Energy Bill [Lords]

Public Bill Committee, 27 June 2023.

Caroline Nokes (Conservative, Romsey and Southampton North)

Before we begin, I remind Members that Hansard colleagues would be grateful if any speaking notes could be emailed to hansardnotes@parliament.uk. Please put electronic devices on silent, and tea and coffee are not allowed during sittings. The only refreshment permitted is water, which is available in the room. I might review my view on whether gentlemen can remove their jackets if it warms up later in the day.

New Clause 1 - Smart meter roll-out for prepayment customers

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

I beg to move, That the clause be read a Second time.

Caroline Nokes (Conservative, Romsey and Southampton North)

With this it will be convenient to consider new clauses 2 and 38.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

It is a pleasure to serve under your chairmanship, Ms Nokes.

We are now in the final week of this Bill Committee, and Members will have spotted that a lot of Government new clauses and amendments have been tabled and accepted. In the spirt of fairness, the Government should also accept some of our new clauses and amendments; hopefully that is what is going to happen. Rather than getting into a debate, if the Minister wants to intervene and tell me which new clauses the Government will accept in the spirit of fairness, I would be happy to give way.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I would not like to put you off.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

Okay, so we go back to my monologue justifying why the Government should accept some of our new clauses, including new clauses 1 and 2.

Clearly, we should be grateful that energy prices are starting to fall, but the reality is that the cap on energy bills for an average household was set at £1,138 in April 2021. This month, Ofgem has set the cap at more than £2,000, so energy bills are still nearly double what they were two years ago. The reality is that many people are struggling badly with their energy bills, even though prices are falling, and those struggling the most are those with prepayment meters. People with prepayment meters can access credit of only £5 or £10. If they reach that credit limit, the lights go out—it is as simple as that. They cannot turn on the gas or electricity, and it is a real difficulty for people. It also means that if people cannot get out of the house for whatever reason—if they are ill or have just had a newborn kid—and have reached the threshold, they lose access to their energy by virtue of not being able to top up their meters.

It is unfair that people with prepayment meters pay higher standing charges. Frankly, it is an outrage that people who pay in advance for their energy are paying a premium to access it, whereas people like us in this room, who pay by direct debit, have access to credit and cheaper tariffs. As I say, the reality is that if someone is on a prepayment meter, they are going to struggle to pay their bills, they will pay more and they will face the difficulties associated with a lack of credit.

As End Fuel Poverty states:

“Imposition of a pre-payment meter is disconnection by the back door. When you can’t top up the meter everything clicks off”.

Forcing people to have prepayment meters means that those who are already struggling are put on to a system whereby they will be forced to ration, automatically disconnected when the credit limit is reached and more likely—this is the rub—to have a cold, damp home, with the long-term health implications that that brings, as well as the short-term heating and eating dilemmas.

It is estimated that 19% of housing stock across the UK is damp. The proportion rises to nearly a third, or 31%, for those on prepayment meters. In other words, if someone is on a prepayment meter, they are 65% more likely than the average person to live in a damp house. Some 51% of prepayment customers have health conditions or disabilities, so in many ways the existing system is punishing those who are more likely to require more energy in the first place. That, in a nutshell, is why a social tariff is needed for those with prepayment meters.

Kerry McCarthy (Labour, Bristol East)

As always, it is a pleasure to see you in the Chair, Ms Nokes.

I rise primarily to speak in support of new clause 38, but it has quite a lot of overlap with new clause 2. Our new clause 38, on the restriction of the use of prepayment meters, says:

“The Secretary of State may by regulations restrict the installation of new prepayment meters for domestic energy use.”

It makes provision to ensure that consumers have full and informed consent on the installation of a prepayment meter, and that vulnerable customers are not put on to prepayment meters. We heard from the hon. Member for Kilmarnock and Loudoun some of the reasons why we have shared concerns about that. Some of my points will be very familiar to the Minister if he followed the debate earlier this year, when it reached crisis point.

Citizens Advice estimates that the number of people moved on to prepayment meters reached 600,000 in 2022, up from 380,000 in 2021. We know that that comes at a cost to them. There is a poverty premium on some of the most vulnerable, and on people on the lowest incomes, because of the shift to prepayment meters, and their use should be restricted as a result. Those with prepayment meters are more likely to be in fuel poverty and facing significant debts already. We find ourselves in a situation in which those requiring the most support are being forced to pay the most and are given the least help.

Citizens Advice revealed at the start of the year, at the height of the energy crisis, that someone was being cut off from their energy supply every 10 seconds, with millions unable to afford to top up their prepayment meters. We also know that so-called voluntary self-disconnection was a thing. People simply could not afford it, so they would not necessarily feature in the numbers. Labour’s call for a moratorium on the forced installation of prepayment meters was dismissed until the March Budget. The Secretary of State told the House on a number of occasions that he was talking to Ofgem and that plans were in motion, but during that period we were still hearing horrific stories about forced entry to people’s houses, warrants being issued and energy companies continuing to go down that path.

Our view was very much that it was the Government and the energy regulator’s responsibility to ensure that people were not left at home in the cold and the dark, yet we had to press incredibly hard before anything was achieved. Over the winter, more than 130,000 households that included a disabled person or someone with a long-term health condition were being disconnected from their energy supply at least once a week because they could not afford to top up. The same report also said that

“63% of PPM users who had disconnected in the last year said it had a negative impact on their mental health. This rises to 79% of disabled and people with long-term health conditions.”

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

It is an absolute pleasure to serve under your chairmanship again, Ms Noakes, for sitting 16 in the final week before we conclude our proceedings in Committee. I thank Members for tabling their new clauses.

New clause 1 places a duty on the Secretary of State to ensure that all legacy prepayment meters are replaced with smart meters before the end of 2025. The Government have been clear that our aim is for as many households as possible to benefit from smart metering, including those that prepay for energy, which is why we have set minimum installation targets for suppliers until the end of 2025. To ensure effective scrutiny and transparency, large suppliers are also required to publish their performance against their targets, broken down by credit and prepayment mode. That ensures that they have strong incentives to deliver.

Although we agree with the hon. Member for Kilmarnock and Loudoun that smart prepayment is highly superior to legacy prepayment meters, it is also true that those customers who would benefit the most from prepayment meters can be among the hardest audiences to reach and the most vulnerable in our society. It is therefore critical that we tread carefully and do not place unrealistic targets in statute that may cause unintended consequences.

As drafted, the new clause could result in the prioritisation of the replacement of traditional prepayment meters. That may inadvertently deprioritise smart meter installation for credit consumers, many of whom are in vulnerable circumstances. Data from Ofgem indicates that around 70% of those with disabilities pay by direct debit and may therefore benefit from the automated readings that smart meters deliver.

Let me turn to the requirement to end self-disconnections within six months of the Bill becoming law. It is critical that the market delivers a fair deal for consumers, with an energy market that is resilient and investable over the long term. Ofgem’s recently published code of practice on prepayment is clear that when self-disconnection occurs, suppliers must make multiple attempts to contact the customer to understand the reasons for self-disconnection and offer appropriate support, including additional support credit. If frequent or prolonged periods of self-disconnection are identified, energy suppliers should assess whether a prepayment meter remains a safe and practicable option for that consumer.

As announced in the 2022 autumn statement, His Majesty’s Government have committed to work with consumer groups and industry to consider the best approach to consumer protection from April 2024, as part of a wider retail market reform. In addition, as announced at the spring Budget, we are keeping the energy price guarantee at £2,500 for an additional three months from April to June. That means we have covered nearly half a typical household’s energy bill through the energy price guarantee and energy bill support schemes since October, with a typical family saving £1,500. That is in addition to the expanded warm home discount scheme, which has been extended until 2026 and provides £475 million in support per year in 2020 prices.

Kerry McCarthy (Labour, Bristol East)

The Minister may be about to come to this point, but I am wondering how it is going—does he know how many warrants are now being issued by the courts? Is he aware of statistics on how many prepayment meters are now being installed or on the type of customers who are being put on them?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I do not have the exact numbers at my fingertips, but I am happy to write to the hon. Lady with that information. I can tell her that the senior presiding judge has ordered magistrates courts to immediately stop authorising warrants for energy firms to forcibly install prepayment meters while the process by which suppliers bring forward such applications is being reviewed.

Alan Whitehead (Labour, Southampton, Test)

In his reply to my hon. Friend the Member for Bristol East, will the Minister expand briefly on his understanding of the meaning of the word “pause” in relation to the forcible installation of prepayment meters by energy companies? As far as I am aware, there is no time set for that, nor is it subject to any other actions that the Government may take. Is it the Minister’s understanding that the pause is strictly time-limited and that practices may start again at the end of it?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The pause will be until Ofgem has finalised the review of supplier practice in relation to prepayment meter customers. That is what we expect, anyway, because in addition to what I have said this morning, the Secretary of State has told Ofgem to toughen up on energy suppliers and to investigate customers’ experiences of how their supplier is performing. Following that, Ofgem established a new customer reporting system for households to pass on their experiences of how they are being treated. We are approaching this across the board. We believe, however, that any ban on the forced installation of prepayment meters would risk a build-up of customer debt. Unpaid debts increase costs for all energy consumers and could pose a risk to supplier stability.

To address issues around the forced installation of prepayment meters, Ofgem has recently published a new code of practice, as I mentioned. The code has been agreed with energy suppliers to improve protections for customers being moved involuntarily to a prepayment meter. It ensures better protections for vulnerable households, increased scrutiny of supplier practices, and redress measures where prepayment meters were wrongly installed. It includes provisions to prevent involuntary installations for all high-risk customers, including those dependent on powered medical equipment, people over 85, and households with residents with severe health issues. It also includes a requirement for suppliers to reassess whether prepayment remains the most suitable and preferred payment method for a customer once they have repaid debts. Suppliers must agree to any request from a prepayment customer who is clear of debt to move off a prepayment meter.

The rules to which suppliers must adhere regarding the installation of prepayment meters are set out in the licence conditions set by Ofgem as the independent regulator. Ofgem will undertake a formal statutory consultation process to modify suppliers’ licence conditions in line with the code ahead of this winter. This will allow Ofgem to use its full enforcement powers to enforce compliance with the code, ensuring that consumers are protected and that the poor practices that we have seen will not happen again.

It is vital that, as the independent regulator, Ofgem continues to set the rules to which energy suppliers must adhere in licence conditions. New clauses 2 and 38 would risk taking that power away from Ofgem. Allowing the Government to set rules outside the licence conditions would threaten Ofgem’s independence and its ability to regulate suppliers effectively.

The Government have always been clear that action is needed to crack down on the practice of forcing people, especially the most vulnerable, on to prepayment meters. We will continue to work closely with Ofgem and industry to see that the code leads to positive changes for vulnerable consumers. I hope that hon. Members are reassured by my explanation and that they might feel able to withdraw their new clauses.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

Despite what the Minister says, I am not fully convinced by those arguments. With the leave of the Committee, I will not press new clause 1 to a vote, but it is important to understand that new clause 2 would not even mean an outright ban on the installation of prepayment meters; it would just put protections in place so that people are not forced on to prepayment meters. It would also address debt build-up by ensuring that people are given access to debt counselling, for example. New clause 2 is about working with customers and providing additional protections, so I would certainly like to press it to a vote.

On new clause 1, I beg to ask leave to withdraw the motion.

New Clause 2 - Restriction of the use of prepayment meters

New Clause 5 - Net Zero compatibility test

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

I beg to move, That the clause be read a Second time.

This fairly simple clause seeks for the Government to include in all future legislative impact assessments a net zero compatibility test. Achieving net zero is vital to save to planet. The Government have legally binding targets to hit net zero by 2050, and this Committee has agreed to Government amendments that give Ofgem a statutory duty to consider net zero. If the regulator is obliged to consider net zero, and if the Government have legal targets to achieve net zero, surely it makes sense to legislate for the Government to undertake a net zero compatibility assessment, so as to ensure that policies will not have an adverse impact on the legally binding target to achieve net zero. That would result in transparency on whether policies are adversely or positively impacting on the route to net zero. Such transparency would also be of assistance with costs, especially given the net zero cynics among Government Members. Importantly, Energy UK, the trade body that represents energy companies, also says that it supports a net zero compatibility test.

Given what I have outlined, I do not see why the Government would not accept the new clause. If the Government can carry out impact assessments of the effect of legislation on small businesses, why not carry one out on the wider, legally binding target to hit net zero? I hope that the Minister will accept the new clause.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Members for Kilmarnock and Loudoun and for Argyll and Bute (Brendan O’Hara) for tabling their new clause. The Government agree with the intention behind it, but we believe that it is unnecessary. We are already taking a cross-Government and systematic approach to embedding net zero and climate into Government policies and decision-making processes.

The creation by the Prime Minister of the new Department for Energy Security and Net Zero, which I am proud to serve, means that there is an entire Department dedicated to delivering on our climate ambitions. The Department’s focus, alongside energy security, is driving overall delivery of net zero and maximising the economic opportunity that the transition presents. The new Department’s officials work with counterparts across Government to co-ordinate action, working particularly closely with the Cabinet Office and the Treasury to ensure that net zero is prioritised in Government policy and decision making, and that it aligns with our wider priorities.

We are also working with industry and stakeholders, which has led to the creation of the net zero council, the green jobs delivery group, the jet zero council and the local net zero forum. We also work closely with our devolved Administration colleagues. We have also gone further by creating the Domestic and Economic Affairs (Energy, Climate and Net Zero) Committee, which brings together senior Ministers from across Government to ensure a co-ordinated approach to delivering net zero across government. Additionally, we have provided Green Book supplementary guidance on the valuation of energy use and greenhouse gas emissions for appraisal. That guidance helps officials when undertaking options appraisal for policies, programmes and projects; building business cases; and when conducting impact assessments. I hope that provides the hon. Member with the reassurance that he needs to withdraw his new clause.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

The Minister smiled when he said he hoped that that would satisfy me. There is no surprise that it does not. He outlined the creation of the new Department for Energy Security and Net Zero, and the important thing is that the net zero compatibility test would apply to all legislation that the Government introduce from every Department, so it would make every Department start to consider the net zero implications of its policies. That is what is critical about this new clause. I do not wish to withdraw the motion.

New Clause 6 - Just Transition Commission

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

I beg to move, That the clause be read a Second time.

