Offshore Petroleum Licensing Bill

Richard Foord Excerpts

2nd reading
Monday 22nd January 2024 Commons Chamber

[Caroline Lucas (Brighton, Pavilion) (Green)]

It is a pleasure to follow the hon. Member for Nottingham East (Nadia Whittome). It was slightly less of a pleasure to listen to the right hon. Member for East Antrim (Sammy Wilson); I want to say a few words about the case that he made. It reaches new depths to suggest that the poorest people in the country will somehow be better off if we continue exploiting more oil and gas when clearly new and existing oil and gas are so expensive. He cited a comment by Siemens about the expensiveness of renewables, but that is precisely because they are linked to the price of gas. That is why we need to reform the totally out of date electricity and gas system that we have in this country.

It tells us all we need to know about this cynical and failing Government that the legislation they chose to debate first in 2024 was a Bill to mandate the annual licensing of oil and gas products in the North sea; not legislation that rises to the immediate challenges that we face as a society—from the cost of living scandal, which sees families unable to meet their basic needs, to the planetary emergency rapidly unfolding before our eyes—but instead a Bill that is frankly no more than a political stunt at home, yet at the same time a very dangerous signal to other countries abroad of a UK doubling down on the fossil fuel economy.

The reality, as many have said, is that the Bill is entirely redundant, with even the North Sea Transition Authority expressing its “unanimous” view that it is not needed. As the Minister knows perfectly well, there have been annual licensing rounds for most of the past decade, driven by the frankly obscene duty to maximise the economic recovery of UK petroleum. Despite the hundreds of licences that have been issued in that time, a paltry 16 days’ worth of gas has been produced. As others have said, it has been estimated that, between now and 2050, new licences would provide the equivalent of just four days’ worth of gas each year, so it is hardly the energy security that we have been promised and that we have heard so much about from the Conservative Benches over the past three or four hours. Of course, any oil and gas, which is extracted, will be owned by companies and sold on the international market to the highest bidder—unless the Government, unbeknown to us, have in mind the renationalisation of energy, which would be a very interesting conversation to have, but when I last checked, that was not their policy.

This oil and gas in the North sea does not belong to the Government and it will not bring down bills. Let us not forget either that 80% of UK oil is currently exported, as was the equivalent of more than 60% of gross gas production last year.

[Richard Foord (Tiverton and Honiton) (LD)]

I am grateful to the hon. Member for giving way. One such example is Gazprom International UK, which continued to produce gas from the North sea last year. This subsidiary company paid a €1.7 million dividend in June 2023. Does she not think it hypocritical of this Conservative Government to talk about this Bill in terms of national security, while, simultaneously, allowing a Russian energy giant to extract gas from the North sea and pay taxes in Moscow?

[Caroline Lucas]

I thank the hon. Member for his point and it is incredibly well made. I shall say a little more on that subject very shortly.

Essentially, this Bill is nothing more than reckless political theatre. It is nothing more than a cynical attempt to stoke yet more division and weaponise much-needed climate action in some misguided sense that, somehow, this will save the Prime Minister’s skin.

While the Bill serves at home to highlight the impotence of the Government, sadly its international impact is far-reaching. Despite the Prime Minister’s fairly evidence-free claim at COP28 that the UK is leading by example, the reality is that creating a climate culture war, scrapping vital policies and issuing new fossil fuel licences is the very opposite of climate leadership. The Bill sends a dangerous signal and undermines global efforts to address the climate emergency by hampering diplomacy and legitimising extraction in other countries. As Lord Deben, former chair of the Climate Change Committee, said:

“How can we ask other nations not to expand the fossil fuel production if we start doing it ourselves?”

It is frankly a scandal that the UK is among just five countries in the global north that are responsible for more than half the planned expansion of new oil and gas fields up to 2050.

While Ministers like to claim that, even with continued licensing, production from the UK continental shelf is projected to decline at 7% annually, what matters is not whether we are producing less relative to some previous time but whether the oil and gas that we are producing now is compatible with our climate goals. Clearly it is not, with the UN production gap report warning that Governments already plan to produce far more than double the amount of fossil fuels in 2030 than would be consistent with limiting heating to 1.5°. The Government’s defence of the Bill, and of the continued licensing of more oil and gas in the North sea as a whole, implies that somehow the UK operates in a vacuum, and domestic decisions have no bearing on our ability to meet our international climate targets. That clearly is not the case. It is no surprise, then, that Professor Piers Forster, the interim chair of the Climate Change Committee, has said:

“UK oil and gas consumption needs to fall by over 80% to meet UK targets. This and Cop decision makes further licensing inconsistent with climate goals.”

