Clause 5
Energy Bill
1:15 pm
Brian Binley (Northampton South, Conservative)
May I say what a pleasure it is to serve under your direction, Mr. Amess?
Although I welcomed the support of the hon. Member for Glasgow, North-West on an earlier occasion, I took some exception to the fact that he was happy that companies could afford a bob or two with regard to the provisions on licensing. The truth of the matter is that the Committee would be doing a disservice if it did not take into account the need to preserve good cash flow in companies. That means that they do not want to tuck away resources when it is unnecessary to do so. Companies need to use all their resources to the best possible advantage. Those two considerations alone—and there are many others—overtake the comment about this being just a bob or two. I hope the hon. Gentleman will forgive me, but I felt that I needed to get that on record.
I understand the need for a financial security test with regard to the financial standing of certain licensees when that test suggests that their ability to meet their obligation may be at risk. However, we need to temper that with an understanding that this should not be an automatic presumption to ensure that companies do not make unnecessary financial provision over a sizeable period of time. That would tie up financial resources that I believe are necessary to develop what is a relatively new industry. I know the Minister would not want that to happen.
We know that industry is going to have to pay a sizeable investment price if we are to crack the question of global climate warming. We know that we have to make several changes with regard to infrastructure, how we run our businesses and transportation—the list is endless. I do not want to tie up money unnecessarily in a Government holding somewhere that detracts from the ability to move on to make the investment necessary to deal with climate warming. I hope that the Minister will agree that it should not be an automatic presumption that, during CO2 storage operations, there should be financial provision whereby money is lodged and held right across the piece as a matter of ongoing procedure.
I ask that there is not such an automatic presumption. It would place a massively onerous obligation on the balance sheets of companies and take up significant capital. More importantly, it would be immensely damaging to medium and smaller companies that might wish to be involved. We need to get all the resources we can involved in this procedure. The presumption would place a proportionally greater disadvantage on those people than on the very big operators. I am sure the Minister would want to be aware of that concern. I hope that he will give me the reassurances that I want.
There is considerable concern about the amounts that we might be talking about to allay the risk, from the Government’s perspective. I know from people to whom I have talked that if they do not know what that financial implication might be, it might stop plans proceeding. We need to know the amounts and the timings, so perhaps the Minister can give us some thoughts in that regard.
Finally, there is a question of when it might become necessary to make some financial stand-by to alleviate the risk from the Minister’s perspective, which I understand. I have spoken about the considerable financial cost involved and that will be particularly grave if it has to be made at the time of the permit application. There is some leeway to allow that provision to be made either before construction starts, or before the storage operation itself starts. I ask the Minister for guidance because this impacts on a number of organisations that might wish to be a part of the infrastructure that the Minister is trying to create, but could be put off by that lack of knowledge.