I shall potentially continue my losing streak here. This new clause is about setting up a just transition commission. The Committee may be aware that the Scottish Government set up a just transition commission a couple of years ago, which is effectively world leading. It brings together independent academics, and representatives from trade unions and right across industry. It advises the Scottish Government on policy implications and what is needed as we move forward to a just transition to ensure that workers are not left behind and do not lose their jobs, to be effectively left on the scrapheap.

This important body came together and has brought transparency to the Scottish Government, and I want to see that replicated at Westminster. It would be good for the Government as a way to work across the sector and the industry, with trade unions and academics to provide expertise. I look forward to hearing the Minister’s thoughts on that, explaining why they are probably not going to do this in the short term. I will be happy to be proved wrong on that.

Kerry McCarthy (Labour, Bristol East)

We certainly need more focus, and to hear more from the Government about ensuring that this is a just transition. We know that we cannot reach net zero without the skilled workforce to deliver it, and without decisive action to ensure that no community is left behind. It is illustrative to look at what Joe Biden is doing with the Inflation Reduction Act in the United States, where a lot of focus is on energy-intensive states such as Texas to ensure that, as they move away from fossil fuel exploration, the jobs are still there. We all know what happened, as we debated earlier in this Committee, when the coalmines were closed with the lack of a strategy to ensure good, decent jobs for people left behind. We saw whole communities abandoned and, in some parts of the country, turned into basic commuter villages, rather than having a home-grown industry.

It has rightly been said that net zero is the economic opportunity of the century, but it represents a potential threat to those who, at the moment, rely on traditional industries. That is not because oil and gas extraction will immediately cease, or because coal-fired blast furnaces will suddenly be switched off. It is because our reliance on the old way of doing things will gradually decline and, as a result, the skills required will evolve.

Workers in those industries need to know that there is a plan. As I said, we cannot allow the mistakes of the 1980s to be repeated. We need a forward-looking industrial strategy, to make it clear that the transition to net zero is an opportunity to reinvigorate our industrial heartlands and coastal communities and to make it clear that that means a higher quality of work, better regulation of employment practices and greater diversity in the sector. This is quite a complex task. Some of it will be industry-led, but we know, particularly when we get further down the supply chain to those clusters of jobs that will be based around the traditional industries, that those smaller companies will need support to diversify as well.

At the moment, decarbonisation is heavily dependent on overseas skills and imported products. We have not seen a response from this Government to the Inflation Reduction Act. We are told that it might come in the autumn, but we also get mixed messages from Ministers—from the Secretary of State, for example, and from the Minister of State in the Department—saying that it is simply a case of the US racing to catch up with us and we are far ahead of the curve, as though we do not need to respond to what is happening in other countries.

We know, because of labour shortages, that in some areas money is simply not being spent. An example is the green homes grant. The local authority delivery scheme had a 35% underspend. I will be in Westminster Hall this afternoon to talk about retrofitting of homes. Some 19 million homes need retrofitting to bring them up to decent energy efficiency standards. There does not seem to be a strategy for that workforce to be there, and that will in part mean people transitioning from more traditional jobs—such as installing gas boilers—to installing heat pumps, for example. There is no clear road map; we do not have an industrial strategy.

The TUC was calling for a just transition commission years ago. My concern about the SNP new clause is that setting up a just transition commission at some point in the future could lead to further delay. We had the Green Jobs Taskforce, and following that, the Green Jobs Delivery Group. Next year, we are due to get the net zero and nature workforce action plan. I commend Scotland for setting up its Just Transition Commission, but the Prospect union has warned that Scotland still

“lacks a clear strategy for job creation”

and it “falls disappointingly short” in this “vital area” at the moment. Scotland was promised a jobs revolution, but not even a quarter of the green jobs promised by the SNP in 2010 have materialised.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

The hon. Lady will be aware that procurement rules and contracts for difference auctions, for example, are reserved to Westminster, so the Scottish Government do not have control of that. There is a whole supply chain aspect that is not developed, and that is partly because of these procurement rules—the fact that the cheapest price takes all. We want that amended at some time.

Kerry McCarthy (Labour, Bristol East)

I was about to move on to that, because it is important. On the Government’s lack of action on developing a strategy, I have been trying to ask questions about the Green Jobs Delivery Group, such as when we will actually see some delivery and outcomes and how that will feed through into a skills strategy and an industrial strategy, but I have been getting very little by way of response.

Friends of the Earth Scotland has called on both the UK Government and the Scottish Government to ensure greater worker representation in their transition planning through existing bodies such as the UK’s Green Jobs Delivery Group and the Just Transition Commission in Scotland. It says that at the moment there is little support provided for high-carbon workers to find alternative jobs, to facilitate retraining where necessary, or to lighten the financial burden of training currently borne by the workers.

Last month, the Climate Change Committee briefed that the

“Government has policy levers at its disposal to support workers during the transition”

but warned that

“clearer plans are needed to harness the potential of the transition and to manage its risks.”

Work has been done. As I said, my concern is about focusing on setting up a commission rather than just calling on the Government to actually come forward with a clear strategy, a clear road map, particularly on the skills front, and to link that up. I do not know whether the Minister will accept my analysis of the situation, but it seems very fragmented. It is left, in large part, to big companies in the supply chain to try to ensure that the workers of the future are there as they transition. There is not a strategy for the smaller companies in the supply chain unless the big companies are leading that.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

I understand what the hon. Lady is saying about wanting the Government to get on with it sooner, but does she not agree that commissioning a body of experts will provide better advice, enabling the Government to develop their strategy better?

Kerry McCarthy (Labour, Bristol East)

As I said, the Government have had their green jobs taskforce, and now they have the delivery group. They are also doing things on the nature side. I would argue that they should have had all the information and expert advice; it is all available out there.

What we need are more incremental steps. Rather than setting up a body, we need something concrete from the Minister on what the Government are doing, for example, to ensure that further education colleges are tying up with the potential needs of businesses in their areas. Some incredibly good further education colleges are working on that—going into schools, working with businesses and encouraging young people to look at those careers—but as I said it is piecemeal and depends on the quality of the college, and the relationship with other agencies in the local area. I sympathise with focusing on a just transition, but I have concerns about whether setting up another body is the way to do it.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Members for Kilmarnock and Loudoun and for Bristol East for their contributions. The Government agree with the intention behind the new clause; however, we already view transition as a consideration embedded across all Government policy actions. We are committed to managing the transition to net zero in such a manner that the positive opportunities are maximised for the economy and the population, while protecting individuals, communities and the economy.

Given that the majority of the low carbon economy lies outside London and the south-east of England, Government action to deliver our net zero commitment and build a low carbon economy will help to level up the UK and spur on the transition. That is demonstrated through the North sea transition deal agreement in March 2021, through which the UK became the first G7 country to agree a landmark deal to support the oil and gas industry’s transition to clean, green energy, while supporting 40,000 jobs in industrial heartlands across the UK.

Since delivering a net zero workforce transition needs joint action by Government, industry, and the education sector, the Government have established the green jobs delivery group. The group is headed up by Ministers and business leaders to act as the central forum for driving forward action on green jobs and skills, and has committed to publishing a net zero and nature workforce action plan in 2024, which will consider the workforce transition. We will continue to join up across the devolved Governments, who have already made excellent progress, with the Welsh Government having launched their net zero skills plan in March 2023, and the Scottish Government and Skills Development Scotland having launched their climate emergency skills action plan 2020-2025 in 2020.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

On working with the devolved Governments, does the Minister recognise that it is time for the UK Government to match fund the £500 million just transition fund that the Scottish Government have put in place?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Member for his intervention, and point him to the remarks that I just made regarding the huge investment that we are already making in the transition, the fact that we were the first G7 nation to sign a transition deal, and the £100 billion of private sector investment by 2030 that we hope to see, and that we are driving into British industries, supporting 480,000 green jobs by the end of the decade. We are looking to meet that target, unlike the Scottish Government’s green jobs target, which of course they have not met—alongside failing in four years out of five to meet their climate change targets, as was announced just last week. Since delivering a net zero workforce transition needs joint action by Government and industry, as I have said, we are continuing in that regard.

With respect to the scrutiny advised in the new clause, the Government already report progress on delivering our net zero ambitions through multiple channels—through parliamentary Select Committees, the Public Accounts Committee, independent bodies such as the National Audit Office, and—under the Climate Change Act 2008—the Climate Change Committee. I should point out that the hon. Member’s colleague and friend, the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), has recently taken up the chairmanship of the Energy Security and Net Zero Committee, and will, I am sure, ably hold my Department to account. I hope that that provides the hon. Member for Kilmarnock and Loudoun with the reassurances that he needs to withdraw the motion.

Olivia Blake (Labour, Sheffield, Hallam)

It is a pleasure to serve under your chairmanship, Ms Nokes. I have asked a few written questions in this space and I agree wholeheartedly with my hon. Friend the Member for Bristol East that the just transition should have already started for many workers. A survey two years ago found that workers were looking to move from the fossil fuel industry to renewables but that they were being put off by training fees. I have asked repeatedly about that.

I asked the Department whether it knew what the average cost of retraining would be for oil and gas workers but was told that it does not know or does not hold that data. However, I have heard at first hand from oil and gas workers who want to move into renewables that they face training costs of many thousands of pounds and that the quality of such training is questionable in some places. Government inaction risks leaving those workers behind when they want to be part of the transition and already have transferrable skills in those industries. I also recently asked a question about the Department’s discussions with the offshore wind industry on recognising an energy skills passport to help oil and gas workers, but was told in response that no such discussions have taken place.

I thank the Minister for his kind words about a transition. However, when will we see action for oil and gas workers? When will the inaction turn into action and delivery so we can get on with developing the green skills we need in this country to deliver net zero and compete in a global market?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Member for Sheffield, Hallam for the tone of her words. The Government believe that the best way to secure jobs for oil and gas workers is to continue to give them support and, indeed, to support investment into the North sea, which not only provides secure employment for them now and into the future but provides for our energy security needs, which is something the Labour party might take note of moving forward.

As a representative of a constituency in the north-east of Scotland, I am fully aware of the pressures that workers in the North sea oil and gas industry face and the desires of many of them to transition to new green jobs. We see that in the city of Aberdeen, which is transitioning from being the oil and gas capital of Europe to the energy capital of Europe. That is why we have set up our green jobs delivery group and why we are identifying recommendations and actions for central and local government, industry and business, and the devolved Administrations.

We are also exploring how we can support local areas to deliver a successful transition, and the Department for Work and Pensions is expanding sector-based work academy programmes to help those who are out of work develop the skills they need to re-enter the job market. The programme runs in England and Scotland and is developed by jobcentres in partnership with employers and training providers. The Government take that incredibly seriously and I have a particular interest in the matter.

I thank the hon. Lady for her comments, but we are clear that it is very important to support people who are reskilling and upskilling from traditional oil and gas jobs into new green jobs, while also investing in our oil and gas industry to ensure that investment continues to support the traditional jobs that will be needed for some time yet.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

The Minister puts forward arguments that suggest the Government are doing a lot in terms of green jobs. The Government are doing some things, but not enough. That is the reality.

To go back to my intervention on the hon. Member for Bristol East, the CfD rules should have been changed years ago to incentivise supply chain development and create those homegrown jobs. Perhaps a just transition commission would have provided advice on how that procurement could have been taken forward. I want to revisit that. The Government should think and should speak to people engaged in the just transition commission. In the meantime, I beg to ask leave to withdraw the motion.

New Clause 33 - Purposes

New Clause 38 - Restriction of the use of prepayment meters

New Clause 39 - Guarantee for consumer protection

New Clause 41 - Energy performance regulations relating to existing premises

New Clause 43 - North Sea Transition Authority

Alan Whitehead (Labour, Southampton, Test)

I beg to move, That the clause be read a Second time.

We come now to something that has run as a bit of a leitmotif through our discussions in Committee, which is the position of the North Sea Transition Authority—I was going to say the “so-called” North Sea Transition Authority, but I accept that it is the North Sea Transition Authority. However, as we have pointed out in previous debates, the name came about by means I am not entirely clear about, as opposed to being set in legislation.

In a previous debate, we discussed the circumstances under which somebody might go about their daily business calling themselves a particular appellation but find out that there were legal consequences to using a name that was not actually theirs, even though for daily purposes that name was reasonably accepted. That is the key point as far as the North Sea Transition Authority is concerned, because legally the North Sea Transition Authority is actually the Oil and Gas Authority. It is not just legally the Oil and Gas Authority; it is an authority that was effectively set up by the Energy Act 2016.

If we turn to the pages of the 2016 Act, we see a number of functions that the OGA must undertake. It is not the case that the OGA did not exist at all in any form prior to the 2016 Act’s passing into law; it was originally incorporated under the Companies Act 2006 as the Oil and Gas Authority Limited. The 2016 Act made a particular point of taking that limited company and transforming it by legislation. It states:

“The company originally incorporated under the Companies Act 2006 as the Oil and Gas Authority Limited is renamed as the Oil and Gas Authority.”

There it is in the legislation. The 2016 Act then made a number of transfers of functions from the OGA: the transfer of property rights, staff and so on. It is fairly clear from that that the Government at the time of the passage of the 2016 Act had a very real intention as to the function, activity and so on of the Oil and Gas Authority: they set it all out in the legislation. They were clear and specific on that. They were also clear and specific on what the OGA should be doing.

It was not just guidance on what the OGA should be doing; it was set out in the legislation under section 8, “Matters to which the OGA must have regard”. It needed to

“minimise public expenditure relating to, or arising from, relevant activities.”

It was concerned with the

“need for the United Kingdom to have a secure supply of energy.”

It had a function entitled “Storage of carbon dioxide”, and the OGA needed to

“work collaboratively with the government”.

By the way, regarding a debate we will come to later, the OGA also had at least an implied function with respect to the maximum economic extraction of oil and gas from the North sea. It was clear that the OGA had a number of things it should do, and that it was able to collect samples and regulate the oil and gas industry in the North sea, all within the overall umbrella of maximising economic recovery of that oil and gas in the North sea and elsewhere.

The OGA had a clear set of legal requirements and a clear set of duties and responsibilities, but the Government’s decision—I do not know whose decision it was, and it would be helpful if the Minister clarified that for me—that, henceforth, the OGA should be called the North Sea Transition Authority was, as far as I can see, conceived and carried out on no legal basis whatever. It was simply a device, which I guess aligned with the North sea transition deal, which was originally entitled the North sea oil and gas deal, whose title was, during discussions on the deal, so I understand, changed. That was when the Government had an industrial strategy, and this was put forward as a strategy for oil and gas in the North sea, although it also included elements of what we might say was a transition.

