Date: 2023-04-18
Caroline Lucas: I rise to speak in support of new clause 10, which stands in my name and addresses the decarbonisation allowance first announced by the Chancellor in the autumn statement and now legislated for in this Bill. Although in principle the decarbonisation allowance may sound innocuous or even useful, it is in fact an outrageous subsidy that sees the taxpayer paying companies to decarbonise their activities. Under this scheme, a company spending PS100 on so-called "upstream decarbonisation"--in other words, reducing emissions from the process of extracting oil and gas that then goes on to be burned--is eligible for PS109 in relief. We should remember that these companies have themselves admitted that they have "more cash than we know what to do with", and earlier this year they recorded obscene, record profits, with BP's profits more than doubling to PS23 billion and Shell reporting annual profits of more than PS32 billion, all while millions of UK households face unbearable choices between basic needs and desperately struggling to make ends meet. In his Budget statement, the Chancellor recognised what he called the enormous pressures on family finances, with some people remaining in real distress, yet even with the decision to freeze the energy price guarantee at PS2,500 as of this month, bills will still rise by almost 20% and 7.5 million households will be in fuel poverty. It is utterly perverse that in this context the Government have decided to hand the climate criminals--those who have profited from the spoils of war--yet another subsidy. These are, at bottom, political choices. The Chancellor may say, in response to my amendments, that we should be endorsing the decarbonisation allowance to cut emissions from the oil and gas sector, but that ignores the economic reality of the situation and the reality of our planetary boundaries, with upstream decarbonisation doing nothing to mitigate the end result of the fossil fuels choking our precious planet. I am afraid that, in the face of worsening climate impacts, paying companies to power oil rigs with wind turbines or to monitor emissions to detect leaks simply does not cut it. Even more alarming is the provision in the Bill for the decarbonisation allowance to support carbon  capture. That UK taxpayers would pay oil and gas companies to capture their emissions in order to allow them to continue production--essentially, to continue business as usual--is a shocking violation of the "polluter pays" principle. If the Government were seriously looking at reducing production emissions, they would, for example, be looking to bring forward an outright ban on flaring by the end of 2025 at the very latest--I remind Members that flaring has been banned in Norway since 1971--or they would be strengthening the lamentable targets in the North sea transition deal from a 50% reduction in emissions by 2030 to at least a 68% reduction, as proposed by the Committee on Climate Change in its balanced pathway, both of which have been called for by the Environmental Audit Committee, of which I am a member. Yet in their response to the EAC's report on "Accelerating the Transition from Fossil Fuels and Securing Energy Supplies", the Government roundly rejected both recommendations, maintaining that the existing targets in the North sea transition deal are "sufficiently ambitious". This is not a Government who are serious about cutting emissions from production, and they are certainly not serious about the climate crisis. New clause 10 recognises that the decarbonisation allowance is just one of the handouts to fossil fuel companies that have been introduced under the energy profits levy. It would require the Government to produce an assessment of the cost of the decarbonisation allowance to the Treasury and, crucially, its impact on overall investment in oil and gas production. It would also reveal how much money would be raised through the energy profits levy without the enormous gas giveaways in the form of both the investment allowance and the decarbonisation allowance, as well as assessing their impact on delivering our crucial climate targets. At this point, I would like to say a few words in support of new clause 6, which would require the Chancellor to conduct a review of the decarbonisation allowance and its impact on public finances, although it is important to note that the amendment is somewhat narrower in not requiring an assessment of climate impacts as well. The Government are very transparent about the fact that the investment allowance is directly aimed at encouraging companies to pump more money into oil and gas extraction in the UK by allowing them to claim PS91.40 for every PS100 invested. That policy runs directly counter to the advice of the world's leading scientists on what is needed to keep 1.5deg within reach, with the UN Secretary-General calling for a cessation of "all licensing or funding of new oil and gas" at the recent launch of the Intergovernmental Panel on Climate Change's "AR6 Synthesis Report", and the report itself being clear that emissions from existing fossil fuel infrastructure already exceed the remaining carbon budget for 1.5deg. The bottom line is that our climate simply cannot take any new oil and gas licences. As I have said time and again, new licences would also fail to deliver energy security. With the oil and gas sold on global markets to the highest bidder, they will not bring down bills in the UK and will inevitably come at a huge cost to the taxpayer. Indeed, if we take just one example, Rosebank, the UK's largest undeveloped oilfield, the costs become  clear. Rosebank is enormous. At triple the size of the neighbouring Cambo oilfield, it would produce more emissions than 28 low-income countries combined or, to put it another way, it would produce the carbon dioxide equivalent of running 58 coal-fired power stations for a year. If developed, its owners will be gifted a PS3.75 billion taxpayer-funded subsidy from the Government to the estimated PS4.1 billion project. The Norwegian state-owned company Equinor, which made a staggering PS62 billion last year, contributed just PS350 million while pocketing enormous profits. The total cost of the investment allowance to the taxpayer has been calculated at a staggering PS11 billion. That is enough to give an inflation-matching pay rise  to every NHS worker and teacher for a year. On decarbonisation, Equinor has said that it will invest PS80 million to ready its production vessel for electrification, meaning that the firm would get PS87 million in saved taxes. That is just ludicrous. The full cost of powering Rosebank with clean electricity would run into the hundreds of millions, but thanks to the decarbonisation allowance, that now risks being borne by UK taxpayers. If the Chancellor cannot see the problem, he is simply not paying attention. I ask him and the Treasury Front Bench team, in all seriousness, to scrap not just the decarbonisation allowance but the investment allowance and, instead, to bring forward a windfall tax worthy of its name. Failing that, I ask that they please accept my amendments, which would at the very least give us transparency over the costs of these policies both to the taxpayer and, crucially, to our planet.