Energy Bill [HL] — Second Reading

Part of the debate – in the House of Lords at 1:21 pm on 22nd July 2015.

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Photo of Baroness Byford Baroness Byford Conservative 1:21 pm, 22nd July 2015

My Lords, I welcome the Bill, which will support the United Kingdom’s oil and gas industry by establishing the OGA. It will be of enormous help for us to be able to use our North Sea resources better, and this authority has powers to do just that. The Bill falls into two parts: the majority has to do with setting up a new authority, and the last two clauses, Clauses 59 and 60, concern the removal of renewable subsidies for onshore wind developments.

I think we all agree that we often have tough decisions to make, and this is one of them. From my very amateur point of view, surely a purpose of public money is to help and pump-prime new technologies and new industries. Once they become established and the cost of running them reduces, surely it is right that we look again at which technologies our money goes towards promoting. While I have listened carefully to what noble Lords have said, I will return to those matters later. The most important thing is that we have a mix of technologies and energy resources. I look forward to Committee, when I am sure we will discuss this in further detail. I have no direct tie with any oil or energy-producing companies, but I do have shares in oil companies, which are declared in the register.

If I may, I will turn to the second part of the Bill first. Clauses 59 and 60 make provision for the early closure of the subsidy arrangements, under the renewables obligation, for new onshore wind developments in Great Britain. They also make changes to the planning system, which we have debated, transferring those decisions for future onshore wind developments to local authorities in England and Wales. While I follow what the noble Lord, Lord O’Neill, said, I think it is right that local people should make local decisions on that matter. It may well be that some areas decide very clearly, “We as an area will benefit by it, therefore we would like to have it”. Unfortunately, in past discussions people have said, “We are against all of it”, but in certain circumstances some may well find it an attractive option.

I have received letters that express concerns about this part of the Bill, which no doubt we will debate fully in Committee. Those concerns include issues that other noble Lords have referred to, such as sunk costs, future investment, confidence and future investment in technology. However, I am much more open-minded about looking at a diverse energy mix for our future production, and that would include nuclear energy, which my noble friend Lord Ridley mentioned.

The proposed grace periods seem reasonable, but I seek clarification from the Minister in respect of the grid connections offer. There can be lengthy delays in gaining planning consent, but both local authorities and central government operate under considerable scrutiny and are open to public challenge. I am not so sure of the position with grid connections; I understand that the picture may not be so clear, and would be grateful for further explanation of the extended period to 2018 to cover grid or aviation delay.

I return to the earlier part of the Bill, which relates to the Oil and Gas Authority and its core functions. Clause 4 clearly sets out matters to which it must have regard, but in the broader context I hope the Minister will expand on its exact role in ensuring secure energy supply. Will it have functions in international negotiations on gas or oil imports, for example? Will it set standards for the physical protection of pipelines, drilling platforms, wellheads and so on, or will it be merely a statutory consultee? As noble Lords have heard, the industry employs some 375,000 people; it is a big industry and we rely on its sustainable future in securing cleaner, increasingly home-grown energy. I agree with the noble Baroness, Lady Liddell, on the importance of skills and expertise that we must not lose.

The Bill’s provisions on national security and public interest, taken in the context of modern communication, raise a number of queries. What mechanism and which medium will be used by the Secretary of State in laying copies of directions given by the department, and what sort of material would be deemed not in the public interest? Where directions are not published, how will the Secretary of State ensure that they remain out of the public domain? I know that these are very specific questions that we will discuss in Committee, but I thought I would flag them up in advance.

I agree that innovation should be encouraged. No doubt in Committee we will consider the definition of “to encourage innovation”. It can range in meaning from standing on the sidelines shouting to providing financial assistance, use of facilities, secondment of personnel and so on. When it comes to dealing with collaboration, will the OGA have a duty to ensure even-handedness in its dealings with all companies and persons that have an actual or potential ability to contribute to oil and gas activities? Will it, perhaps, have a role in ensuring that government departments do not fail to recognise the contribution of small and medium-sized enterprises, which are hugely important to future development?

Finally, I come to the system of regulation. I would welcome an indication of the intended meaning of the phrase “stable and predictable”. Which bodies or persons will be the judge of whether a system is predictable and the circumstances in which that will be relevant?

This is not a big Bill but it is a very important one, which I support. It fulfils the Conservative manifesto’s support for the UK’s oil and gas industry in the longer term and will secure cleaner, increasingly home-grown energy. In a world that is very topsy-turvy, how important that is. Sir Ian Wood’s independent review aimed to maximise the recovery of the UK’s indigenous oil and gas supplies and to help maintain security of supply. The Government have taken on board his recommendations with this Bill, which could result in the delivery of 3 billion to 4 billion barrels of oil equivalent—more than would otherwise be recovered over the next 20 years, worth some £200 billion pounds. The Bill deserves our support.