The North sea oil and gas companies undertook to change their position on flaring, for example, and undertook to do various things about the electrification of the North sea oil rigs and various other things. However, notably in the North sea transition document, there was no mention of, nor any agreement on, the management of production in the North sea, or indeed management of exploration or any other activities that were going on. This was a limited document that might be described as a North sea transition document, and an even more limited change to the name of the North sea OGA, which was renamed the North Sea Transition Authority. I presume that the name change arose from the basement of the Department for Business, Energy and Industrial Strategy as a nod in the direction of that particular document, but that is all.

The North Sea Transition Authority has done some mighty work in respect of its new function. It has changed its notepaper, I think—it has got that bit sorted out—but nothing else has happened as far as the authority is concerned. As the Minister saw just recently, and as I have periodically pointed out as the Committee has progressed, when the guidance notes and the notes published by the Department on various aspects of the Bill appear, we see that the North Sea Transition Authority is doing various things related to various aspects of the Bill. However, when we go into the clauses in the Bill, we see that it is not the North Sea Transition Authority that is doing those things, but the Oil and Gas Authority, because that remains the legal arrangement.

What is to be done about that? Is it satisfactory for the medium and long-term future that we should look to an authority to take positive action on the transition and on some of the things we have talked about in Committee this morning, even though it has functions that require it to do something else and a name that suggests it should do something else entirely? In the great British tradition of muddling and fudging, we may say that as long as everybody understands what is being done, it is okay that we have a body doing one thing while it is legally required to do something else entirely. I do not think that is good enough if we are to be serious about North sea transition.

We have designed the new clause to attempt to give effect to something that has some sort of legal basis, and the Energy Act 2016 needs to be amended so that it is clear that what we are talking about in the legislation, as well as on a daily basis, is the North Sea Transition Authority. Undoubtedly, the Minister will say that that requires rather more than putting the North Sea Transition Authority in section 1 of the 2016 Act, and that we have to do all sorts of other things. I appreciate that that is the case, and the new clause seeks to substitute “North Sea Transition Authority” for all references to “the OGA”. I am not sure that that quite stands up, but the intention is to change the wording to the “North Sea Transition Authority” throughout the Energy Act.

As I have pointed out, what is really important in all this is that section 8 of the 2016 Act concerns matters to which the OGA must have regard. If the OGA is to become the North Sea Transition Authority properly, what will be the sorts of matter to which the NSTA ought to have regard? I do not object to a number of things that are already included in the 2016 Act, but I would have thought that it was absolutely essential to put in those matters to which the North Sea Transition Authority should have regard. It should have regard to the transition, as that is included in its name and in its functions for the future.

The new clause would insert a new paragraph to section 8(1) of the 2016 Act, on things to which the newly named authority should have regard, which is:

“The need to ensure an effective transition from high carbon exploration production and exploitation of the North Sea basin to a low carbon exploitation of all North Sea basin resources compatible with the United Kingdom’s net zero commitments.”

That would effectively give the North Sea Transition Authority a job for the whole of the North sea’s transition, not just the continued safety, security and production of high-carbon elements that can be extracted from the North sea. It would also have oversight of and regard to the low-carbon exploitation of the North sea basin’s resources, including carbon capture and storage, which the 2016 legislation nods in the direction of, as well as offshore wind, including interconnectors and various elements that develop the capacity of the North sea to provide wind resources to shore. Essentially, it would become a North sea authority covering all the features that mean the North sea will be an absolutely crucial basin for our future energy wellbeing, as well as its current functions.

That is potentially very important in the medium and long-term, because, as we know, the North sea basin is very mature in terms of exploitation. Regardless of whether we exploit the small pools alongside existing fields, future production is unlikely to increase and, indeed, will probably decline quite substantially. The Government regularly publish figures on the likely reserves in the North sea, what has already been exploited and what might be exploited for future production. Those figures all trend downwards very substantially.

We want to make sure that the North Sea Transition Authority is managing not just the decline of a resource, but the decline of a resource in one area and its expansion in another, making sure that those two—as the word transition suggests—are compatible in terms of the overall contribution that the North sea can make to the UK’s future energy and economic wellbeing.

The Minister may say that is all very well, but there are other parts of the UK involved in the extraction of resources. It is certainly not the intention of the new clause to limit the North Sea Transition Authority to those particular areas; there is no reason to suggest it would be limited. As the name implies, its concentration would be on the largest resource we have—the North sea—and the Celtic sea and so on would come under the general heading. The transition authority would be for all the UK’s exploitation of energy resources, regardless of where they were around the UK coast.

The new clause is very helpful indeed, and will, among other things, prevent the Minister from having to explain in the future why one thing means another thing and why something that does not mean something does mean something after all. The Minister will be able to stand up as an entirely reformed man and tell us all what the North Sea Transition Authority is really going to do, backed up by a firm body of legislation that will support his words.

I am making light of that, but as the Minister is aware, one always needs to look at out of the corner of one’s eye at who is going to say what about things that the Government are trying to do in the energy sphere. On a couple of occasions, companies and individuals have occasionally sought judicial review of an activity of Ofgem in this sphere.

One notable change that has taken place in the Bill, of which the Minister can be proud, is the amendment to the function and responsibilities of the Gas and Electricity Markets Authority and Ofgem on the net zero mandate. Bringing the North Sea Transition Authority into line with that provision would not be such a bad thing. It would allow us to be sure that the future actions of the North Sea Transition Authority were legally sound. That is a win-win all round. The Minister may suggest otherwise, but I hope that he does so in technical terms, and not in terms of the principle of the idea.

The Minister may formulate his response in words such as, “We will go away and have a good look at this and see if there are things we ought to do to cause this change to take place.” If the Minister said that, I would be happy not to press the new clause to a Division, providing he acknowledges in clear view of the Committee that it is a good thing that what the North Sea Transition Authority says and does are both firmly rooted in proper legal provision.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Member for tabling his new clause and for his attempts at my reformation. To be clear, the new clause would change the name of the Oil and Gas Authority and introduce an express obligation for it to ensure the transition to net zero in carrying out its functions.

In March 2022, the Oil and Gas Authority changed its trading name to the North Sea Transition Authority, or NSTA. The change, supported by the Government and the Opposition, reflects the expanded role the NSTA plays in our transition to a net zero economy.

Under the new clause, the name change would occur only in the Energy Act 2016. However, as the hon. Gentleman admitted, the Oil and Gas Authority is mentioned in a large amount of primary and secondary legislation, which would also require amendment. Any partial change of name could undermine or change the NSTA’s statutory functions, powers and objectives. However, the Government recognise the importance of the change and, as we speak, we are considering legislative options to amend the authority’s statutory name to the NSTA in all places where it occurs.

The new clause would also create an express obligation for the NSTA to ensure the transition to net zero in carrying out its functions. In December 2020, in accordance with section 9A of the Petroleum Act 1998, the NSTA produced a revised strategy, titled “The OGA Strategy”. Under the strategy’s central obligation, the NSTA must

“secure that the maximum value of economically recoverable petroleum is recovered from the strata beneath relevant UK waters; and, in doing so, take appropriate steps to assist the Secretary of State in meeting the UK’s Net Zero target.”

The strategy therefore already provides a basis for the NSTA’s ongoing work to help drive the energy transition.

The NSTA will continue to work with the Government, industry and other regulators to help accelerate the move to net zero while meeting the UK’s energy demand and security. Under the revised strategy, the NSTA has also introduced new expectations for the management of North sea oil and gas assets in the least polluting way, and for consideration of the full societal carbon cost when taking decisions.

The energy transition will be further supported by the Government’s landmark North sea transition deal. The deal, agreed in 2021, could support up to 40,000 high-quality direct and indirect supply chain jobs, including in Scotland and our industrial heartlands in the north-east and east of England; generate up to £14 billion to £16 billion of investment by 2030; and deliver new business and trade opportunities to support our transition to a low-carbon future. Through the deal, the NSTA continues to hold industry to account on emissions reduction targets by tracking and monitoring performance.

Following those explanations, I hope that the hon. Gentleman feels that he can withdraw his new clause.

Alan Whitehead (Labour, Southampton, Test)

Indeed there is a feeling welling up in me that we are not able to proceed with the new clause, given that the Minister said—and I agree—that such a change cannot be made easily with a quick stroke of a pen, and that a number of other things need to be considered alongside that. I am pleased that he indicated that, as we speak, there are serious people with towels round their heads working through the implications and looking at how we can best do it. That was the intention of the new clause, but perhaps I was rather optimistic in thinking that the name change could be written in easily. I appreciate that it cannot.

I also appreciate that the transition authority has the green light from Government to start undertaking things relating to transition. It is beginning to pursue that, and that is all good, but I say gently to the Minister that at some stage we will need to push this together. If the gentlemen with wet towels round their heads—

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

And ladies.

Alan Whitehead (Labour, Southampton, Test)

And ladies, indeed. If they can undertake their work in a reasonable fashion, I hope we will have a solution that is good for all of us, as far as the transition is concerned. I beg to ask leave to withdraw the motion.

New Clause 44 - Maximum economic recovery in the North Sea

Alan Whitehead (Labour, Southampton, Test)

I beg to move, That the clause be read a Second time.

New clause 44 concerns a similar legislative requirement—this time, not in the Energy Act 2016, but in the Infrastructure Act 2015. The 2015 Act—I know that hon. Members will have it at their bedsides at all times—contains what can only be described as a performative piece of legislation. Section 41 makes an extensive amendment to the Petroleum Act 1998, which worked perfectly well in supporting the development and activity of the North sea basin, to introduce a principal objective of

“maximising the economic recovery of UK petroleum”—

interestingly, that is not defined in the legislation—through

“development, construction, deployment and use of equipment,”

collaboration among various persons, and so on.

Section 41 also states that the Secretary of State

“must produce one or more strategies for enabling the principal objective to be met.”

There is a requirement on the Secretary of State,

“As soon as practicable after the end of each reporting period,”

to

“consider the extent to which, during that period, these persons have followed section 9C by acting in accordance with the current strategy or strategies,”

and to

“produce a report on the results of the consideration of that question.”

The section goes on to state what the report must contain, and to provide that the Secretary of State

“must publish, and lay before each House of Parliament, a copy of each report produced under this section.”

I have one initial question for the Minister: where are the reports? I have looked quite hard in the Library and various other places to find copies of the reports that the Secretary of State was supposed to produce in each reporting period, and to identify what considerations he or she made in terms of licence holders and operators under petroleum licences and so on. It is probably a case of me being a little remiss, but I cannot find those reports on the maximisation of the economic recovery of UK petroleum, several of which should have been produced by now, since they are supposed to be produced at the end of each two-year reporting period.

Far be it from me to suggest that the Secretary of State is in breach of his requirements under the 2015 Act. I am sure the Minister can put me right about whether the Secretary of State is in breach and either point me to the reports or, perhaps, suggest that they might be forthcoming. I hope the Minister has received inspiration that may enable him to address that point.

Even at the time, section 41 of the 2015 Act appeared to be rather strange in definitional terms. What would lead the Secretary of State to consider that the economic recovery of UK petroleum has been maximised? Is it the extraction of every last drop of petroleum and gas from the North sea—and, if so, over what timescale? It is unclear. Presumably, if economic circumstances change and make further North sea extraction economical, the Secretary of State and industry should start busily extracting everything that is economically extractable, even though in the future it may not be regarded as such.

Section 41 is a bit of a nonsense, and of course it is a much bigger nonsense now than it was, because the Government have solemnly agreed to our net zero targets and amended the Climate Change Act 2008. Indeed, the amendment of those targets was agreed after the 2015 Act was passed. We now have targets for our country’s future emissions, as well as legislation that essentially says that we are required to do the opposite of those targets through oil and gas extraction in the North sea.

As I am sure the Minister is aware, one important calculation in reaching net zero—indeed, the Government have introduced a net zero calculator—is whether at least some extraction of oil and gas from the North sea contradicts the net zero target. We have had a number of assessments, including from the Climate Change Committee and various other bodies, that maximising the economic extraction of oil and gas from the North sea would undoubtably bust our targets, and that we must be clear that at least some of it probably needs to be left there. If we sucked the North sea and other places dry of their oil and gas resources, depending on how we accounted for it, that would pretty much inevitably bust our ability to reach our targets. The objective to maximise economic recovery sits in stark contradiction to our overall emissions targets.

The new clause would amend the Petroleum Act by simply removing sections 9A to 9I, which relate to the maximum economic recovery of UK petroleum. Before hon. Members leap to their feet and say, “Well, that means that you’ve disabled the ability to proceed with production and various other things in the North sea,” let me say that that is absolutely not the case. The Petroleum Act facilitated production by laying down arrangements for it to be undertaken, introducing safety arrangements and so on. The removal of sections 9A to 9I would have no effect at all on the continuation of production, the management of that, and all the things that we have been talking about in terms of North sea activities. It would only take away what I have always thought to be a pretty performative piece of legislative change and restore the 1998 Act so that it does what it was originally intended to do.

I would be grateful if the Minister would indicate whether he thinks that is a good idea or a bad idea. Is he wedded to the continuation of the maximum economic recovery objective, despite our commitments under climate change legislation? If he is, is he happy to produce regular reports on why it is a good idea and what is happening in terms of trying to pump every last drop of oil and gas out of the North sea? It is important that he puts on the record whether he supports that or whether he considers that there are ways in which—as I said with respect to the restoration of the 1998 Act—we can create a clear distinction between the continuation of a healthy industry in the North sea based on the development of its remaining resources, and seeking to bleed that resource dry.

It is important as we move towards 2050 that the North sea has longevity and can continue to produce over a considerable period, albeit at a reduced level, to support the use of oil and gas in our economy, albeit at a much lower—but nevertheless appreciable—level. The idea is that the North sea, if it produces over a much longer period, can reach a point where it can satisfy most of that lower level of requirement in the UK. That can only happen if the North sea is still in production. If it has been bled dry by a doctrine of maximum economic recovery, it will not be there to underpin the UK economy in 2040 or 2050, when we will need an indigenous supply of oil and gas for those residual activities.

I am interested to hear from the Minister. I understand, of course, that our attempt just to excise sections 9A to 9I from the 1998 Act may cause similar issues as arose with new clause 43. If that is the case, I would be interested to hear what he has to say about it. However, this looks to be a rather simpler procedure than the one concerning the North Sea Transition Authority; we just excise what went into the Petroleum Act in 2015, and allow that Act to do its work of ensuring that we have a viable, profitable and economically useful North sea oil and gas sector in the very long term.

