The following Answer to an Urgent Question was given in the House
of Commons on Wednesday 9 February.
“There will continue to be ongoing demand for oil and gas over
the coming years. It is a clear choice between a transition that
secures our energy, protects jobs and leads to innovation in new
technologies like carbon capture and hydrogen, and an extinction
for our energy sector, as I think the honourable Lady proposes.
Flicking a switch and turning off our domestic source of gas
overnight would put energy security, British jobs and industries
at risk and we would be even more dependent on foreign imports.
The way we produce oil and gas is cleaner than in many
jurisdictions, so it would be illogical to import them at further
expense to Britain and our planet.
The fields referred to in these reports are already licensed,
some dating back to as early as 1970, and are now going through
the usual regulatory processes. All proposals are subject to a
rigorous scrutiny process prior to consent, as opposed to
licensing, by our expert regulators, including an environmental
impact assessment and a public consultation. No decisions have
been taken by the regulators, so it would be inappropriate to
comment further on that process. However, to be clear, continued
support for Britain’s oil and gas sector is not just compatible
with our net-zero goals; it is essential if we are to meet the
ambitious targets we set for ourselves while protecting jobs and
livelihoods.
As announced last year, and forming part of the North Sea
transition deal, we will introduce a climate compatibility
checkpoint for any new licences to ensure that any future
licensing rounds remain consistent with our goals. Meanwhile, we
continue to make progress on developing new nuclear, which I
think the honourable Lady also opposes, and renewables that will
power our future. Today, we have announced that we are ramping up
our options for our flagship renewable scheme, contracts for
difference, establishing new industries, boosting investment and
creating jobs in our former industrial heartlands.”
11:50:00
of Darlington (Lab)
My Lords, the energy price crisis is a fossil fuel crisis. This
means we must go further and faster on zero-carbon energy, energy
efficiency and clean energy storage. In their White Paper, the
Government said that they would
“develop the existing checkpoints in our processes before
proceeding with future licensing rounds.”
How is what the Government said yesterday consistent with that
approach? Further, can the Minister explain whether he believes
that any licensing decisions must be compatible with keeping
warming to 1.5 degrees and how the Government will make that
assessment?
The Parliamentary Under-Secretary of State, Department for
Business, Energy and Industrial Strategy () (Con)
I thank the noble Baroness for her question. She is right: we
intend to introduce a climate-compatibility checkpoint for all
new licences, which will be used to assess whether any future
licensing rounds remain in keeping with our climate goals.
(LD)
My Lords, in Q3 of last year, which is the last time for which
data is available, exports from the UK North Sea were double
those of the period in the previous year. At the same time,
Ministers were reported to be scrabbling to Kuwait to secure
extra supplies of LNG to the UK to meet the energy crisis. This
is very counterintuitive. Does the Minister agree that shipping
expensive—in environmental terms—LNG from the Middle East, rather
than using gas that comes from our doorstep, is not sensible or
good for the planet? Will he tell your Lordships’ House how the
Government will turn that around and make better use of the
resources we already have and are already producing?
(Con)
First, I agree with the noble Lord that it is much more sensible
to use our own domestic resources, rather than LNG. However, the
reality is that, throughout this period, the UK remains a net
importer of oil and gas. Therefore, it makes no sense to pursue
the operations he is proposing. We do not produce enough of our
own domestic energy. We are expanding our renewable capacity
massively and have the largest developments of offshore wind in
the world. We need to go further and faster, but it makes no
sense to isolate ourselves from the rest of the world and cut off
imports and exports.
(Con)
My Lords, in running down North Sea oil and gas for climate
purposes, is it not vital to ensure that supply does not shrink
so fast that it falls behind continued demand, with the resulting
price explosions in all the fossil fuels that we see now, which
are causing such misery and crisis?
(Con)
I totally agree with my noble friend. I know he speaks with great
authority on this matter as a former Energy Minister. As I just
said in response to the noble Lord, , we remain a net importer.
Production from the North Sea is sadly declining. We need to make
sure that we ramp up our renewable capacity as quickly as
possible, but it remains a fact that we will still have demand
for oil and gas during the transition. If we have that demand, it
makes sense to produce this domestically rather than importing it
from other, unstable, parts of the world.
(Lab Co-op)
My Lords, can the Minister confirm whether decisions on these
matters are within the total competence of the United Kingdom
Government? Is there any way that the Scottish Government could
thwart them?
