Energy Bill [HL] — Second Reading

Part of the debate – in the House of Lords at 12:22 pm on 22nd July 2015.

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Photo of Baroness Liddell of Coatdyke Baroness Liddell of Coatdyke Labour 12:22 pm, 22nd July 2015

My Lords, I refer to my entry in the Register of Lords’ Interests in that I am a non-executive director of the Offshore Renewable Energy Catapult, a government-funded initiative to develop technology in the offshore renewable energy field. It is funded by BIS through Innovate UK. In a little while I shall refer again to the Offshore Renewable Energy Catapult but for a very specific reason.

There is much in the Bill that I support. I learned a very long time ago that, whenever Sir Ian Wood says something about the oil and gas industry, one should listen very closely. He has considerable expertise and focuses very rapidly on the key issues. Indeed, the review that he conducted for the coalition Government merits detailed consideration during the passage of this Bill because it refers to a lot of the detail that we need to take into account to ensure that we sustain an industry in which, quite frankly, we are world leaders.

My noble friend Lord Grantchester talked about the infrastructure, which we need to maintain. One area that I am concerned about—and here I agree with my noble friend—is the supply chain, but particularly the supply chain as it applies to people. Our skills in oil and gas technology lead the world. I speak with a degree of passion on this issue because people have tended to forget that some years ago the oil price dropped to $10 a barrel, at a time when every major company was doing its sums on $28 a barrel. We looked hard in the eye at the prospect of decommissioning. We saw carriers in Scottish sea lochs, nose to tail for mile after mile. The thing that scared the living daylights out of me was the dramatic reduction in applications to study offshore oil and gas technology at Robert Gordon Institute in Aberdeen, now Robert Gordon University—another world-leading institute. This is not a partisan point but the then Labour Government put considerable effort and impact into the oil majors. For the first time ever, we got the oil majors around the table to consider what this challenge would mean for the industry. We managed to protect that supply chain and regenerate interest in offshore technologies. In fact, some years later, I was to see the benefits of it when I was walking through the central business district in Perth, Western Australia, and was greeted with that elegant Scottish phrase, “Gaun yersel, Mrs Liddell!”. Many of the oil and gas specialists became international specialists and would fly into and out of, for example, the Timor Sea area because they have expertise in deep water.

I am labouring that point to the Minister because there is something I want him to look at. I have a great interest in offshore renewable energy, as I have mentioned. Many of the skills from our technologies in oil and gas in the North Sea are transferable. As the noble Lord, Lord Howell, pointed out, we have a dramatically declining oil price. We should consider the Iranian situation, and I am beginning to hear talk about the oil price coming down to $40 a barrel. This is emergency territory. We must not lose our expertise. I am not going to bounce the Minister into an answer today, and perhaps he would be kind enough to write to me, or perhaps we could meet. However, I ask him to look at a proposal called OASIS, which has come from the Offshore Renewable Energy Catapult. It aim is to take people from the oil and gas offshore industry and second them into the catapult of other organisations to allow the transfer of research and development capability in the North Sea, particularly as regards deep water. I am asking him to look at that early because the Oil and Gas Authority could consider it, and that needs to be done more quickly than it will take us to complete the proceedings on this Bill. At an early stage, there is a need to triage the significant R&D projects that could be imperilled as a consequence of the low oil price and to map where that kind of innovation and R&D capability could move across to offshore renewable technologies.

The second opportunity would be in development projects such as floating offshore wind capability—something I have plucked from mid-air. It might even put a smile on the face of the noble Viscount, Lord Ridley, who is known to be extremely sceptical about these issues. However, we have rigs, capabilities and semi-submersibles out in the North Sea. Can we look at the possibility of using them for offshore renewable technologies? My third point is that we have an opportunity to become global leaders in these technologies. Co-ordination and co-operation with the Oil and Gas Authority can bring this to fruition.

I make one slight diversion into the issue of onshore and solar energy. I am not going to go into whether onshore wind or small-scale solar are wonderful. What I will say is that anything that mucks about with the regime for these industries affects investor confidence, and that is what we really need to work on at the moment.

I am never sure whether we can refer to strangers in this Chamber, but I saw the Energy Minister standing at the Bar of the House. She was looking remarkably well. In her position, I would be losing sleep. There are real concerns about security of supply. A major outage in the United Kingdom could put us in an extremely perilous position, and that is a strategic issue. The last thing we need at the moment is uncertainty around energy investment.

I was tempted by the argument of the noble Lord, Lord Howell, when he referred to Hinkley Point. Like him, I am a great advocate of nuclear energy. But, frankly, the proposal for a new generation of nuclear is at the dog’s breakfast stage. Something needs to be done and it needs to be done quickly because we need the energy and we need the capabilities. There is no way of shirking that. If we do not do something about our own nuclear industry, we will be importing French nuclear electricity. We really need to get our act together on this. If it takes cross-party discussions then for goodness’ sake let us do it. It is too important to leave to a whim and the bargaining power of EDF—a monopoly is not a good situation to be in.

My main plea is that I hope we will have an opportunity to address the strategic issues in the course of this legislation. I am slightly worried by the conclusions of the Constitution Committee, but that is undoubtedly something we will look at in more detail as the Bill goes through its processes in September. I pay tribute to Sir Ian Wood’s work. What he has put together is essential for our energy security. I make a sincere plea to the Minister and his department. I work on the figure of 375,000 jobs in the offshore oil and gas industry. We lead the world. Let us build on that leadership in the world and recognise that oil and gas capability can be transferred to offshore renewable capability. Let us seize the moment.