Olivia Blake (Labour, Sheffield, Hallam)

It has been an interesting discussion. “Maximum economic recovery” might sound like three benign words, but they could be a toxic combination. If we are not careful, they could be rephrased as “maximum economic crisis”. The climate catastrophe that will unfold if we do not cap global warming at 1.5°, and maintain that on average over 20 years, will be incredibly tough for any Government and for everyone internationally. Some reports suggest that if we wait 10 years, it will not take 1% of GDP to tackle the climate emergency; that will jump staggeringly. About 8% of GDP expenditure will have to go on resilience alone, and dealing with the consequences of the climate catastrophe. The cost of changing to a green energy system in that same decade would double as well. It is really important that we understand what that means.

Katherine Fletcher (Conservative, South Ribble)

I am grateful to the hon. Lady, and I will be brief. Will she share the definition of a stranded asset? Some oil and gas extraction areas have enormous potential for carbon capture and storage; it will be a matter of pushing stuff down a pipe, rather than pulling stuff out of it. Has any of that been taken into account in her slightly apocalyptic analysis of what we can do in the North sea and other areas?

Olivia Blake (Labour, Sheffield, Hallam)

It is apocalyptic because going above 1.5°C will be catastrophic.

Katherine Fletcher (Conservative, South Ribble)

We are talking about a transition.

Olivia Blake (Labour, Sheffield, Hallam)

I absolutely agree that it needs to be a transition; that is exactly my point. In the scenario we are discussing,

“Fossil fuel resources that cannot be burned and fossil fuel infrastructure (e.g. pipelines, power plants) that is no longer used may end up as a liability before the end of its anticipated economic lifetime.”

The assets are not being valued at their value over their lifetime; it is that simple. Say we give a value to an asset for its lifetime—25, 50, 100 years or whatever. Its lifetime will fall short of that period, and there will be catastrophic consequences for the financial and economic world; things will go into freefall. This is about economic risk, not just what we have, where. It is that fundamental. That understanding is missing from a lot of this debate, but financial services, pension funds and the insurance industry are all saying that they are very aware of the issue.

Katherine Fletcher (Conservative, South Ribble)

The hon. Lady has just read quite a detailed definition of a stranded asset, which included fossil fuel reserves remaining under the ocean, if I heard her correctly.

Olivia Blake (Labour, Sheffield, Hallam)

We would have to leave them there, but figures for them would be baked into the economic analysis and the business planning for those sites. That is why there is a financial risk; financial plans will come into play that will be unrealistic and unmeetable. That is why the assets will become stranded assets; it had been planned that they would produce a profit over a period, but we will not get to that time because of the situation.

Katherine Fletcher (Conservative, South Ribble)

If I understand the hon. Lady correctly, she is worrying about a figure of £1.5 billion in stranded assets, which includes fossil fuels that are left under the ground. That does not take into account the fact that the assets could be repurchased for an energy transition. Would she agree that there is perhaps more analysis to do?

Olivia Blake (Labour, Sheffield, Hallam)

To be clear, it is not £1.3 billion; it is £1.4 trillion, and that is why this is significant. I am not the only one worried about this—so are financial institutions around the globe. This massive financial risk could spin us into financial crisis if we are not careful. This is not just a climate catastrophe; it is an economic situation that we need to monitor, and we need to ensure that we do not have a cliff edge that lands us in a spiral that we cannot get out of. That is why a transition is so important, and why we need development of industry in the North sea, but cannot rely on our valuations of assets at the moment.

We need to take into consideration changes in the use of oil and gas, so that we can reach 1.5°C. We cannot deal with those two issues in isolation. As much as that would please everyone at the moment and allow them to make a quick buck, it is economically illiterate to think that we can continue as we are. That is a big problem. There are huge opportunities for Government, and I welcome a lot of the things in the Bill that will help to unlock them.

At household level, the move to renewables would significantly benefit people. Renewables are three times cheaper than oil and gas-related heating and electricity. A record number of households are suffering from energy insecurity. It is important that we look at the issue in the round. We cannot just say, “We need this” or “We need that,” and expect it to add up. If the financial sector gets scared, and much suggests that it is, it will look to invest in other places. If insurance companies say, “We are not going to insure these facilities because there is such an economic risk to us,” we are in trouble. If pension funds flee from the sector, we are in trouble. Our financial sector is incredibly important in this area, and those in it are saying loud and clear, “Governments are behind us, and we need them to catch up.” This tiny phrase, “Maximum economic recovery”, and what it asks for, could lead to the cliff edge that we have all been saying that we do not want. That is why this is so important.

The decisions we take now will shape the world. That is categorically true. A combined, whole view of this is so important. Not only will there be a cost to the public purse, but we will need to spend massive amount of GDP to deal with the crisis as it unfolds. People can say that this is catastrophising, but these are very real concerns. We already have over 20-odd million people displaced by significant environmental and climate events, and it could go up to hundreds of millions if we do not get to 1.5°C. That would mean hundreds of thousands of people displaced in the UK.

Water levels are rising, and will continue to rise beyond 2100, meaning that significant parts of the UK will be under water and people will be displaced. We are seeing real, measurable effects, and things are quickly getting worse. Just look at the oceans and the temperatures at the moment. There is an unprecedented rise in the temperature of UK waters, and it will have a devastating effect if it continues. It is so important that we see things in the round and do not just say, “This is how much we need. If we continue to burn as much as we can today, we will be all right as long as we stop by 2050.” That is not the outcome we want. We want a just transition that slowly helps us get to that point and stops us turning off the gas tap at the point of no return. We need a planned way forward that helps us not face economic ruin.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Members for Southampton, Test, and for Sheffield, Hallam, for their impassioned contributions to the debate. There has been talk of apocalypse and catastrophe, and there has been some idea that the country is not taking the issue seriously. The hon. Member for Sheffield, Hallam suggested that we were just setting a date and hoping for the best. Nothing could be further from the truth. We have decarbonised faster than any other G7 nation. Off the coast of this country are the first, second, third and fourth-largest offshore wind farms in the world. We created an entire Department to focus on the challenges of net zero, and we are passing this Bill, which will enable us to unlock so much of what we need to do to move this country forward even more quickly.

There was talk of economic illiteracy, but it is economic illiteracy not to support our outstanding British offshore oil and gas industry as it continues to produce the oil and gas that is required to keep the lights on in this country as we transition to a net zero future. It is the safest, most responsible offshore oil and gas sector in the world. Indeed, by 2035 we will have the first net zero offshore oil and gas sector, and the North sea will be the first basin in the world to be a net zero basin. I urge colleagues to stop talking down this Great British success story and start talking it up, as it contributes so much to our energy security and net zero ambitions.

Olivia Blake (Labour, Sheffield, Hallam)

I think the Minister completely missed the point of what I was saying. I am in no way doing down the industry. I am saying that there are financial risks linked to our climate risks, and they must be brought into this debate. That is fundamental, and future Governments will not thank us if we do not discuss and address that now.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I could not agree more that there are financial risks. That is probably why, just this morning, so many businesses expressed their worry at Labour’s Just Stop Oil plans, which were outlined a couple of weeks ago and which the former Labour leader of Aberdeen City Council described as even worse for an industry than the actions of Margaret Thatcher in the 1980s. That is from a member of the Labour party who resigned due to Labour’s policies on oil and gas.

Alan Whitehead (Labour, Southampton, Test)

I would be grateful if the Minister withdrew that comment about Labour’s “Just Stop Oil plans”. There are no Labour Just Stop Oil plans. Indeed, Labour has condemned the activities of Just Stop Oil protesters, because Labour does not wish just to stop oil. We specifically said this morning that we do not wish to do that, and that we see a substantial role for the North sea oil and gas industry out to 2050. We would support that future, so I hope the Minister will not resort to these easy gibes and will address the issue rather more seriously today. That would be helpful.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I should probably turn to the new clause, but I welcome the welcome and support that the hon. Gentleman—and now, it seems, the Labour party—will give to our offshore oil and gas industry. He should probably inform the members and founders of Just Stop Oil who have donated so much money to his party.

The objective of maximising economic recovery in the North sea forms the basis of the North Sea Transition Authority’s regulatory functions, and removing them could significantly undermine its ability to operate as intended. It would also lead to a significant lack of clarity about the authority’s regulatory role. Maximising the economic recovery of oil and gas need not be in conflict with the transition to net zero, and the North Sea Transition Authority is already doing a great deal of work to support an orderly transition that delivers on our climate commitments and supports workers.

In December 2020, in accordance with section 9A of the Petroleum Act 1998, the North Sea Transition Authority published a revised strategy, titled “The OGA Strategy”.

Alan Whitehead (Labour, Southampton, Test)

Ah!

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

It is rather ironic, given what we have just been discussing. Through the revised strategy’s central obligation, the North Sea Transition Authority must

“secure that the maximum value of economically recoverable petroleum is recovered from the strata beneath relevant UK waters; and, in doing so, take appropriate steps to assist the Secretary of State in meeting the net zero target”.

The strategy therefore already provides a basis for the North Sea Transition Authority’s ongoing work to help drive the energy transition.

Under the revised strategy, the North Sea Transition Authority has also introduced new expectations for how North sea oil and gas assets will be managed in the least polluting way, and it will consider the full societal carbon cost when taking decisions. The North Sea Transition Authority will continue to work with Government, industry and other regulators to help accelerate the move to net zero while meeting the UK’s energy demands and need for energy security.

Section 9D of the Petroleum Act 1998, on reports by the Secretary of State, was repealed by paragraph 10 of schedule 1 to the Energy Act 2016, which means the repeal happened before any reports needed to be produced.

I pay tribute to our offshore oil and gas industry, particularly Offshore Energies UK and its “Vision 2035” plan, which means the North sea will become the world’s first net-zero basin. With these explanations, I hope the hon. Gentleman feels able to withdraw his new clause.

Alan Whitehead (Labour, Southampton, Test)

I thank the Minister for clarifying the position on reports, because I must admit that I had not read that paragraph of the 2016 Act. It rather underscores my point that this is a performative piece of legislation. There were requirements to report, but the Government presumably realised that they were even sillier than the original imposition on the 1998 Act and decided, one year later, that reports would not be necessary. It could have been a bit embarrassing if the reports came out, so they decided that the reports were not necessary. I thank him for that clarification, but he is rather speaking to my point instead of his.

I am very disappointed that the Minister has sought to characterise our debate as one side of the Committee being against oil and gas and the other side being in favour; he thereby swerves the important point raised by my hon. Friend the Member for Sheffield, Hallam. On the overall position that maximum economic extraction could lead us—

(Afternoon)

Caroline Nokes (Conservative, Romsey and Southampton North)

We resume the debate on new clause 44. I think the shadow Minister was just winding up.

Kerry McCarthy (Labour, Bristol East)

You wish!

New Clause 44 - Maximum economic recovery in the North Sea

Alan Whitehead (Labour, Southampton, Test)

The shadow Minister was indeed winding up, and he was slightly wound up by the Minister’s reference to Labour’s allegedly “Just Stop Oil” policies. I admonished the Minister on that before we went for lunch, but let us be clear that Labour has no such “Just Stop Oil” policies.

The question we are talking about, which we will perhaps return to later in a slightly different guise, is that of what “maximum economic recovery” means in the context of a net zero world where we have to be very careful about what we extract from the earth. I will remind Members in a later debate that there is widespread consensus across the energy world—in other words, the world—that further oil and gas exploration and extraction, as my hon. Friend the Member for Sheffield, Hallam pointed out this morning, puts us in grave danger of developing a crisis not just of emissions but of economics, as the assets are likely to be found to be hideously overvalued when we get round to the business of reducing the amount of oil and gas we are using, hence affecting the amount that we leave under the ground.

I am sorry that the Minister, who is normally a very measured and reasonable chap, briefly took out his party’s playbook on oil and gas and renewables. I am sure he does not want to be cast alongside the real climate change sceptics and deniers, who use this debate for their own purposes, not for the purposes that he and I agree on—the future of our low-carbon society. I hope the Minister accepts that that is how the question of maximum economic extraction should be cast. I think that, in the end, he will agree that something like our new clause needs to be in place to underpin the wider and longer-term message. I am sorry he is not prepared to accept our new clause as it stands and hope that, as he did with the previous new clause, he will set some heads thinking in his Department about how best we can get out of this issue, which is still with us on the statute book, given that we need to move pretty smartly in the other direction.

Although I am a little disappointed in some of the Minister’s response, I accept that quite a lot more work probably needs to be done to get maximum economic recovery off the statute book. I hope that work will be done shortly, and on the basis of that hope I will not press the new clause to a vote. I beg to ask leave to withdraw the motion.

New Clause 45 - Electricity Storage Capacity

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

I beg to move, That the clause be read a Second time.

It is a pleasure to serve under your chairmanship again, Ms Nokes. The new clause is derived from my frustration at the lack of movement on and support for pumped-storage hydro. For years in this place I have been calling on the UK Government to engage in constructive dialogue with industry and consider a route-to-market revenue mechanism that would allow companies to release investment and fund the various pumped-storage hydro schemes that have been developed, but all I have had to date is the odd sympathetic comment from Ministers. There has been no progress whatsoever—hence this new clause.

A cap and floor mechanism has been mooted, which would mean that companies receive a minimum price for the electricity they generate, based on some form of assessment of capital costs and the borrowing they have undertaken, as well as the operational costs of the pumped-storage hydro schemes. Importantly for bill payers, the whole point of the cap is that the companies would receive a maximum total revenue. That would make it fair for bill payers and would help to reduce bills in the long run. New clause 45(4) would require the Government to consider any relevant pricing proposals along with the provisions to ensure that consumers pay a fair price for electricity. That would be a much more transparent way forward than, for example, the back-room negotiations over new nuclear projects.

The need for additional electricity storage could not be starker. National Grid Electricity System Operator confirmed that last year system-balancing costs reached £4.2 billion, which is an amount of money that would have been significantly reduced had better grid upgrades been undertaken in advance, and it would have been massively mitigated by a better storage strategy. As it is, we have the absurd position that wind farm operators are paid to turn off their turbines while gas generators are paid to turn on their gas turbines. That is the epitome of bad planning and needs resolved sooner or later.

Additional storage would reduce methane emissions by reducing reliance on gas. Additional storage means less imported gas, and critically it means greater grid resilience in terms of day-to-day operation in meeting peak demand or balancing the intermittency of renewables. Storage also helps in repowering if a black-start scenario is encountered, so it provides additional back-up resilience. If energy security is a key aim of the new Department, surely it would want to embrace the new clause and come forward with a proper electricity storage strategy, given the benefits I have just outlined.

