Energy Bill [HL] — House of Lords, 2015-10-19
Topic: Energy
Bryony Worthington (Labour, Centre-left): My Lords, the next group of amendments have been tabled under the heading of decommissioning and the risks associated with the, "decommissioning of oil or gas infrastructure", and safeguards. In speaking to Amendment 19, I shall speak also to Amendment 77. As we have said previously, we are grateful to the Minister for listening to some of the concerns raised during the passage of this Bill. Under the previous group, we talked about carbon capture and storage and use. The other aspect of this Bill which we felt needed more attention was decommissioning. This afternoon, the noble Lord, Lord Howell, who is not in his place, kicked off by reminding us that the world is changing very fast. The very low prices, which look likely to be sustained, have had a big impact on the North Sea and the pipeline of investment into and operations within it. We are seeing a somewhat contracted timetable for decommissioning as a result of that change in the global oil price It is fair to say that the resource discovered in the North Sea in the 1970s has been an absolute mainstay of our economy and our public finance. It has paid a huge sum—some £300 billion, I think—in tax income since then. Obviously, it has helped to generate many jobs, to bring about world-class engineering and has been a considerable boon to the UK. However, all good things seem to come to an end and, particularly when it comes to fossil fuel reserves, that end can come rather more swiftly than one might expect. That is partly because of oil and gas prices and the commodity market, but also because we are now entering a world in which we know that we can no longer burn and combust oil and gas without paying heed to the fact that that is contributing to global warming Obviously, the recent oil price reductions have not yet been directly related to policy interventions on climate change, but they may be a foretaste of things to come as more nations move to a low carbon economy. I am thinking specifically of the US, China and Europe—the three big economic blocs where it is clear that the commitment to tackling climate change is real and the desire to move to cleaner energy systems is starting to be witnessed We are now seeing decommissioning occurring. In tabling these amendments, our concern is that this is happening on a more condensed timetable than we might have expected or perhaps wished. On the one hand, we have a desire to develop a new industry in the form of carbon capture, storage and utilisation, which obviously requires the fitting of equipment to capture the gases that are transported and potentially stored in areas of the North Sea, or onshore in saline aquafers and other locations The move to deploy these projects has been very slow. It was way back in 2005, under a Labour Government, when we first said that we were going to pay for such projects. There have been several iterations of that policy since and here we are, 10 years later, still awaiting the first sods to be turned and projects to go ahead. We know that we now have a funding mechanism—at least, we hope we do—in the form of the contract for difference. We expect those projects to be successful and to see at least two, or possibly three, demonstration projects in the UK, which will then result in relatively large volumes of CO2 needing to be stored. But that is all taking rather a long time In the mean time, we see the major players in the North Sea wishing to withdraw. Therefore, the decommissioning of their infrastructure may happen sooner than we are able to reuse it through CCS, which poses quite a significant challenge. Our purpose in tabling these amendments is to explore the extent to which the OGA will have and should have powers to manage decommissioning, so that, if a large oil and gas operator wants to move out of the North Sea, it cannot simply begin the decommissioning process without giving due notice to government and considering the reuse of that infrastructure For avoidance of doubt, I am sure the Minister will explain that government Amendments 73, 74, 84 and 85 are relevant to this discussion and seek to address the misalignment between potential decommissioning and the need for that infrastructure, which is welcome. Our amendments are perhaps a little more explicit. Certainly, Amendment 19 would give the Secretary of State a specific power to direct, "the OGA to postpone or prohibit decommissioning".