When talking about inconsistency with our climate goals, we could also talk about hypocrisy. Since a climate emergency was declared in this very Chamber in 2019, no fewer than 17 new fields have been approved: Laverda, Barnacle, Cadet, Sillimanite, Blythe, Elgood, Southwark, Evelyn, Abigail, Jackdaw, Tommeliten, Talbot, Teal West, Murlach, Alwyn East, Rosebank, and most recently Victory. Mentioning Rosebank gives me an opportunity to come back to an issue that has been touched on a few times tonight: the scale of fossil fuel subsidies. We have heard a load of guff from Conservative Members about the importance of tax revenues from oil and gas, yet look at the amount of money we are giving to the oil and gas industry. The hon. Member for Tiverton and Honiton (Richard Foord) spoke about tax revenues going to Russia. We could also point out that the UK taxpayer will hand over no less than the equivalent of £3.75 billion to Equinor to develop the Rosebank site, because of the massive loophole in the windfall tax that means that for every £100 invested, £91.40 can be claimed back. A bit of clarity on these issues would help.

Section 20 of the Environment Act 2021 requires that a statement be made on the front of the Bill saying whether it is in line with other environmental laws. The Secretary of State claims in her statement that

“the Bill will not have the effect of reducing the level of environmental protection provided for by any existing environmental law.”

To me, that seems extraordinary because, even if one believed that the carbon intensity test would make a difference, the annual licensing rounds under the Bill could easily cancel out any predicted carbon savings and lead to an overall increase in emissions. I hope that she will tell us what modelling was undertaken to inform her section 20 statement.

Looking at its content more closely, the Bill proposes two so-called tests, which are set so ludicrously low they are impossible to fail. The first is the carbon intensity test, which is met if the carbon intensity of domestically produced gas is lower than that of imported liquefied natural gas. That test not only ignores the fact that more than half our gas imports come from Norway—via a pipeline, as we have established—where gas production is half as polluting as in the UK, but in only considering gas, it fails to take account of the fact that 70% of remaining North sea oil reserves are oil. In any case, comparing the carbon intensity at the point of production rather than combustion exaggerates the difference between different sources, given that the vast majority of emissions are produced when any oil or gas is burned. In other words, they are scope 3 emissions, which remain unaccounted for. The second test is the net importer test, which will be met if the amount of oil and gas produced in the UK is less than the UK’s demand for oil and gas. Surely that question would be much better addressed by reducing demand rather than producing more planet-heating oil and gas, yet the Government seem incapable of pursuing demand reduction in any meaningful way.

What should the Government do instead? If they were actually interested in cutting household bills and delivering energy security, they would be working to get us off expensive gas for good, rather than continuing to tether us to volatile international markets. The National Infrastructure Commission has been really clear:

“Reliance on fossil fuels means exposure to geopolitical shocks that impact the price of these internationally traded commodities.”

In its 2022 energy outlook report, the IEA reported that a higher share of renewables correlated with lower electricity prices in response to the energy crisis, with energy efficiency and heat electrification providing an important buffer for households. At a time when, as we have heard, 6 million families in the UK are living in fuel poverty this winter, we have to ask why the Government are doubling down on the very thing at the heart of the crisis.

The Government should instead be delivering a meaningful just transition that genuinely meets the needs of workers and communities, rather than temporarily propping up insecure jobs that we know will not exist in years to come. We have heard the rhetoric from Conservative Members pretending that those of us who want to accelerate a transition to a greener economy do not have people’s jobs in mind. That is totally untrue; it is precisely because we care about people’s jobs that we want them to have sustainable jobs into the future—good-quality, decent jobs—and are not pretending that draining resources in the North sea will somehow provide a sustainable livelihood in years to come.

There should be a massive scaling-up of renewables, and we should back cheap and abundant energy sources such as onshore wind, for which a grand total of zero applications have been submitted since planning rules were changed in September. There should be a nationwide, street-by-street energy efficiency programme to ensure that families have warm homes for the long term, rather than scrapping the upgrade in standards of private rented homes, which according to the Climate Change Committee could have saved tenants £250 a year, even at so-called normal prices let alone at a time when prices are spiralling. Again, what an indictment of the Government. Remember the green deal back in 2012? The Government set the interest rate so ridiculously high, as we all said at the time, that unsurprisingly the whole plan collapsed. Those homes were not insulated and plenty of energy companies, including in my constituency, went bust as a result. The Government are incompetent as well as totally ideologically driven.

The Government should be properly taxing the filthy profits of oil and gas companies rather than foisting the cost of new developments on to the taxpayer, and they should urgently withdraw from the dangerous energy charter treaty, which—it beggars belief—allows us to be sued by fossil fuel companies. A fairer and greener energy system is entirely possible, but it requires both imagination and investment—two qualities that I do not associate with the Government. The legislation makes it painfully clear that the Government are wilfully ignoring the lessons of both the climate and the energy crises, and are once again privileging their own interests above the wellbeing of people and planet. The Bill sends exactly the wrong signal at the wrong time, and actively undermines global efforts to address the climate emergency by hampering diplomacy and giving the green light to further extraction right around the world. It is not what leadership looks like, it is not what this moment demands, and all our constituents deserve better.