On the revenue mechanism, cap and floor is effectively the system used for interconnectors, so it is a principle that the UK Government could instruct Ofgem to consider and develop.

On pumped-storage hydro itself, SSE has developed Coire Glas in the highlands, which has an estimated output of 1.5 GW. That scheme alone would double the pumped-storage hydro storage capacity that is available in Great Britain. Other projects could quickly get to construction if a revenue mechanism was put in place, including Red John in the highlands, Glenmuckloch in the south of Scotland, Balliemeanoch in Argyll and Bute, and Corrievarkie in Perth and Kinross. Along with Coire Glas and the Cruachan extension, those projects would add 5 GW of additional storage capacity. I refer the Minister to the Scottish Renewables report “The Economic Impact of Pumped Storage Hydro”, which was undertaken by BiGGAR Economics. It estimates the creation of 15,000 jobs by 2035 and the generation of around £6 billion in economic benefit for the UK economy.

It should be noted that a fair pricing mechanism within a wider storage strategy is not a subsidy. Given the lack of momentum in addressing the US Inflation Reduction Act, such a mechanism is one way to get major investment moving without any Government subsidy or tax reductions. Just today, industry highlighted its concerns with UK Government inaction in respect of IRA and that fact that the EU and Canada have now acted. Tessa Khan, who is founder and executive director of the climate organisation Uplift, said:

“I think that’s a shocking delay…Given that this is ultimately a competition and a race for investment, supply chains [and] jobs, [this] just means that we end up losing a significant amount of ground.”

Clare Jackson, who is chief executive of the industry body Hydrogen UK, warned:

“The U.K. has not responded and that sends a huge message to the industry, which I’d say is already on slightly shaky grounds in terms of its confidence in the government”.

She added:

“I think the longer this delay goes on without a response to IRA, the more that industries start to make plans elsewhere.”

Meanwhile, the Secretary of State’s response is, “Everybody else is playing catch-up; we do not need to worry if we are 10 years behind.” What industry is saying is that that is not the case. We need a response to IRA, and pumped-storage hydro would release that investment without having to go down some of the other routes.

Both hydrogen and ammonia are seen to be important solutions for the hard-to-decarbonise industry sector and transport. It would therefore be beneficial for the UK to consider those mediums with regard to electricity, which is why they are in included in subsection (2) of the new clause.

Returning to pumped-storage hydro, Coire Glas will cost approximately £1.5 billion. SSE has committed £100 million to advance investigation and design works. Coire Glas could generate enough power for 3 million homes for a 24-hour period. That is a level of resilience that should make the UK Government desperate to support and advance the project. In the wider context, we talk about levelling up, which is exactly what the various pumped-storage hydro schemes around Scotland achieve in rural areas. Again, that would be done without Treasury support.

Coire Glas was intended to have the final investment decision taken by SSE next year and to be built within seven years. Originally, it was hoped that it could be built by the end of the decade, but the UK Government have been slow to move, delaying the project. Pumped-storage hydro is much quicker to construct than nuclear, it provides flexibility that nuclear does not and it is much cheaper than nuclear, yet the Minister is tasked with delivering the nuclear obsession of Labour and the Tories instead of looking at a more balanced system to introduce storage.

New clause 45 would address that imbalance by compelling the Government to have a strategy to increase the provision of electricity storage facilities, to enhance the resilience and flexibility of electricity supply and, crucially, to ensure fair pricing for electricity users. While my frustration stems from the lack of support for pumped-storage hydro, I am looking for the Government to bring forward a balanced, technology-neutral assessment of how to deploy various forms of electricity storage. That is why subsection (2) includes battery storage, hydrogen, ammonia and compressed air, as well as hydroelectric.

On battery storage and hydrogen, there is good development work being undertaken by ScottishPower at Whitelee wind farm in my constituency, and new batteries are being installed at Kilmarnock South substation. There is good pioneering development work going on, but it is too ad hoc, which is why we need a wider strategy.

The reality is that the longer the UK Government dither, the higher the balancing costs for the system. A figure of £4.2 billion in one year is truly astonishing. That is money that should have been invested in grid upgrades and storage. The new clause would focus UK Government minds on the benefits of storage and set in train a strategy that provides value for money for bill payers as well as all-important resilience, by cutting down the need to import gas. It would prove once and for all the benefits of pumped-storage hydro to the wider grid. Unlike a previous Secretary of State unfortunately said, it is not just a Scottish technology; believe me, pumped-storage hydro benefits all bill payers connected to the grid.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

It is a pleasure to be back here this afternoon under your chairmanship, Ms Nokes, for sitting 17.

I thank the hon. Member for Kilmarnock and Loudoun for his new clause, but let me first knock one thing on the head. He talked about this Government’s nuclear “obsession”. It is not an obsession; it is investment in one of the most reliable, proven and secure sources of energy that is available right now, key to delivering our net zero goals and to delivering for a more energy-secure future.

It is not only us who say that, but the Governments of France, Sweden, Italy, Poland, Spain, the Czech Republic, Finland, Japan, Belgium and more. Indeed, only this year, Sweden changed its legislation to move from 100% renewable sources of energy to 100% clean sources so that it can invest in new nuclear, Italy has just voted to reopen its nuclear programme, and countries such as the Czech Republic and Poland are moving into new nuclear facilities as they wean themselves off coal-fired power stations. That is good for the planet and good for everybody’s energy security, given the situation in central Europe right now.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

rose—

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I will be delighted to give way if the hon. Gentleman is about to announce a damascene conversion of the Scottish National party to new nuclear power north of the border.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

Well, that is stunning optimism and naivety. If nuclear is so proven and stable a technology, why is it the only power-generation technology to have got more successful and never reduced in price, and why has there not been a successful EPR project delivered on time and on budget?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Gentleman for pointing out my optimism. I am a Scottish Conservative as well as an Aberdeen and Scotland football fan, so I have to be an optimist; otherwise, I would have to throw myself off Westminster bridge.

On the cost of nuclear, all I will say is that Finland, where a new nuclear power station has come on stream in the past year, has seen its energy bills reduce by a staggering 70%, and I would like to see the same for UK bill payers. That is the sort of thing that nuclear brings to the party: cheaper, more secure and cleaner energy for the United Kingdom.

Mark Jenkinson (Conservative, Workington)

Will my hon. Friend give way?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I was going to make some progress, but because my hon. Friend asked so politely, I am delighted to give way.

Mark Jenkinson (Conservative, Workington)

I just need to put on the record that the current nuclear fleet generated electricity at £45 per MWh. Once we start building more nuclear, I am sure we can get back to lower energy bills, as my hon. Friend points out.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Absolutely—the current nuclear fleet. By the way, the last time we unveiled a new nuclear reactor in this country was in 1995—Sizewell B—and it is about time we got on and delivered some more nuclear reactors so that we can reduce the cost per MWh and thereby reduce British bills in due course. However, I should be speaking to the new clause—

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

I thank the Minister for giving way once more. We know that Hinkley Point C, if it comes onstream, will be £92.50 per MWh. Let us not be caught up talking about £45 per MWh, because Hinkley has a very expensive site rate.

Caroline Nokes (Conservative, Romsey and Southampton North)

I gently remind the Minister that we are discussing electricity storage.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

On that gentle prodding, I will turn to the new clause. The hon. Member obviously does not share my optimism, but I am sure I can convert him in time into a glass half-full kind of guy—which I know he usually is—on nuclear.

The Government fully recognise the importance of energy storage. The hon. Member says we have done nothing, but actually, through this very Bill, we have sought to provide further regulatory clarity for the sector. Indeed, our measure to define electricity storage provides long-term clarity and certainty over its treatment in regulatory frameworks. That will facilitate storage deployment going forward.

However, I do not believe that a specific electricity storage strategy is necessary. That is because the Government’s approach is to remove barriers, facilitate change and spur innovation for all low-carbon flexibility technologies. Indeed, our 2021 smart systems and flexibility plan sets out actions to facilitate the deployment of these technologies, including storage at all scales.

As an example, we are accelerating the commercialisation of novel technologies through the net zero innovation portfolio. In April this year, we confirmed the final allocations of up to £69 million to accelerate the commercialisation of longer-duration energy storage technologies.

However, that is not the only action we have been taking. We have introduced a business rates exemption for eligible storage from 2023 to 2035, as well as a temporary zero VAT rate for battery storage when supplied as part of a qualifying material installation. In addition, we have published a call for evidence that considers the case for extending the relief to electrical battery storage when it is installed on its own.

The Government have also committed to enabling investment for large-scale, long-duration electricity storage by 2024. We outlined our next steps in the Government response to our call for evidence in August 2022. We reiterated our commitment in “Powering up Britain” earlier this year—I know that Britain is close to the heart of the hon. Member for Kilmarnock and Loudoun.

Together, these actions are facilitating the deployment of electricity storage capacity. That is evidenced by the threefold increase in planning applications for electricity storage facilities since 2020 and the securing of the highest battery capacity to date at the 2023 capacity market auctions. We also anticipate a doubling of the current grid-scale battery capacity to be operational by the end of 2023.

Although I welcome the hon. Member’s intention, as ever, I hope that he can recognise the Government’s sustained commitment to enabling the deployment of electricity storage and that he might be willing to think about withdrawing his new clause.

Alan Whitehead (Labour, Southampton, Test)

The Minister apparently stood accused of having a policy he did not actually have, which is a shocking thing, as I am sure we would all agree. I am sure the Minister would never want to be in a position of doing that sort of thing to someone else.

As far as storage is concerned, the new clause is very much on the right track. It is true that we had a long overdue reorganisation of licensing arrangements for storage earlier in the Bill. Those who are looking to develop storage programmes will now have a much better chance of developing what it is they want to develop without fear that they will be charged twice for the same activity or that they will be in a slough of uncertainty concerning exactly the status of their storage proposals.

All that is very good. What we do not have at the moment is not exactly what is in the new clause, but a clear plan and strategy for what storage is appropriate under what circumstances. We have at last realised that storage is potentially important, but it is important for a range of different circumstances and uses. Battery storage, for example, will be important for managing the circumstances in which we require a large amount of electricity at a particular point—say, for photovoltaic charging, where a PV charging site would otherwise have to deliver a much greater jolt of electricity into a particular set of charging circumstances. The provision of batteries is already beginning to happen; indeed, it is currently being discussed in “The Archers”, curiously. A battery storage facility can help to uprate charging, which is an immediate deficiency that can be rectified. Overall, battery storage is useful and important, over and above intra-day balancing, but it actually does not have a function much beyond that.

In intra-seasonal balancing, one can try to take the product of something offshore, where that is constrained, and it can be stored for quite a long time and then used in the system at other stages, where circumstances allow that to happen. That may be today, it may be over a longer period of time and it may be quite inter-seasonal. Technologies listed in the new clause include compressed-air energy storage systems—indeed, there is a company proposing to develop about 40 or so compressed-air storage systems around the country—whereby the product of various sources of electricity coming from offshore can be fed into the system as and when it is required.

The same can be done for hydrogen, which can be made from electricity coming in that is surplus to grid requirements at certain times. It can then be reconverted to electricity when the time is right, but there is considerable loss in the conversion of hydrogen into electricity and electricity into hydrogen, so that has certain disadvantages for running the system. Chemical arrangements, such as those involving ammonia, have a similar sort of function, but a slightly more complicated chemical trail.

Of course, we have hydroelectric storage, which the hon. Member for Kilmarnock and Loudoun mentioned. It essentially requires two lakes, with one lake feeding the water downhill. A turbine is driven at certain times, and then the water is pumped back up the hill again for use at other times. Hydroelectric can be used for reasonably long-duration storage, but it is perhaps rather obvious and does not need spelling out that it requires two lakes in reasonable proximity to each other for it to work really well. Unfortunately, in most parts of the country, there are not two lakes in close proximity up and down a hill—particularly in East Anglia, where we would be lucky to find a hill at all.

All those methods of storage have different functions and uses in the system, as we move towards a more balanced demand-side and supply-side energy economy, but they also have drawbacks in terms of their particular uses. Therefore, a strategy that gets that right, in terms of what we need, where and when—we know we will need a lot of storage—will be a useful addition to our general strategy on low-carbon power. However, I have to say that that strategy is not in the new clause, and although I strongly support what the hon. Member is driving at, I will not be able to fully support it. I hope he will join me in saying that we should perhaps lay this issue on the table, having made it clear to the Minister that we need some kind of storage strategy. When the Bill is over and done with and he has a bit more time available, he might put his mind to getting one under way.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

The shadow Minister says that the new clause does not deliver a strategy in itself, but it would obviously require the Government to deliver one. From the Minister’s response, it seems the Government still think they are doing enough, but frankly they are not. The reclassification of electricity storage will not in itself release this additional key investment in long-duration storage, such as pumped-storage hydro.

Although the Minister listed some Government policies and plans, the Government still do not have the overarching strategy required to look at different storage mechanisms. As the shadow Minister said, there are advantages and drawbacks to the various technologies, and we have to consider where they are best utilised and deployed. In doing that, we should look at how best to balance the grid overall.

I am used to being defeated and being a lone voice. I still do not want to withdraw the motion, but it will not take long to resolve the matter.

New Clause 46 - Carbon capture, usage and storage: spending commitment

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

I beg to move, That the clause be read a Second time.

Caroline Nokes (Conservative, Romsey and Southampton North)

With this it will be convenient to discuss new clause 47—Timeline for track 2 carbon capture, use and storage projects—

“Within one month of the day on which this Act is passed the Secretary of State must bring forward legislation that sets out the timeline for track 2 carbon capture, use and storage projects.”

This new clause seeks to require the UK Government to commit to a clear timeline for track 2 CCUS projects.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

I am wondering whether I should go straight to a vote and see whether the Minister agrees this time.

New clause 46 is very simple: it says to the Government, “Show me your working.” It was all too easy for the Chancellor and the Secretary of State to commit to spending £20 billion over 20 years on carbon capture and storage. That was a good headline, a welcome commitment, in theory, for industry, and a good indicator, but that commitment does not start until 2028. That means that there is no Budget line. There is therefore no binding commitment, other than a statement saying, “At some point in the future, we will spend £20 billion on carbon capture.”

