on a global scale, certainly for technology and design, and for manufacturing in the European sector. Until three months ago, Scotland had the world’s largest floating offshore wind installation, but that title now belongs to Hywind Tampen in Norway.

We are at a critical juncture for offshore floating wind in Scotland, with the potential to exploit our enormous growth opportunity, and to export our manufacturing expertise across the world, but only if we get the strike price right. It is therefore frustrating in the extreme to see the Tories talk about the need for economic growth while at the same time utterly failing to do anything ambitious to support this burgeoning industry of almost limitless potential for Scottish jobs, UK jobs and global sales. Contrast that investment posture with the rush to welcome Chinese expertise and French technology into England’s nuclear industry.

Floating wind must get an appropriate strike price in AR6 that reflects the enormous growth potential of the industry. The Department needs to stand up to the Treasury and secure an administrative strike price that reflects the rudimentary understanding that, as a new technology, floating wind will have a higher cost per megawatt-hour, but it will reduce over time. The price must reflect the advantage of having a more advantageous strike price that allows the supply chain to fall on these islands, not forcing developers to get their supply chain from abroad.

Energy Bill [Lords]

Debate between David Duguid and Dave Doogan

Report stage
Tuesday 5th September 2023 Commons Chamber

[David Duguid]

I welcome the hon. Member to his new role and pay tribute to his predecessor, the hon. Member for Kilmarnock and Loudoun (Alan Brown).

The hon. Member gave a whole list of reasons why there would be an absence of baseload in Scotland, but I think I may have missed the point where he suggested how that baseload would be supplemented in the absence of nuclear. Could he clarify that? Does it include a new gas-fired power station in Peterhead with carbon capture, usage and storage?

[Dave Doogan]

The hon. Gentleman is entirely correct: he did miss me highlighting what would replace that baseload, and I refer him to Hansard after today’s debate.

The challenges of inflation and interest rates have altered the parameters to such an extent that this Government’s pretence that it is business as usual is breathtaking. Have they not seen what happened in the recent auction round in Spain or, conversely, what happened in Ireland when the Irish Government intervened to protect investment in renewables and reaped the benefit and reward for their economy?

If projects do slip from allocation round 5 as a result of an unrealistic strike price, where do Ministers think the supply chain capacity, the skilled workers and the specialist vessels will go? They will not wait around here, waiting for the Department to get its sums right—they will be off to the US and the EU to access commercially cogent incentive packages such as those found in the Inflation Reduction Act or the EU’s Net-Zero Industry Act. The stakes could not be higher for both net zero commitments and UK energy prices.

I am proud that the SNP has worked to protect people from the worst effects of the Westminster cost of living crisis with our amendments to the Bill, with steps that would protect the next phase of contracts for difference projects within AR5, properly provide for a comprehensive and complementary mix of energy storage solutions, advance local supply rights and work towards supporting our most vulnerable with the development of a social tariff, especially for those with higher energy use caused by medical conditions. I am pleased that the SNP’s new clause 39 will be put to a vote this evening, and I urge all Members to support that provision, which, while modest in scope, would have profoundly positive effects on many in our rural constituencies who live off the grid and have to heat their homes through liquid fuel.