Fracking

Matt Hancock Excerpts

Tuesday 25th November 2014 Westminster Hall

[The Minister for Business and Enterprise (Matthew Hancock)]

It is a pleasure to serve under your chairmanship, Mr Gray. I will respond to as many points as I can in what has been a largely reasonable and reasoned debate. In particular, the short contribution of the Opposition spokesman, the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), was commendable for its—

[Tom Greatrex]

Brevity.

[Matthew Hancock]

For its brevity, but also for its tone, which is similar to the Government’s tone—it is incumbent on the Government to explore the potential of that geological asset deep beneath the ground. The potential described by the geologists is great, but the question of how much can be extracted is as yet unanswered. It is necessary to find out that answer, but we have to do so reasonably, carefully and safely. I therefore take on board many of the points made by many hon. Members about regulation. We are working to continue strengthening what is already a strong and robust regulatory system.

My right hon. Friend the Member for Lewes (Norman Baker) started with the triumvirate of goals that sit atop energy policy: to ensure security of supply, to reduce carbon emissions and to encourage jobs and growth. Any Energy Minister presented with a potential opportunity to deal with all three together will of course want to investigate further. That is the potential behind exploring for shale gas.

First, the benefits of shale gas to energy security are clear and obvious. As a country, we are lucky that for 50 years we have been able to extract oil and gas from underneath the North sea. Just as there was a debate about whether to do that 50 years ago, there is now a debate about whether to extract resources from deep beneath the land. The answer with North sea oil was right: yes, we should explore, and we should do so within a strong and robust regulatory framework. That was what we did. The answer of 50 years ago is the same today with shale gas: yes, we should explore, and we should do so within a robust and clear regulatory structure. Shale gas could help our energy security, so that we may reduce our reliance on overseas energy supplies, which sometimes come from countries that are not friendly towards us.

Secondly, there is undoubted and clear evidence from the United States that, by replacing coal, gas can reduce carbon emissions. Gas has half coal’s carbon emissions per unit of energy. The debate about coal will continue, but being able to replace coal is nevertheless important.

Thirdly, if there is a clear supply of gas, that will encourage and support jobs and growth, because of the direct benefits that my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) spoke about so powerfully. As he argued, there is a need for fair distribution of the resources from under the ground. The proposal for a sovereign wealth fund is an attractive one, and I look forward to working with him and others on the details of the design of that fund, to make sure that the allocation of those resources is fair. After all, if the exploration succeeds, there will be a substantial return.

There are questions about how that return is allocated: how much of it goes to the local population, how much to local authorities and how much to the national taxpayer? Who controls a sovereign wealth fund? How much goes to local communities and in what form? How much goes into paying for the exploration and production, which have costs? How much of it goes into paying for regulators? The point made by the hon. Member for Rutherglen and Hamilton West is important: if production gets going in a big way, the regulator will of course have to expand in scale. We are lucky, in that we are exploring for something of high value, so there will be revenue that in future can be used to provide exactly the sort of regulatory scale he talked about.

The contribution that my hon. Friend the Member for Lancaster and Fleetwood has already made to the debate on this issue is a strong one. We can see that in our discussion of the sovereign wealth fund. I pay tribute to my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), who has made that case strongly as well, as has my hon. Friend the Member for Fylde (Mark Menzies).

Several Members asked about the strength of the regulatory regime. It is undoubtedly stronger than the regime in the United States. Indeed, the environmental impact assessment for the Cuadrilla planning proposal that is outstanding in Lancashire ran to 4,500 pages. It is quite hard to argue that there is not enough detail in that.

Many hon. Members talked about public opinion. Polling from August was read out; that polling says that around a quarter of people support fracking. The same polling showed that about a quarter of people oppose it, and the vast majority of people are in the middle. That shows the importance of having an informed debate. To inform that debate, we have published a number of studies, including from the Royal Society, with incredible detail and length, and shorter resources by the Department and the Office of Unconventional Oil and Gas, such as “Shale gas made simple”, which bring out the salient details in a clear, short form for lay readers.