The Tory Government continually talk about unfunded spending commitments by Labour, but that £20 billion in the future—£1 billion per year—is just the same: it is an unfunded spending commitment that has no corresponding Budget line or legislation behind it. The new clause therefore forces the Government to make good on their pledge and commitment. It is sometimes argued that we cannot bind a future Government and that future Governments can, in any case, change and overturn commitments, and that is the reality, but I would still rather see that commitment put in black and white now and then challenge future Governments to change it if they want to.

We have already seen that in Peterhead. Before the 2014 referendum, there was a £1 billion pot for carbon capture and storage; then, after the referendum, that £1 billion miraculously disappeared. Nine years on from that decision, it is truly shameful that the Acorn carbon capture cluster is still classed as a reserve or, as Tories from the north-east like to tell us, “the” reserve. However, the reality is that being “the” reserve does not unlock funding. We are supposed to be grateful that “the” reserve has received £40 million from the UK Government, but that £40 million is nowhere near enough, and the Scottish Government have provided £80 million—double that amount. Saying that Acorn is well placed for track 2 also means nothing until a clear decision is made, especially given the let-downs I have outlined for Peterhead and the failure to support Acorn to date.

The Minister earlier made comments about Scotland not meeting its climate change targets. Given how important carbon capture and storage is for Scotland, we will never meet our climate change targets, particularly the 2030 emission reduction target, without Acorn and carbon capture and storage going ahead and addressing the emissions from Peterhead power station and from the Grangemouth refinery and chemical plant.

If Acorn does not go ahead and is not operational by 2030, the UK Government will miss their own 2030 targets as well, so this is a critical cluster for both Scotland and the UK. Although Acorn is my biggest concern, other clusters are also looking for certainty, and new clause 47 is about compelling the Government to bring forward a definitive programme and expand the decision-making process in terms of when the track 2 clusters will be announced and supported.

I should also say that, given that carbon dioxide from the Peterhead facility and elsewhere in the UK would be transported and stored in the North sea basin, Acorn should be a strategically critical project for the UK as well, and would allow the reduction in emissions from other industries, outwith the main clusters themselves.

There is no doubt that a fag-end Government are approaching their dying days. What is needed is certainty attached to those projects, rather than us getting lost in the mire of a general election and the legislative paralysis that would follow. I really want to see certainty for carbon capture clusters.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Gentleman for his comments and for tabling new clause 46. For clarity, Storegga, which is the lead company in the Acorn project Scottish cluster is headquartered in Westhill, in my constituency. I would just like to place that on the record, as I obviously have a constituency interest in this particular debate.

The hon. Gentleman talked about the UK Government supporting the Acorn project Scottish cluster, but we have spent £40 million to date supporting it. That is £40 million more than the Scottish Government supported it with from their own pocket. For once, I would like to see the Scottish Government and the SNP not continually talking the project down, but talking it up. That is what the UK Government have been doing.

The hon. Gentleman said that Tories from the north-east of Scotland talk about Acorn being “the” reserve. Well, it was the reserve—there was no other reserve. It was the only one that was classed as a reserve, and it is in a very good place moving into track 2, which is where we are going now. We will get more detail on the timescales of that as we move through the summer.

The new clause seeks to emphasise the Government’s March Budget commitment to spending £20 billion on carbon capture, usage and storage over the next two decades by setting out that commitment in primary legislation. I appreciate the hon. Gentleman’s support for the funding and the benefits it will bring in establishing the UK’s CCUS industry and its important role in supporting our net zero ambitions.

None the less, the new clause is inappropriate, as embedding a specific funding amount in primary legislation could result in poor value for money. We want initial development of CCUS in the UK to be delivered with the maximum value for money for taxpayers and consumers within the funding envelope announced in the 2023 Budget. None the less, actual costs are subject to negotiation and inherently uncertain economic variables.

Spending reviews set out the Government’s plan for departmental expenditure over a specified period. For example, the 2021 spending review set departmental budgets for 2022-23 to 2024-25 for day-to-day resource and capital budgets. Estimates are the mechanism by which Parliament authorises this and other departmental spending year on year. These estimates are appropriately provided and voted on by Members of Parliament; it would therefore be inappropriate for Government to set out longer-term spending plans in legislation.

The hon. Member for Kilmarnock and Loudoun also tabled new clause 47. The new clause seeks to require the Secretary of State to commit to a clear timeline for track 2 CCUS projects in primary legislation. Track 2 relates to the Government’s cluster sequencing process, by which the Government are delivering on their commitment to establish CCUS clusters. Track 1 selected the first two clusters and a reserve cluster, and track 2 will select a further two clusters to be deployed by 2030.

I appreciate the hon. Member’s support for the cluster sequencing process and the Government’s ambition to scale up the deployment of CCUS across the UK, as supported by the carbon dioxide transport and storage provisions in the Bill. None the less, setting out the Government’s commitment for deployment by adhering to a specific timeline in primary legislation would place an unreasonable burden on the Government in designing and delivering the track 2 policy. Such an amendment would be inappropriate, as it would obstruct and restrict the Government’s ability to effectively design the track 2 model in line with our objectives of ensuring that track 2 enhances competition, optimises delivery and represents value for money. Time for proper consideration of the outcome of the recent track 2 expression of interest is needed, and it is crucial to ensure that we are able to meet these objectives.

I once again reassure the hon. Member that the Government remain committed to the deployment of four CCUS clusters, with an ambition to capture and store 20 million tonnes to 30 million tonnes of carbon dioxide per year across the economy by 2030. As I said a second ago, we will publish an update on the next steps for track 2 later in the summer. I politely and humbly ask that the hon. Member withdraw his amendments.

Alan Whitehead (Labour, Southampton, Test)

The timeline mentioned in new clause 47 is a timeline for track 2 carbon capture, usage and storage projects. There are several important things about what has happened with timelines and industrial clusters over the recent period. The first point is that industrial clusters are much more than just carbon capture, usage and storage; they are clusters that can actually bring together hydrogen, carbon capture, usage and storage and all sorts of other low-carbon arrangements. In particular, they can use the concentration of infrastructure in those areas to get these sorts of technologies underway.

It was just a crashing nonsense, frankly, that the Government decided they would have track 1, track 2 and possibly further tracks, and then, as far as track 1 was concerned, declare of the Acorn project, “Well, this particular cluster is a reserve”, as if it were highly commended in best of breed but did not quite win the prize. The Acorn project, the Scottish cluster, is absolutely essential to the development of CCUS in the UK, particularly in enabling the UK to develop facilities for a combination of barged and piped CCUS from parts of the country that do not have their own industrial cluster immediately handy, but may want to develop CCUS in a very proactive way.

If the Acorn project is supposed to be a reserve, what is that supposed to mean? Is it that if another cluster turns out not to want to proceed, that cluster slips in, or was it just a device to say, “Actually, we have a pretty feeble competition going on here, and we don’t want to completely disappoint the Scottish cluster, but we are going to have to disappoint them in practice because we are not going to advance them to track 1. Talking about tracks, we have our mind on a particular track of two clusters here, two clusters there, and then we get to 2030.” The answer is just to let the clusters go ahead together, because that is what we will need in the not-too-distant future for CCS, hydrogen and other developments.

I ought to mention the world’s forgotten cluster, which is the greater Southampton cluster. You and I, Ms Nokes, have expended considerable efforts to try to push that cluster forward, but it may well get dropped off in the end when other tracks come forward. If that were the case, I am sure that both you and I, Ms Nokes, would be pretty cross. I do not expect you to comment other than to look reproachfully at the Minister.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Terrifying!

Alan Whitehead (Labour, Southampton, Test)

I hope the Minister will take that away and think about it. It is just not appropriate to put these sorts of competitions in place for things that are vital for the future. The Government ought to have sufficient funds available to allow all the clusters to go ahead. In some clusters, there is already uncertainty about not just when they are going ahead, but whether and how they are going ahead.

I know that uncertainty is beginning to build in the Scottish cluster. The firms that are investing are asking, “Well, what’s going on? Are the Government in favour of it or not? Are they supporting it or not? Should we put in our investment early, late or not at all? If we do put it in, how can we be certain that it will come to fruition in the timescale that we thought it would when we first committed to invest in that area?” It has very real consequences for investment in CCS, hydrogen and various other things.

I do not particularly think these things should be placed on the face of the Bill, but they ought to be placed on the face of the Minister. He seriously ought to sort out what the spending commitment on carbon capture, usage and storage is going to look like so that, among other things, the companies that are investing can have greater certainty. He ought to ensure that the industrial-cluster arrangements properly support all the work that has gone into the industrial clusters, and get them going in a timely manner so that the investment that everybody is working so hard to get into those clusters, and the benefits of the clusters, can be realised in good order. As I said, the Minister would be relieved of a stern glare from you, Ms Nokes, and that is really worth putting in the bank.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

In the Minister’s opening remarks, he challenged me to talk up the Scottish cluster. He was perhaps not listening to me and just reverting to a stock phrase. The whole point is that I am asking for funding for the Acorn cluster to get the go-ahead, and arguing that it is a strategically important project for Great Britain. I want to see it operational by 2030. I am quite confident that I am talking it up, and I am talking up the need for it to get that support. Calling it the reserve is not talking it up. Being the reserve is just not good enough. As the shadow Minister outlined, being the reserve is still an uncertain case because we do not know what will happen going forward, and investors are getting a bit jittery

The point raised about Southampton was interesting. Again, that shows the issue with the kind of beauty parade-type system in place at the moment and the playing off of some against others. While I hope Southampton is successful—obviously, there are two strong advocates for it—it would be even more frustrating from our point of view if Southampton suddenly went in front of the reserve. Again, that is what is wrong with the process at the moment. We actually want to see all carbon capture clusters get as much support as they can and be allowed to go on and develop.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I absolutely understand. If the Government could wave a magic wand and say, “Every carbon capture and storage project in the country can get the go-ahead today”, that would of course be fantastic. But I would like to ask the shadow Minister and the SNP spokesperson where exactly they are getting the billions and billions of pounds necessary to fund all those projects at the same time.

The shadow Minister has said we should just have the money available to support all projects right now. Either we are talking about a hefty increase in people’s taxes to support that, or we are seeing it put on their energy bills. If we were to support every project today and not have the tracking process that allows us to spend incremental amounts over time, we would have to find billions upon billions of pounds at this moment when, as I am sure everyone recognises, the economy is under quite a bit of strain and people are paying a heck of a lot on their energy bills as it stands.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

I am quite concerned by that intervention because if we are talking about staggering payments, we actually need to stagger them over a very long time to smooth out the spend profile; if it is only a couple of years, we will still have substantial payments to make. Is the Minister actually saying that the Government cannot afford to support several of those at the same time? That is what I heard.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

The hon. Gentleman is playing a bit fast and loose with what I said—he obviously understands. We are supporting two projects right now. The contracting process is coming along. We will be supporting two projects moving forwards or four on-stream by 2030, but to have money available, as the shadow Minister argued, to support every project today is just inconceivable and unrealistic, and I know the hon. Gentleman knows that.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

As I pointed out, I am a glass half-full man, and I think the Government can find that money if they put their mind to it. That is what the broad shoulders of the UK are all about. We could be reinvesting all those oil and gas revenues to support this industry. That would have been a logical way forward.

Anyway, on new clause 46, I take the Minister’s point that legislation is not an appropriate way to deal with the issue, but I want to make the point that that £20 billion is still not a firm commitment. As I pointed out, the estimates process is not going to kick in for a number of years, so I would still like to see a better way for the Government to show that the £20 billion will be available for industry in future.

With the leave of the Committee, I will not push the new clauses to Divisions, having—belatedly—read the room today. I am starting to catch on that they might be defeated. I want to make the point behind new clause 47: I want to see that certainty for the category 2 clusters and greater support going forward, because we only want to see the Acorn CCS cluster delivered. I beg to ask leave to withdraw the motion.

New Clause 48 - Pre-conditions for hydrogen grid conversion trials

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

I beg to move, That the clause be read a Second time.

The aim of the new clause is to set out considerations that need to be taken in advance of hydrogen trials. I do support the concept of hydrogen trials. I support H100 Fife, which is a green hydrogen trial, and I hope to visit that in due course. I am keen, however, that we ensure that there is complete buy-in from participants in the hydrogen trials. Full buy-in can be achieved only by understanding what levels of disruption there will be in and out of the home and on the street. Wider buy-in can also only be achieved by consultation and assessment of the health and safety risks, especially in relation to hydrogen leakage. There needs to be full transparency. If the schemes are successful, which we hope they are, with full transparency in terms of reporting assessments, that will mean some of the hydrogen myths will be debunked as a consequence, and that will be beneficial.

It is clear that hydrogen development requires financial support. From comments that the Minister and the Secretary of State have made, it seems that the UK Government are U-turning on a hydrogen levy on our bills. Will the Minister confirm how the Government propose to support hydrogen, or will it be through general taxation?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Member for Kilmarnock and Loudoun for his new clause. As he said, it covers several aspects, which I fully agree are important for the safe and effective delivery of the hydrogen village trial and other trials.

In comments in the other place, the Minister for Energy Efficiency and Green Finance, my colleague the noble Lord Callanan, explained why a statutory consultation is not required. The reason is that we are already considering these matters in our decision making. As we have already discussed, we have now received two final proposals for the village trial from the gas transporters. These detailed plans have been developed following extensive consultation with local residents and local partners, including councils. We are assessing the proposals against our key requirements for the trial, including those mentioned in the new clause. These include local support, costs, environmental impact and consumer protections.

This thorough assessment process already includes expert input from statutory bodies, including the Health and Safety Executive and Ofgem. We will publish the result of the assessment later this year, including relevant evidence to explain our decision. That will be available for all right hon. and hon. Members to read. We will go ahead with the trial only if it can be conducted properly. Evidence of strong support from the local community, validated by an independent external source such as a local council, will be a critical factor in the final selection of the trial location.

The gas transporters have extensively consulted local residents to develop an attractive consumer offer that is tailored to the community, and there have been drop-in centres in Whitby and Redcar where anyone can directly ask questions about what the project means for them. They have also held a number of public events. The views of local people and communities are a vital part of delivering these trials. I recently met the hon. Member for Ellesmere Port and Neston (Justin Madders) and my hon. Friend the Member for Redcar (Jacob Young) to discuss the respective trial proposals in their constituencies. My officials also meet regularly with the local authorities, as do the gas transporters.