(Con)
No, these decisions remain a matter for the UK Government. The
noble Lord makes a good point. It is sad to see the reaction of
the Scottish Government in not being totally supportive of the
tremendously successful North Sea oil and gas fields which, as
well as employing thousands of people in good, well-paid jobs,
also contribute large amounts to the UK taxpayer.
(Con)
My Lords, can my noble friend the Minister tell me whether the
Government are reviewing their position on fracking?
(Con)
No, we are not reviewing our position, is the short answer to my
noble friend’s question. Let me explain this issue: there is
currently a moratorium on fracking because of the tremendous
seismological damage that it caused. We remain open to reviewing
this if it can be demonstrated that fracking can go ahead in a
safe and responsible manner, but nobody should run away with the
idea that this could be a solution to our problems. The
quantities produced would be relatively small and they would not
impact on the current high prices and it would be many years,
perhaps even decades, before significant quantities could come on
stream, even if we overcame all of the environmental problems and
gave the go-ahead tomorrow.
(Lab)
My Lords, a previous question was about why we are exporting
something that we desperately need in the UK. People cannot
understand why we are still exporting, when there is a shortage
and we are having difficulties getting supplies in the UK. Can
the Minister explain it?
(Con)
Yes, I realise that it is counterintuitive but supplies are
required in different parts of the country. We are importing and
exporting. The corollary to the noble Lord’s question would be to
say that we seal the borders, disconnect all our interconnection
pipelines and import no further LNG—and we would not have enough
supplies to satisfy our domestic demand in such circumstances. We
import and we export, but the point remains that we are a net
importer of both oil and gas supplies.
(Con)
Bearing in mind that the four Governments previous to this one
have ignored the role of nuclear—that appears to be the
situation—can my noble friend assure this House that we will now
see what useful role nuclear can play in giving us, in a sense, a
defensive supply?
(Con)
Indeed, my noble friend makes a very good point. The House will
shortly have the opportunity to consider the Nuclear Financing
Bill, which has its Second Reading on 21 February, I believe.
(CB)
The Government agree—do they not?—that the actions of President
Putin show that the whole of the West needs to increase the
priority it gives to energy security. New nuclear must be part of
that, but it should cause us to rethink some of the finely
calibrated decisions on fossil fuels here in the UK if it can
mean extra security for our western partners.
(Con)
The noble Lord makes an excellent point. Regarding energy, first,
it takes many years to develop new sources—sometimes even tens of
years—and, secondly, we need diversity of supply. Yes, we need
continued oil and gas production during the transition period;
yes, we need to encourage new renewables; and, yes, we need to
encourage nuclear. We need a diverse mixture of supplies.
(Non-Afl)
My Lords, can I press the Minister? People have stressed the
importance of reliable domestic energy sources. In response to
the question on fracking, the Minister raised all sorts of
problems of safety and so on. These are contentious but could it
be possible for the Government to lift the moratorium or at least
commit themselves to looking again at this important issue?
Nobody suggests that shale gas will solve all the problems but in
an energy crisis that is really serious, we want to look at
nuclear, fracking and all reliable energy sources. Fossil fuels
should not be demonised so that we move away from them, and
safety fears should not be used to stop what would be sensible
for the British economy.
(Con)
The noble Baroness makes some good points. As I said in response
to my noble friend earlier, we keep these matters under review.
If it can be demonstrated that fracking can be carried out in a
safe and reliable manner, then of course we need to consider it.
But we have to be realistic about this: it is not going to be the
answer to our short-term difficulties. In preparation for this, I
was chatting to some specialist officials and they said it could
easily be 10 years—even if we got rid of the moratorium tomorrow
and overcame all the environmental problems that were
caused—before any fracked gas came on stream.
(CB)
My Lords, the oil companies, including BP and Shell, have been
making record profits. Yet for their North Sea operations they
have had a negative tax rate for several years. Given the current
circumstances, might the Government re-examine the fiscal regime
in the North Sea? Can the Minister tell the House?
(Con)
Of course, I leave all tax decisions to the Chancellor. But,
again, I think that the noble Baroness is wrong and looking at
this too simplistically. First, most of the profits announced by
the companies in recent days were made in worldwide operations; a
very small percentage came from British domestic production.
Secondly, it was only last year or the year before that they were
making net losses; I do not remember the noble Baroness or others
saying that we should give them taxpayer support. Thirdly, where
do these profits go? First, they pay more corporation tax and,
secondly, they go to UK pension funds, shareholders and people
who need that income to help them though the crisis. There are no
easy answers; the idea that there is some magical, mythical pot
of money that we can just extract from to solve all of our
problems is not true, I am afraid.