[Tessa Munt (Wells) (LD)]

I am sorry that I was not able to speak in the main debate. The Minister has mentioned public confidence. If we look at, for example, the well examination schemes, they are not really fit for purpose. They are self-regulated by the operators. Where there are guidelines as opposed to regulations people will not have confidence. It is not a terribly difficult step for the Government to make regulations instead of guidelines and an inspection regime instead of self-regulation.

[Matthew Hancock]

The regulatory approach is not one of self-regulation. There is clear statute and there are clear statutory guidelines that oversee the process. Statutory guidelines are in themselves a form of regulation.

Several hon. Members mentioned the leakage of fluids and methane from different wells that have been drilled so far. At Preese Hall, the well did not fail and the Health and Safety Executive has made it clear that it is satisfied with the steps taken by the operator to deal with the small pressure that was detected.

I pay tribute to the clear mind that the hon. Member for Brighton, Pavilion (Caroline Lucas) has on this issue, although I happen to disagree with her position, because I do not think that the best place for shale gas is underground. She said that she was disappointed that her parliamentary question went to the DWP. That happened because it was a question for the Health and Safety Executive, and the DWP is responsible for the HSE. She also referred to a point made by the former chief scientist. He said that shale gas was a problem in the absence of a climate change policy. Well, we have a climate change policy.

That brings me to a point raised by many Members, namely that exploring for shale gas—cautiously and carefully—is entirely consistent with building renewables and with having safe and secure domestic supplies. I bow to no one in my support for renewables. We have doubled the amount of energy coming from renewables—last year, 13% of our electricity came from them. The amount of investment in renewables—my right hon. Friend the Member for Lewes referred to that—demonstrates our support for them very clearly.

[Caroline Lucas]

Does the Minister not recognise that the issue that really matters is how much fossil fuel is being burned and cannot be how much more renewable energy is being created if those renewables do not replace fossil fuels? My argument with him is that at the same time as creating some renewables—for which he gets some credit, although there are not nearly enough—he is anticipating a whole new fossil fuel industry. That is incompatible—the scientists say that it is—with the kind of targets we currently have on climate change.

[Matthew Hancock]

I am afraid that a sweeping statement like, “The scientists say this or that,” undermines the hon. Lady’s case and shows that it is not based on a rigorous analysis of the facts.

I will make a couple more points in the three minutes I have left. My hon. Friend the Member for Warrington South (David Mowat) made a clear and balanced argument, and really put his finger on the issue: until we explore, we do not know how big the opportunity is. I sometimes felt that some Members did not know whether their problem was that there was not enough shale gas or that there was too much. Instead, the question we have to answer is how much shale gas can reasonably be brought out of the ground at a commercial rate under a strong regulatory regime. We need to explore because of the support that will give for jobs for the chemical industry, which many hon. Members mentioned, and because of the direct benefit for those involved.

My hon. Friend the Member for Fylde specifically mentioned both independent monitoring, which is important, and the independent panel of experts that he has called for. That is an interesting idea and I will look at it. I am constantly on the lookout for ways to reassure people that the exploration will be carefully monitored and will be done safely. For instance, my first decision in this job was to strengthen the planning guidance on national parks, which has dealt with many of the problems that my right hon. Friend the Member for Lewes is worried about.

The hon. Member for Blackley and Broughton (Graham Stringer) asked whether the gas can be retrieved in a way that is sensible and rational. The Opposition Front-Bench spokesman’s argument was about whether we can have robust and effective regulation, and he asked for reason and analysis in the debate on this issue. That is exactly the approach we should take and is the Government’s approach.

I firmly believe that the more well-founded, well-researched scientific analysis that is put in the public domain, the more we will be able to reassure people that shale gas represents an opportunity that it is incumbent upon us as a country to look at and explore and that that exploration can be done safely. It has to be done within a strong regulatory structure, but will none the less provide an opportunity for jobs, energy security and economic benefit and, in the short term, will tackle climate change by removing other dirtier fuels from the system, within the context of a balanced energy mix. I therefore look forward to working with all hon. Members to make sure that we get this matter right, so that we can take the advantages of the exploration, which are clear, but do so in a way that mitigates some of the risks that are undoubtedly there as well.