We agree that safety is fundamental. Before any community trial can go ahead, the Health and Safety Executive will need to be satisfied that it will be run safely. No trial will go ahead until we have that confirmation. I am sure that hon. Members support our commitments to introduce additional consumer protections, which we published in the response to our public consultation in 2022. Among other important protections, this means that consumers in the trial area will not be financially disadvantaged as a result of taking part in the trial and will pay no more for their heating than they would if they remained on natural gas. It also means that the gas transporters must make all efforts to minimise disruption as far as possible. These protections must be met by the gas transporters in order to receive any funding for the trial.

I hope I have reassured right hon. and hon. Members that the Department is already carefully considering all these factors before coming to a decision on the trial. Importantly, we will be closely examining the evidence and outcomes of the gas transporters’ engagement with local authorities and consumers. Undertaking a formal consultation, however, would duplicate the work that the Department and the gas transporters are already doing and could delay important milestones on the way to these trials and net zero. Given that detailed explanation, I hope the hon. Member for Kilmarnock and Loudoun might feel willing to withdraw the motion.

Alan Brown (Scottish National Party, Kilmarnock and Loudoun)

The Minister’s comments were—I hesitate to use the word “reassuring”, but he said all the right things. The proof of the pudding will be in how things work out going forward, but he definitely said the right things to give us reassurance, and I am happy to beg to ask leave to withdraw the motion.

New Clause 49 - Licences to search and bore for and get petroleum

Alan Whitehead (Labour, Southampton, Test)

I beg to move, That the clause be read a Second time.

The new clause essentially states that we should not provide new exploration licences to bore for and explore for new petroleum outside of our existing field. It would not stop production or the development of existing fields; rather, it focuses on the development of new fields, over and above what we already know we have in reserves and in production, and what we have following completion of the exploration and production development process in our fields.

Caroline Nokes (Conservative, Romsey and Southampton North)

It would be out of order to read it, Dr Whitehead, so please do not.

Alan Whitehead (Labour, Southampton, Test)

Indeed, Ms Nokes. I always take your advice, and that is the main thing that would swing it.

The abstract of the article states:

“Parties to the 2015 Paris Agreement pledged to limit global warming to well below 2 °C and to pursue efforts to limit the temperature increase to 1.5 °C relative to pre-industrial times. However, fossil fuels continue to dominate the global energy system and a sharp decline in their use must be realized to keep the temperature increase below 1.5 °C.”

The article uses a

“global energy systems model to assess the amount of fossil fuels that would need to be left in the ground, regionally and globally, to allow for a 50 per cent probability of limiting warming to 1.5 °C.”

The conclusion of the article is that, across the globe,

“nearly 60 per cent of oil and fossil methane gas, and 90 per cent of coal must remain unextracted to keep within a 1.5 °C carbon budget.”

In parallel with that article, the hyper-authoritative International Energy Agency, which has not in the past been at the forefront of radical action on climate change targets, produced “Net Zero by 2050: A Roadmap for the Global Energy Sector”. It concluded in its pathway to 2050:

“Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required. The unwavering policy focus on climate change in the net zero pathway results in a sharp decline in fossil fuel demand, meaning that the focus for oil and gas producers switches entirely to output—and emissions reductions—from the operation of existing assets.”

Caroline Nokes (Conservative, Romsey and Southampton North)

Dr Whitehead, may I check whether you have moved the new clause for debate?

Alan Whitehead (Labour, Southampton, Test)

If I did not move it, we could not have a debate, but as I indicated in my speech, I will not call a vote.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

For a minute there I thought I would be denied the opportunity to speak about the new clause, which I know would have disappointed hon. Members.

The hon. Member for Southampton Test took issue with how I described Labour’s policy on oil and gas. I can understand that, but I draw the Committee’s attention to comments made by Gilad Myerson, the head of Ithaca Energy, which were reported only two hours ago on the BBC News website. He said that Labour’s policies—including this one of not allowing licences to explore new fuels in the North sea, which the hon. Gentleman seeks to add to the Bill—would put off investment in the North sea. That would be

“starving the UK of energy, and it will become very dependent on energy from abroad.”

That means we would become more energy insecure.

I acknowledge the hon. Member for Southampton, Test’s concern with and consternation at how I described Labour’s policies earlier, but it is clear that the new clause and the wider Labour policy towards oil and gas are causing significant concern, putting off investment in our North sea basin, and could probably result in us becoming more reliant on imports from overseas. That would be a dangerous place to get to, specifically and critically, in the world we live in right now.

The “Powering Up Britain” plan set an ambitious pathway for the UK to move to clean, cheap power and lead the world in moving to net zero by 2050. The UK has decarbonised more than any other major economy since 1990, but oil and gas still supply about three quarters of the UK’s overall energy use today.

Our aim is to accelerate the reduction in oil and gas use. We recognise, however, that they remain essential to modern life, and will do so for many years to come, not just for energy, but to manufacture materials such as chemicals, plastics and steel. We want to avoid an increased reliance on foreign oil and gas imports as we move to net zero. Surely that is brought home by Putin’s illegal invasion of Ukraine, which reminded us all of the importance of a secure and resilient energy system. We are determined to power Britain from Britain.

We are a net importer of oil and gas and a rapidly declining producer, so new oil and gas development and licences will simply reduce the fall in the UK supply; they do not increase it above existing levels and will not increase emissions above legally binding carbon budgets. As someone who was born, brought up, schooled and went to university in, and now represents, the north-east of Scotland, I can tell the hon. Member for Southampton, Test that the North sea basin is in decline. Even with continued exploration and development, UK oil and gas production is expected to decline by 7% a year. Contrary to what the hon. Gentleman said, that decline is faster than the average global decline needed to align with the Intergovernmental Panel on Climate Change 1.5° pathways.

We already lead the world, therefore, and are already moving beyond what we need to do to reach our commitments regarding the climate goals that we have signed up to. By preventing the issuing of exploration and production licences, however, Labour’s policy—this new clause—would cause a faster decline in UK oil and gas production. That would lead to increased liquid natural gas imports, which are less secure and more carbon intensive, and provide no tax revenue or employment benefit to the United Kingdom.

The domestic oil and gas industry brings huge economic benefits to the UK. Domestic oil and gas production adds about £17 billion to the UK economy annually, and the sector supports about 120,000 British jobs. As the hon. Member for Southampton, Test mentioned exports, it should be noted briefly that right now the majority of our oil and gas exports go to countries in central and eastern Europe, replacing the Russian oil and gas that they relied on until the invasion of Ukraine.

We are also working to clean up existing production, whether it is by reducing flaring and venting of excess gas, or by converting existing offshore operations to use clean electricity. The North Sea Transition Authority has already worked alongside industry to halve the amount of gas flared since 2018.

The hon. Gentleman has said already that he is not minded to press the new clause to a vote, but given all that, I also ask him humbly to consider changing Labour’s position. The Labour position on oil and gas is leading to us being seen internationally as not having a sustainable and investable oil and gas industry, which will lead to this country being less energy secure—a bad place to be.

Alan Whitehead (Labour, Southampton, Test)

I do not think that I have too much to add to the discussion. I do not accept that this provision would lead to a collapse in interest or investment in our present North sea activities. Indeed, I have received assurances to that effect from a number of people who are concerned with making the most of production in the North sea over that period in precisely the way that I described. They see a strong, bright future for the North sea under those circumstances.

I think that there is an increasing consensus about new exploration. That means that we will not be alone in this move, and it will not necessarily be the case that everyone will say, “Right, we are desperate to explore for new oil, and we cannot explore in the UK, so we’ll go and explore somewhere else,” because it may well be that that “somewhere else” is also saying that they will not explore any more. That, indeed, is what the IEA is trying to achieve for the future—that the world oil industry concentrates on production and not on exploration—so we will be in good company. The arrangements that people will judge us by will be very much about what we look to do in terms of the longevity of the fields in terms of production and similar activities. Therefore, they will start to change their attitudes towards those fields in the longer term.

I would add that if they do not, and we continue to value supposed unexplored assets—undeveloped assets—as part of our book, which a number of companies tend do, then, between us, we will be very much in a carbon bubble situation, and at some stage those assets will collapse in an uncontrolled way. Calculations have been done on that, and that will be a much worse economic outcome for this country—among others—than the alternative of actually managing a good production level from a declining field, in conjunction with others that are doing the same thing in their particular areas.

For technical reasons, we will not press the new clause to a vote. As far as the principle is concerned, we are proud to be behind that principle and we think that many other people in the world will also be pleased to see that we are behind it. I beg to ask leave to withdraw the motion.

New Clause 56 - Onshore wind

Alan Whitehead (Labour, Southampton, Test)

I beg to move, That the clause be read a Second time.

New clause 56 relates to perhaps a rather more immediately clear position. If we are to move towards a sustainable low-carbon economy in this country—I am sure that the Minister is absolutely at one with me in wishing that that would come about—we must ensure that we have available to us all of the sources of renewable energy that we can get hold of to provide the amount of renewable generation necessary for clean energy provision for our country. There is a divergence between the Opposition and the Government on the dates by which this would be achieved. The Government would like to see our energy supply system effectively decarbonised by 2035; Labour thinks that should be 2030, and that the resources and arrangements should be put in place to allow that to happen.

One particular criticism that we have of the Government’s 2035 target is that, while they have some good ideas on how to make that happen in the abstract, they are very lacking in how to go about the process of quickly reaching a low-carbon energy economy in the not-too-distant future. Indeed, a Climate Change Committee report will come out very shortly that may reflect the Government’s lack of preparedness to do what they say they will about low carbon energy for the future.

One of the key elements that anyone who studies this reasonably closely would know is that wind is, and has to be, part of that process. We cannot get there without a substantial element of wind power coming into our generation capacity for the future. Not only can we not get there without a large amount of wind, we probably cannot get there without both onshore and offshore wind.

As I am sure the Minister will remind us, we have made very good progress with offshore wind. We are now getting towards 14 GW or 15 GW of offshore wind energy being developed—we almost have the 15:15:15 ratio of offshore deployment, onshore deployment, and solar deployment. But we should not underestimate what we will have to do in addition to that, to get us to where we need to be—to be able to say with hand on heart that a low-carbon energy supply economy will be in place by 2030 or 2035.

The Opposition think that, roughly speaking, to move from the current deployment to a position in which we can truly say we have sufficient ways to reach our low carbon energy targets, we need to quadruple our offshore wind provision; we need to treble our solar deployment; and we need to at least double our onshore wind deployment. When we say we want to do that, it sounds as though we will put quite a bit more effort into offshore than onshore, but we are talking about a running start for offshore wind, because of all the deployment that has gone on recently, and a standing start for onshore, because since 2015 it has effectively been banned in this country. I say banned: although the way it was undertaken was a little more weaselly—shall we say—than a straight ban, that has been the effect for onshore wind. When the Cameron coalition Government put the ban in place, I am afraid to say as a disgraceful capitulation to a number of their own Back Benchers at the time, it was severalfold in its operation.

It was firstly a ban by fiat—that is, the Government were going to take away any support for onshore wind, in terms of contracts for difference and its preceding processes. If a developer of offshore wind wanted to come forward, they would get no support from Government. They then put in other ways of deterring onshore wind. Every local authority had to produce a revision to their local plan, saying where onshore wind could or could not be sited in their area. That would have meant that pretty much every local authority would have to dismantle their local plan and start again, which most of them were not going to do. Finally, the Government introduced planning changes that effectively meant that if one person objected to an onshore wind planning proposal, it would not go ahead.

In practice, that meant that anybody trying to develop onshore wind, certainly in England—not necessarily Scotland—would simply say, “We will not put millions of pounds into going through these various processes only to know that there was a 99.9% chance at the end that our proposals would not go forward. We would simply have thrown that money down the well in pursuit of an application that would not go ahead.” That is why we have had a virtual standstill in the deployment of onshore wind; I think only three turbines were put up in England recently. It has been a devastating blow for all the elements of low-carbon energy advancing together to get us to our future target, with this one vital area lagging completely in its development.

That also means that the public have missed out on a substantial source of cheaper energy. Onshore wind is the cheapest form of energy now. Renewables overall are three times as cheap as gas at the moment. Among the array of low-carbon energy sources—we should include nuclear here—onshore wind is by far the cheapest of all. We can draw a very direct relationship between the absence of additional onshore wind over the eight years between 2015 and today and the real addition to energy prices that people have paid as a result of that act of energy and environmental vandalism.

Hon. Members may ask, “Well, hang on a minute, aren’t we dropping our ban on onshore wind? Haven’t the Government indicated that actually things will change as far as a ban is concerned?” The headlines are not terribly encouraging: “Rishi Sunak will keep ban on fracking in UK, No 10 confirms”, from a newspaper article on Wednesday 26 October 2022. Of course, that was in response to the brief period of magical realism that occurred with the previous Conservative Administration, when it looked like they would drop the ban; the Prime Minister was coming into No. 10 and saying in Parliament, “We will actually keep the ban.” Consultations have been going on about how the planning arrangements might be changed, but as campaigners have pointed out, promises to lift the ban, which appear to be in that consultation—

Katherine Fletcher (Conservative, South Ribble)

I am listening quite hard to the hon. Gentleman. I cannot work out whether he is talking about onshore wind or fracking. Can he clarify that? I thought we were talking about onshore wind. Forgive me if I have misunderstood.

Alan Whitehead (Labour, Southampton, Test)

The hon. Member is quite right; the article I just cited actually refers to fracking. The article I am about to cite concerns wind. She is quite right; that was inadvertent on my part, but it makes no difference to the—

Katherine Fletcher (Conservative, South Ribble)

I am listening to you, Alan, I promise.

Alan Whitehead (Labour, Southampton, Test)

Thank you. It makes no difference to the general point. I will come back to that article.

Caroline Nokes (Conservative, Romsey and Southampton North)

I remind the shadow Minister that it is very clear in the rules that any extracts from documents need to be short.

Alan Whitehead (Labour, Southampton, Test)

I will make sure, Ms Nokes, that any extracts I read will indeed be short.

I have here an article about, among other things, Hugh Fearnley-Whittingstall sending a letter to Secretaries of State voicing concerns that the Government will renege on promises to lift the onshore wind ban. The concern is that

“proposed changes to the National Planning Policy Framework”

will not actually do what they propose to do in lifting the ban. Campaigners are concerned that the status quo of—effectively—a ban will stay in place for the future in England.

Proposals are sort of under way supposedly to ease some of the planning restrictions in place on onshore wind farms, but there is great deal of controversy about whether even those proposals would actually change things. Meanwhile, the onshore wind farm industry does not move ahead in England at the expense of customer bills and the targets that we need to reach to achieve a low-carbon energy economy. Our amendment seeks to cut through a great deal of that.

