Energy Bill

Part of the debate – in the House of Lords at 9:00 pm on 22nd October 2008.

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Photo of Lord Hunt of Kings Heath Lord Hunt of Kings Heath Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Environment, Food and Rural Affairs, Minister of State (Sustainable Development, Climate Change Adaptation and Air Quality), Department for Energy and Climate Change, Minister of State (Department of Energy and Climate Change), Minister of State (Department for Environment, Food and Rural Affairs) (Sustainable Development, Climate Change Adaptation and Air Quality) (also in the Department for Energy and Climate Change), Deputy Leader of the House of Lords 9:00 pm, 22nd October 2008

My Lords, that was a remarkable tour de force by the noble Lord. Not only did he eloquently put his own case, he also anticipated my response. I shall, none the less, respond in detail. The noble Lord is absolutely right: there is no disagreement in principle, but there clearly continue to be drafting problems. I agree that we need to avoid ambiguity if we possibly can.

I do not need to go into the detail of the matter; the noble Lord has already done that. We have been in regular discussions on the clause with the companies that might be affected. It was clear at an earlier stage that there could be some doubt about whether a company would be seen as being entitled to derive a benefit from an installation. The Government have sought to make clear that entitlement to a benefit must arise from the exploitation or exploration of mineral resources or storage or recovery of gas from the installation in question. I understand, and the noble Lord, Lord Jenkin, has confirmed, that there is still doubt and uncertainty within the industry, which he has sought to resolve by adding further clarity to the provision. Our discussions with the industry this week indicate that its concern is that licensees should only be liable for decommissioning if they have benefited from the exploration and/or the oil or gas production of the installation in question.

An issue that has been raised is that many licence areas are very large and may include a number of separate field developments. A small field may often be developed by linking it to the installation on another field; this is known as a "tie back" to a host installation. The Government take the view that it would be unrealistic to expect the companies responsible for the tie back to bear the liability for the host installation and vice versa.

I know that the noble Lord has taken the response of my honourable friend Mr Wicks, when he was Minister for Energy, and used it as a basis for his amendment. Alas, sometimes Ministers' letters do not easily translate into legislation. My advisers have concerns that the amendment is not specific enough. We are therefore going to have another go between now and Third Reading at seeking the clarity that all agree must be achieved. I take the noble Lord's point about wishing to see that amendment as soon as possible, and will certainly do everything that I can to ensure that he does so.

Clearly, the balance is that we want clarity while having to protect the taxpayer. However, I agree with the noble Lord that we must avoid ambiguity. I hope that, on that basis, he will be satisfied that we are dealing with this matter in a sensible way.