Offshore Petroleum Licensing Bill

Richard Foord Excerpts

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

[Richard Foord (Tiverton and Honiton) (LD)]

Most people in this country accept that we need energy security, that we must move away from fossil fuels to more sustainable energy sources, and that we must seek to reduce our carbon emissions to meet the challenges posed by climate change. They see the effects of climate change every day. Recently in my corner of Devon, the communities of Feniton and Cullompton showed me what it was like to experience flash flooding. It has caused terrible damage to constituents’ properties and destroyed some of their most treasured possessions. Flooding will only get worse and more frequent as the UK continues to suffer the effects of climate change.

We in the UK have shown leadership in this area. We should be setting an example to the rest of the world on the need to reduce our greenhouse gas emissions, but also crucially on the economic benefits that the UK can enjoy as a result. The Government claim that by mandating the North Sea Transition Authority to run regular bids for new oil extraction licences, they will protect the UK’s energy security, but that simply does not add up, because 80% of the oil is exported, so there will be no material difference to people’s energy bills, and we will still be reliant on imported liquefied natural gas. We saw that in the second invasion of Ukraine in 2022; it caused huge spikes in oil and gas prices and left consumers facing spiralling energy bills. They would not have been nearly so badly affected by that if we had continued to invest in onshore wind in the way we were doing in 2015, or if we had continued to insulate buildings in the way we were in the coalition years.

It is not UK-produced oil that would have mitigated those price rises, but UK-based renewable energy and demand avoidance, encouraged by a more progressive Government than this one. For example, Octopus Energy notes that £5 billion could have been saved by consumers if onshore wind had continued to be developed at 2015 rates, but the Conservatives were left to govern alone, and that prospect vanished.

The UK Energy Research Centre said of this Bill:

“A fixation on new licensing…is a distraction. It offers comfort in the possibility of conserving oil and gas production…rather than grasping the challenge of a rapid transition.”

To put it bluntly, this is the approach of a Government who are too scared to embrace the future and make the fundamental changes that we need to build a better future for our children. Many on the Conservative Benches have highlighted the challenges of phasing out oil and gas as we transition to renewable energy, but there are not only challenges. There are also opportunities to support new home-grown, clean energy that will power our homes and create a swathe of well paid jobs. We cannot cling to the past because we are too scared of the future.

There is an analogy here from over a century ago, when Great Britain first embraced oil. Winston Churchill was First Lord of the Admiralty in a Liberal Government. He took office in 1911, a key point in the Anglo-German naval race. There was a big decision on his desk when he took on the role. How should Great Britain power its ships? Until that point, coal had been the Royal Navy’s dominant source of fuel. It was produced at home in Britain, and the saying “carrying coals to Newcastle” reminds us that there was an abundance of coal in Britain, but that did not make Churchill determined to exploit the abundant reserves of that fuel, which was powering the world’s largest navy of the day.

Churchill signed an order for the Royal Navy to be powered by the innovative energy source of the 20th century, which happened to be oil. Oil was more efficient and allowed ships to travel faster, further, with less fuel. It also allowed for the innovative design of new ships. By this Government’s logic, Churchill should have put that cutting-edge energy source on the back burner and stuck to coal. The arguments made in favour of coal then were similar to those being deployed in favour of the Bill today. Churchill believed in looking to the future and seizing the opportunities that arose, so he took the fateful decision that all new ships in the surface fleet would switch to the more innovative, more energy-efficient fuel source. As a result, the Royal Navy continued to dominate the seas and hampered Germany’s international trade and, later, its war effort.

Today, China is working on zero-emission shipping. The California-China Climate Institute at Berkeley is looking at 21st-century innovations that will power the leading economies of this century. If China tunes into BBC Parliament and sees us in our 19th-century surroundings, it would think it quaint that we are debating which 20th-century energy source we should cling to.

Churchill’s decision in 1911 put Britain at the forefront of innovation and design, allowing Britain and British talent to reshape the character of the 20th century. Do Conservative Members disagree with Mr Churchill? Are they daunted by the prospect of seizing the opportunity presented by new sources of energy, including renewable energy, to power the UK in the 21st century? Why are they seeking to take these short-term, short-sighted decisions that fly in the face of our climate commitments?

This Conservative Government already offer subsidies to the oil industries, and they are already indifferent to the price of renewable energy being tied to the price of gas. It is time for a rethink. It is time to focus on improving the national grid, boosting home-grown green energy and investing in the technologies of tomorrow.

Question put, That the Bill be now read the Third time.