Caroline Nokes (Conservative, Romsey and Southampton North)

I remind the hon. Member that it is a new clause, not an amendment.

Alan Whitehead (Labour, Southampton, Test)

Sorry, it is late in the afternoon. It is indeed a new clause. Our new clause tries to cut through a lot of that by stating:

“The Secretary of State must by regulations ensure that onshore wind installations are treated for the purpose of planning and development as local infrastructure and will be permitted or otherwise as if they were.”

That means no special pleading, one way or the other, for onshore wind; it is dealt with just as if it were another local infrastructure application. It of course has to go through the proper planning procedures, consideration of acceptability and all the rest of it, but there would be no special measures in place to discourage onshore wind, just as other local infrastructure developments are not discouraged or encouraged. The new clause would also introduce the simple provision that

“Regulations…may amend any primary legislation passed before the passage of this Act.”

That tidies things up.

This is a pretty simple new clause that puts onshore wind infrastructure on the same footing as any other local infrastructure. I do not think anybody wants to say that onshore wind should get a free pass under all circumstances in planning. There are clearly a number of circumstances where onshore wind will be inappropriate, and circumstances where it is quite right that those involved in local planning will need to make sure that onshore wind acts as a good neighbour, and does what it says it will. There are of course questions about where turbines might best be sited and so on. That can all be considered under our general planning arrangements. There should be no special weaselly devices to try to stop onshore wind developing. That view is the difference, I think, between ourselves and the Government at the moment.

Although the Government saying that they are consulting on lifting the ban, they do not appear to be serious about making arrangements in planning guidance, which still effectively trips up onshore wind as it seeks to develop. We do not want that to happen. We think there is a simple solution. We think onshore wind should be treated no better or worse than anything else being considered locally, and we think the legislation ought to be in place to make sure of that.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I thank the hon. Member for Southampton, Test for tabling the new clause. We are in agreement on most things, including the importance of onshore wind to meeting our net zero and carbon budget ambitions, but I am not convinced that the new clause is necessary.

Let me begin by recapping on the role of onshore wind. Onshore wind is an important part of our energy mix. We have around 15 GW of onshore wind installed in the UK—the biggest amount of any renewable technology. Last year, onshore wind generated around 10% of our electricity. Not only that, but the cost of onshore wind has fallen significantly over the last 10 years; it is now among the UK’s cheapest electricity generation technologies. If we had more low-cost renewables, such as onshore wind, in the system, it would limit household electricity bills and ensure Britain was less affected by fluctuations in volatile global gas prices. So far, so good.

That is why this Government acknowledge that we will need more. The recent publication “Powering up Britain” accelerates our plans through a series of ambitious pledges. Those pledges will put Great Britain at the leading edge of the global energy revolution by facilitating more wind power, offshore and onshore, and many other technologies.

The new clause asks that the Government change national planning policy on onshore wind to bring forward more onshore wind installations in England. However, I assure Committee members that His Majesty’s Government are already looking into that point. While the Government understand the strength of feeling about onshore wind turbines in England, we are serious about delivering cheaper, cleaner, more secure energy, so we are considering all options. That is why we are consulting on making changes to the national planning policy framework. The Government believe that decisions on onshore wind sites are best made by local representatives, who know their areas best and are democratically accountable to the local community.

Under our proposals, local authorities that wish to host onshore wind infrastructure can better respond to the views of their communities. The consultation has closed, and the Government are considering their response, which we will publish in due course. There should be no doubt of the value that the Government place on a strong renewable power sector, which includes onshore wind.

Alan Whitehead (Labour, Southampton, Test)

Does the Minister accept the point that I was trying to put across, which is that even the changes that the Government proposed in the consultation would not free up onshore wind? Even if there is a positive response to the consultation, the ambitions that the Government have set out will not really get us where we want to get to.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I understand the hon. Gentleman’s concern, which I know comes from the right place, but I stress that the changes that we propose are designed to give local authorities more flexibility to respond when their communities wish to host onshore wind infrastructure. Where there is support, of course they will be able to host it. As we have not yet published our final position, I will not prejudge the outcome of the consultation while we are still considering our response; he would not wish me to. As I said, we will publish the response in the near future.

There should be no doubt of the value that the Government place on a strong renewable power sector, which includes onshore wind. Over recent years, we have committed to delivering deep decarbonisation of the grid by implementing new legislation, stimulating growth through ambitious policy pledges, and bolstering growth through the provision of financial support. I very much doubt it, but I hope that the hon. Gentleman is reassured by the actions that we are taking, which will facilitate the growth of onshore wind while ensuring, importantly, that local communities continue to have a say on their area.

Andrew Western (Labour, Stretford and Urmston)

It is a pleasure to serve under your chairship, Ms Nokes. The Minister touched on the points on which I will contribute. My understanding of the recent consultation is that the only specific change proposed by the Government and consulted on is the power to replace existing onshore wind turbines at the end of their 25 years of life. As my hon. Friend the Member for Southampton, Test, suggested, that would do nothing to enhance levels of onshore wind—the cheapest form of energy, as has been said—and would not address the two fundamental problems in the planning system.

As a former local authority leader, I am incredibly familiar with challenges in, for instance, bringing forward and maintaining an up-to-date local plan. The Minister will be aware that fewer than half of local authorities have an up-to-date local plan. The ban effectively introduced by the Government in 2015 is incredibly difficult to deal with; only one in nine local authorities has felt able to bring forward a local plan that addresses the question of onshore wind. That may or may not be because of intransigence on their part, but having led a large local authority, I know the significant pressures on planning departments up and down the country.

Mark Jenkinson (Conservative, Workington)

I want to check the figure of nine local authorities. In Cumbria, seven local authorities came together to produce a supplementary planning document on wind. That is seven in one county alone.

Andrew Western (Labour, Stretford and Urmston)

I think the hon. Gentleman misheard me: I said one in nine local authorities. Just 11%—I flipped the presentation of the figures—of local authorities have been able to resource bringing forward such a local plan. That could be because they are unwilling to bring one forward, as their communities are not supportive; however, the reality is that there is significant pressure on local authority planning departments, which have been decimated by the austerity measures since 2010 because they are not a statutory service in the same way that adult or children’s services are. They are therefore seriously under-resourced. Local authorities are also unable to pay planners salaries that are available in the private sector. There is therefore a significant shortage of people who can be recruited to undertake the work. That is barrier No. 1.

Barrier No. 2 is the community consent clause that the Government introduced in 2015, which creates an absurd position. I have said in the House that the planning system should be scrapped because it inhibits development in a way that is totally unnecessary, or prohibits it in a way that is damaging to our economy, and in this case to our future renewable energy security. The idea that one person can object to national infrastructure of that importance is frankly ridiculous.

The Government and the Minister suggest that the consultation will deal with all the issues, but as I understand it, the consultation tabled only one question of direct relevance to this issue, which is about the replacement of existing turbines when they get to the end of their 25 years of life.

Katherine Fletcher (Conservative, South Ribble)

Prior to being encumbered by a payroll title, I believe I was the first signatory to the proposed onshore wind amendment, which the Government kindly allowed us to withdraw, having taken on the consultation. This is an issue that I feel quite passionate about and follow quite closely. I am not convinced that what the hon. Member believes to be the case is actually the case. Perhaps he can take some reassurance from that.

Andrew Western (Labour, Stretford and Urmston)

I am certainly happy to say that there was flexibility to make additional comments. I would need to check back before withdrawing any supposition I made on the specifics of the question. I do not recall seeing, for instance, a question on whether we should remove the community consent clause, or on the 2015 changes that mean that local plans must consider onshore wind if they are to appear in localities. If I am wrong, I will happily correct the record at our next sitting. By contrast, I know there was a question in the consultation on the power to replace existing onshore wind turbines.

In any case, we have ended up with nowhere near the amount of action, rigour and drive needed to achieve a significant increase in onshore wind. As usual in this country, at the heart of that are significant problems with our planning system. We see how that cuts across multiple Departments and holds back our aspirations for onshore wind. I gently say to the Minister that if we are reliant on changes to planning policy to ensure that we can deliver what we require while still holding on to the idea of community consent, I fear that we will never upscale to the amount of onshore wind production that we need in this country.

Alan Whitehead (Labour, Southampton, Test)

My hon. Friend the Member for Stretford and Urmston was absolutely right to draw attention to the distinction between repowering and new onshore wind sites. There has certainly been an issue to do with whether sites that have been in operation for quite a long time, and are coming to the end of their life, would have to go through the whole process, as though they were a brand new scheme, before the site could be repowered. There has been quite a lot of controversy not only on that, but on whether they would have to repower to the same level as previously, or could increase their power. If existing sites can produce a lot more power from their wind, that is a substantial prize. It is almost inevitable that they will be able to, because when sites first came into operation, turbines were generally small and underpowered; sites could increase the power that they produce by between a third and half, simply by using modern turbines. There may be some progress on that point, but that is it, really.

The Minister is effectively saying, “Don’t worry. Take us on trust that, even though it appears we are not actually going to do anything much, we are secretly doing a bit more.” I think we ought to take the opportunity to get this clear now, and the new clause would get it clear. Obviously, we can have consultations on what exactly happens afterwards, but the principle that onshore wind is just a local infrastructure project that stands or falls by the way it goes forward does seem the right way to go. I am therefore not particularly reassured by the Minister’s suggestions and would like to press new clause 56 to a vote.

New Clause 58 - Hydraulic onshore fracturing

Alan Whitehead (Labour, Southampton, Test)

I beg to move, That the clause be read a Second time.

New clause 58 is an attempt to get some clarity on the position relating to fracking, in the same way that we tried to get clarity about the position on onshore wind. As hon. Members will know—here I reprise my reference to the newspaper article that I inadvertently introduced in the previous debate; I thank the hon. Member for South Ribble for drawing my attention to that—we supposedly have a ban on fracking in the UK.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Will the hon. Gentleman give way?

Alan Whitehead (Labour, Southampton, Test)

Yes.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

I apologise to the hon. Gentleman, but as he is speaking he is brandishing a large picture of the Conservative party chairman, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands). It is quite distracting, so I wanted to draw his attention to it.

Alan Whitehead (Labour, Southampton, Test)

If I drew a moustache like mine on the right hon. Member in question, it would not look too bad. The reason why I have a big picture of the then Energy Minister in March 2022 is because, in response to an urgent question, he actually produced an answer that set out what he thought was the Government position on shale gas at that time. He said:

“We have always been clear that the development of shale gas in the UK must be safe and cause minimal disruption and damage to those living and working in nearby sites. This is not a new position. Shale gas and new approaches could be part of our future energy mix, but we need to be led by the science and have the support of local communities. That was in our general manifesto…The pause on fracking implemented in November 2019 on the basis of the difficulty in predicting and managing seismic activity caused by fracking remains in place, and we will continue to be led by the science in our approach.”—[Official Report, 15 March 2022; Vol. 710, c. 761.]

The important point to recognise is that the then Minister, the right hon. Member for Chelsea and Fulham, referred to a “pause on fracking”. He indicated at that time, as did the Prime Minister, that it was a pause and not the end of fracking. The legislation on fracking goes back to one of hon. Members’ favourite Acts, the Infrastructure Act 2015, which set out a large number of conditions that have to be met in order for fracking to take place. After those conditions have been met, the legislation is clear that a hydraulic fracking consent may be issued, subject to any conditions that the Secretary of State thinks are appropriate. The door is still open for fracking to take place. Fracking is paused for further and better particulars to be received about seismicity and various other things, but in principle it has not been put out of contention.

With new clause 58 we want to be clear that fracking has no place in our energy pantheon. To undertake to try to get hydrocarbons out of the soil requires extreme measures. We have to drill a well, blast the rocks to bits and then see what comes out. What comes out is a small amount of hydrocarbons that deplete rapidly, so then we have to blast a hole again, and do so repeatedly, until that source runs out. That seems to me like the stupidest way to extract gas from the ground, if one gives any mind to our low-carbon future.

There was an initial great wave of enthusiasm for fracking, but the plays that we have in the UK are unlike the Texas play, which I have seen. The play in Texas is a basin, and one has to be pretty dumb not to hit something when going down into it. The plays in the UK are very fractured, are particularly geographically located, have uncertain outputs and, contrary to what was hyped up at the time, would not produce a bonanza of gas.

Onshore fracking in the UK would create a very difficult environmental landscape. I have been to see the American shale activity in progress, and when coming into Austin airport I could see the devastation of the landscape from the fracking pads, the ponds and all the other things associated with it. It is clear how inappropriate it would be in a densely populated island such as the UK, with areas of northern Bowland clays in the north-west and Wealden clays in the south, to have that sort of activity concentrated on those areas and communities, with all the environmental consequences that would entail.

There is now a widespread consensus in this country that fracking is not for the UK, yet the Government do not put it out of contention. I accept that there has been a fairly long-lasting moratorium on the development of fracking, and the companies that were undertaking fracking have now effectively gone away, but I do not think they have given up the ghost on future fracking. They certainly will not for as long as the Government hold out the prospect that things could change for fracking in future.

Let us have a bit of courage in the Committee this afternoon, put fracking out of its misery—indeed, it would be a misery for a lot of us if it was not put out of its misery—and say that we do not want any fracking licences or well consents situated in the English onshore area. Let us just say no to fracking and put that on the face of the Bill. The Government would have another problem off their plate and would not have to think at great length about levels of seismicity and well capping and all the rest of it, because we would not have any fracking. That seems to me the best thing that could happen to the UK’s energy economy. It is simple, straightforward and means the end of fracking. I commend the new clause to the Committee.

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

New clause 58 would impose conditions prohibiting hydraulic fracturing on onshore well consents in England after 1 January 2024. In October last year, the Government confirmed that they had adopted a presumption against issuing any further hydraulic fracturing consents. Therefore, further legislation is unnecessary as there is already an effective moratorium on fracking. This position will be maintained unless compelling new evidence is provided that addresses concerns about the prediction and management of induced seismicity. That is in line with commitments made in the 2019 Conservative manifesto, which set out that we will not support fracking unless the evidence shows categorically that it can be done safely. I urge the hon. Member to withdraw his new clause.

Alan Whitehead (Labour, Southampton, Test)

The Minister used the word “moratorium”, but moratorium does not mean ban. That is the simple difference between us. I hear what he said and accept that as far as he is concerned we are in a position where we are most unlikely to have fracking in future but, as I pointed out, that does not necessarily bind a future Government, whereas having something in legislation now would do so. On that basis, we will indicate our position by pressing the new clause to a vote.