Energy Bill [Lords]
Debate between Philip Boswell and Callum McCaig
Callum McCaig
I very much agree. I remember sitting on this very Bench, looking through the Budget statement and being somewhat relieved that the rumours I had heard about this competition being scrapped did not appear to be in that statement. Lo and behold, however, an announcement was made to the stock market a few moments after the Chancellor had left the Chamber, removing that funding. I understand that no greater certainty was provided to the companies involved in both White Rose and Peterhead.
Philip Boswell
Further to that point, on the very morning of that Budget, I intervened on another Member and asked the Minister to provide assurances that both the Peterhead and the White Rose projects would not be cut, but no answer was forthcoming. There was nothing in the paperwork that day to show that this was going to happen.
Callum McCaig
I agree with my hon. Friend. The fact that different parties have the same essential view not only about the Government’s abysmal handling of this process, but about how to salvage something from the ashes of the carbon capture competition suggests that there is not a huge amount of difference between my new clause and new clause 7, tabled in the names of Labour Front-Bench Members. The main difference—we discussed the issue in Committee—is that our provision includes the devolved Administrations as bodies that should be developing a strategy. I know that the Scottish Government—who, working with DECC, pursued what should have been the second phase of carbon capture and storage at Grangemouth—have high ambitions for the deployment of CCS and share the concerns of many Members here about the way in which the Government have handled this matter.
As for short-sighted decisions, I understand that the White Rose project had substantial European Union funding associated with it. The potential for Peterhead to use carbon capture and storage—or potentially carbon capture and utilisation to create a virtuous cycle for enhanced oil recovery—was there, but that potential has now been lost. The suggestion from the Energy and Climate Change Committee that this will make meeting our climate change commitments all the harder, highlights the need for the strategy that I am proposing.
We have seen that the Government are all over the shop when it comes to CCS. One minute they are for it; another minute they are against it. One minute it is not working; the next minute it is looking promising for the future. These represent severe mixed messages for investor confidence, when we need clarity. If we are to get investment from industry—I hope we do, and I gain the impression that Members of all parties want to see this become a reality in the UK—we need an unequivocal statement from the Government. Then we need an unequivocal strategy, which is what I am calling for today.
There is a tie-in between the utilisation of the infrastructure in the North sea and what can be deployed for CCS. I believe that it is also incumbent on the Government to bring forward a strategy for decommissioning, which is the subject of my new clause 1. Decommissioning is one of the sad realities of the North sea that is going to happen. We all, or at least the majority of us, hope that this will happen at some time in the future. The Government can take steps to deal with that. The industry has called for tax cuts, and loan guarantees for oil and gas companies are also a key part of ensuring that decommissioning happens as far in the future as possible. It is, however, going to come.
Decommissioning provides a huge opportunity, when there is upwards of £30 billion-worth of work to be done. A large part of the bill will be paid back by reimbursing the companies for previous tax paid. They have built up the tax to offset against decommissioning costs. Essentially, as we go forward, the Treasury will be footing the bill for a large part of decommissioning.
It strikes me and my party that we need to ensure that the greatest possible benefit comes to these shores. The east coast of this island is ripe with opportunities for ports and the like. Frankly, they should be champing at the bit to see the work come ashore. I believe that the Shell platform at Brent is coming to Hartlepool. That is a strong commitment and an investment in infrastructure, but also in skills.
Callum McCaig
A large number of things need to be done before we commence wholesale decommissioning, and this includes the widest possible consideration of what the infrastructure could be used for. The proposals and possibilities are perhaps not endless, but they are numerous. Whether we are talking about carbon capture, storage of hydrogen or looking for further hydrocarbon resources that are yet to be discovered, there are vast possibilities. While the infrastructure is there, the opportunities for doing other things with it will remain; once it is gone, the opportunity is gone. The Oil and Gas Authority—which a large part of this Bill deals with, although not the aspects we are debating at this precise moment—has done a lot of work on that and is to be commended on that development.
Decommissioning is a reality. If we are smart collectively —if we can line up the ducks, in terms of the supply chain, skills and investment in the ports and suchlike—there could be a massive windfall. We have considerable leverage, as funders of a large part of this work, through tax receipts offset against previous earnings, and we should be looking to maximise that economic potential, in the same way as we were looking to maximise the economic recovery of the North sea.
Philip Boswell
On the point about that opportunity, does my hon. Friend agree that decommissioning goes hand in hand with the critical assessment, evaluation and management of the infrastructure that surrounds these isles to enable access to marginal fields, which would not otherwise be available, were the critical infrastructure not kept in place, as part of an overall plan with a long-term vision for the energy supplies of these isles?
Callum McCaig
I agree with my hon. Friend, and that is something the Oil and Gas Authority is set to look at. It will also be hugely beneficial to the oil and gas industry, so that work needs to take place. We need to be aware of what opportunities exist, but we also need to remember that this Government have a duty to support the oil and gas industry at this time, so I reiterate the calls made by me and others in my party to see substantial movement in Wednesday’sBudget.
It might seem somewhat ironic to some that I am moving from how we best exploit the North sea to how we best tackle climate change but, as I have said a number of times in this place, because we have been a major producer and user of hydrocarbons, there is a moral duty on us to do what we can. I note new clause 11, standing in the name of the right hon. Member for Doncaster North (Edward Miliband), among others, which is not something I would be ready to support, although I wholeheartedly endorse the principle. This is something we need to do, but I would see new clauses 4, 8 and 10—which deal more closely with the short term—plus the issue around carbon capture and storage, as being the correct pathway.
It strikes me that we are very much at a crossroads when it comes to the deployment of technology. It is likely—or, I am hopeful—that a zero-carbon future can be achieved, but the pathway to that is not clear to me, and I do not think it would be clear to the Government if they were to commence that work now. I would rather see things that are in the gift of the Government at this precise moment in time—if they were to focus on them, to deliver on them and act sooner rather than later—because the more work we do now, the less we have to do in future. It is about timing and priorities. The concept is to be wholeheartedly commended and supported, but I am not quite sure I am there when it comes to prioritising it now.
Finally, I would like to talk about new clause 10, to which I was happy to add my support—I imagine that a number of others who also put their name to it will talk about it in greater detail. Our carbon accounting mechanisms need to be brought into line with what is happening and going to happen. The fact that we can get to the stage where upwards of half our emissions do not properly factor into our carbon accounting means that we cannot set about achieving what we must in an open and honest way. Following on from Paris, numerous people have said that we need to get serious about this. If we are to get serious about taking the steps we need to take to make our contribution to tackling climate change, we absolutely have to be clear about what we are counting, which is the basics of this. The bean counting of climate change might not seem particularly appealing to some, but it is fundamental. If we do not know what the emissions are and we are not counting them properly, how can we tackle the challenge of reducing them properly?
Energy BILL [ Lords ] (Sixth sitting)
Debate between Philip Boswell and Callum McCaig(8 years, 3 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text
Callum McCaig
The Minister has spoken a lot. Splitting hairs on what is a commitment and what is not is perhaps interesting for folks watching elsewhere given the voracity of the defence of a Tory party manifesto commitment to end new subsidies for onshore wind that could, in fairness, be read in a multitude of ways. When is a commitment not a commitment? When they do not want to do it. It was clear in the manifesto that it should happen. That it has not is regrettable. I am interested that the Minister believes that there will be no comeback from any of the companies involved in the bidding process. That may essentially be welcome for the sake of the taxpayer, but it is by no means assured and underlines the Government’s atrocious handling of the competition. I want them to make amends and to provide a clear strategy for the CCS industry.
Philip Boswell
Does my hon. Friend agree that there is something striking about the Government’s contradiction? The Minister spoke about fuel poverty, which we all agree must be addressed, but, almost in the same breath, she supports a £92.50 strike price for EDF for a French Government power station. Where was the due diligence when they are now considering a £37 billion debt? With renegotiation probably on its way, the price will only go up over 35 years. It never goes down. At the same time, they have cancelled the RO for electricity when some of the prices for renewable wind are actually much cheaper. The Minister cannot have it both ways. Instead, there is a blind focus on the rash dash for gas and nuclear, and we are walking away from solar, from CCS, from onshore wind and from the green investment bank. Does my hon. Friend agree that there is a contradiction?
Callum McCaig
Perhaps unsurprisingly, I agree with my hon. Friend’s assessment. The inherent contradictions and the differing values that are placed on certain technologies, depending on the voracity of opposition from certain Tory Back Benchers, mean that the criteria are perhaps not applied anything remotely near fairly. That lack of clarity, vision and planning is why the Government need to put strategies in place. That is what the new clause and new clause 10, tabled by Labour Members, seek to do. They are remarkably similar because we have engaged in similar manners with the industry, which is crying out for clarity from the Government.
Callum McCaig
The price of offshore wind is coming down and I think the Government have suggested that, if further offshore wind contracts for difference are to come forward, it needs to do so significantly. The curve is downwards and the point of the contracts for difference mechanism and the competitive process is to allow for active discussions and bidding to drive down costs, but I am not clear that that there has been such an open, transparent process in the strike price at Hinkley.
Philip Boswell
Does my hon. Friend agree that that some of the offshore wind strike prices have been as low as £80, which is considerably below £92.50? Does he believe that the implementation of transmission charges differentiated geographically in Great Britain has rendered Longannet uneconomical and its closure effectively some four years early could turn Scotland from being a net exporter of energy to a net importer? That would be to Scotland’s disadvantage, so we should have more local input.
Callum McCaig
I think my hon. Friend was referring to the strike price for onshore rather than offshore wind. On transmission charging, that does not help how we in Scotland would wish to form our energy supply. We have limited control over that and the cost of producing a gas-powered plant in Scotland, as opposed to within the M25, is prohibitively expensive. I do not think that the process is working, because I do not see a whole new fleet of gas plants being built in close proximity to London and if we do operate a GB grid, that should be done on a level playing field.