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Session 2007 - 08
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General Committee Debates
Energy Bill

Energy Bill

The Committee consisted of the following Members:

Chairmen: Mr. David Amess, † Mrs. Joan Humble
Baron, Mr. John (Billericay) (Con)
Binley, Mr. Brian (Northampton, South) (Con)
Hendry, Charles (Wealden) (Con)
Horwood, Martin (Cheltenham) (LD)
Iddon, Dr. Brian (Bolton, South-East) (Lab)
Ladyman, Dr. Stephen (South Thanet) (Lab)
Main, Anne (St. Albans) (Con)
Owen, Albert (Ynys Môn) (Lab)
Palmer, Dr. Nick (Broxtowe) (Lab)
Reed, Mr. Jamie (Copeland) (Lab)
Robertson, John (Glasgow, North-West) (Lab)
Seabeck, Alison (Plymouth, Devonport) (Lab)
Swire, Mr. Hugo (East Devon) (Con)
Tipping, Paddy (Sherwood) (Lab)
Webb, Steve (Northavon) (LD)
Whitehead, Dr. Alan (Southampton, Test) (Lab)
Wicks, Malcolm (Minister for Energy)
Chris Shaw, Committee Clerk
† attended the Committee

Public Bill Committee

Thursday 21 February 2008


[Mrs. Joan Humble in the Chair]

Energy Bill

9 am
The Chairman: Before we begin, I have a few preliminary announcements. Members may, if they wish, remove their jackets. Please would all Members who have mobile phones or pagers ensure they are switched off or turned to silent mode. There is both a money resolution and a Ways and Means resolution in connection with the Bill. Copies are available in the room.
We are now back to the more familiar territory of clause-by-clause scrutiny. There are no amendments to clause 1, so we go straight to stand part debate.

Clause 1

Exploitation of areas outside the territorial sea for gas importation and storage
Question proposed, That the clause stand part of the Bill.
The Minister for Energy (Malcolm Wicks): Good morning. It is good to get into the Committee stage proper, although the evidence sessions are an interesting innovation. It is a great pleasure to serve under your Chairmanship, Mrs. Humble.
Let me introduce clause 1. Under part V of the United Nations convention on the law of the sea, coastal states can claim certain rights within an area known as the exclusive economic zone, which extends from the edge of the 12 nautical mile limit to the territorial sea for a further distance of 188 nautical miles. Article 56(1) of the UN convention provides that these rights include, among other things, the exploration and exploitation of the sea bed and its subsoil and the waters above it. It also provides jurisdiction for the establishment and use of installations and structures in the area. The UK has previously claimed a number of rights under article 56(1), such as rights to the offshore generation of electricity, under the Energy Act 2004, but has not yet claimed rights in relation to unloading and storing gas.
The clause makes provision to claim those rights by providing for the ownership to be vested in the Crown within areas designated as gas importation storage zones by means of an Order in Council. Subsection 2 sets out the activities to which those rights relate—namely, the unloading of gas to installations or pipelines, storing gas whether or not it will be recovered and exploring for suitable sites for unloading or storing gas.
I draw hon. Members’ attention to the fact that the clause covers both the storage of combustible gases, such as methane and butane, and the storage of non-combustible gases, such as carbon dioxide. Without this provision, it would not be possible to implement the licensing regimes set out in chapters 2 and 3 of this part of the Bill.
Mr. Hugo Swire (East Devon) (Con): Will the Minister confirm that nothing in the Bill will affect existing foreshore-right owners, where the foreshore is not vested in the Crown?
Malcolm Wicks: If other hon. Members are going to speak to the clause, I may have the opportunity to give the hon. Gentleman a definitive answer to that question in due course. I hope that that is acceptable to him. My instinct is that the Bill will not do so; but if my instinct is wrong, perhaps I will return to the question.
Charles Hendry (Wealden) (Con): I join the Minister in welcoming you, Mrs. Humble, as our Chairman, and I thank the Minister for the way that we went through the evidence sessions. It is the first time I have gone through an evidence-taking session. They have been extremely useful; they have given industry and others a very good opportunity to tell us what they think, and that has helped us work more effectively together as a Committee.
My understanding of these Committees was that the Government would normally stuff them with placemen, who would simply vote with everything that the Government wanted, but what is very encouraging is that it is actually a Committee full of Members who understand energy, who care passionately about different aspects of it, and that is very good in terms of the issues that we need to debate.
Another thing that came out of those sessions was a sense that many of the things that we have concerns about are not included in the Bill, such as smart meters, feed-in tariffs and the role of Ofgem. I hope that the Minister will give us an opportunity—particularly in the light of today’s news on British Gas—to have wider debates about fuel poverty and social tariffs, because they are clearly matters of great concern to people.
As you said, Mrs. Humble, there are no amendments to these early clauses, but we wish to have some questions answered before we give the go-ahead to individual clauses. We certainly agree with the Minister that more needs to be done to make those areas outside territorial waters available for gas importation and storage.
Will the Minister tell us his assessment of the long-term role of the Rough gas field storage facility? Does he believe that it has a long life? Does he expect it to be there for many years into the future, or is part of his concern—and part of the reason for introducing these provisions—a feeling that the Rough gas field will have reached the end of its useful life before long? Will the Minister elaborate on how the process of identifying such zones will work? Who will be responsible for that and what process of consultation must be undertaken before approval as an appropriate zone for such work? Can he also provide some detail on the types of installation that such exercises will involve, especially the above-water structure?
Dr. Brian Iddon (Bolton, South-East) (Lab): Does the Minister feel that enough is known about the storage of carbon dioxide below the sea in the cavities from which oil has been excavated? Will he support future research by the organisations that are already involved, to ensure that such carbon dioxide storage will be safe indefinitely?
Steve Webb (Northavon) (LD): Good morning, Mrs. Humble. It is a pleasure to serve under your chairmanship.
What is very striking, having observed the procedures on the Bill so far, is that most of the attention has been focused on what is not in the Bill, rather than what is. Obviously, we will look at the detail. However, the balance of amendments tabled so far reflects the fact that we in the Committee are not particularly exercised with most of the Bill, but we do feel that it is a missed opportunity. I hope that there will be time during our proceedings to discuss those issues, some of which were raised by the hon. Member for Wealden.
Will the Minister give us slightly more context to the clause and this part of the Bill? I appreciate that clause 1 is very limited, but rather than repeat that on each clause in this part of the Bill, may I refer the Minister to the Department’s press notice that relates to those clauses? Is says that
“The current offshore regime for gas infrastructure projects is complex and a barrier to investment.”
Will the Minister expand on the measures in this part of the Bill, of which this is obviously the first clause? What exactly is deemed complex about the present regime by those who have to deal with it? How will the changes in these clauses address those complexities?
Often, we find that complexity is there for a reason. It may be possible to achieve the same objective more simply, but often something has been specified in detail to address a particular problem. How sure is the Minister that, by simplifying the regulation, we will not allow things to happen that were perhaps not meant to be allowed when the original regulations were framed?
If the Minister can give us more of an overview of this part of the Bill—this is probably the right time to do so—it may speed up our consideration of subsequent clauses. Certainly, on the substance of the clause, I do not think that we have any substantive objection.
Malcolm Wicks: I understand the concern expressed by the hon. Member for Northavon about the need to set out the context. I hope that the Committee will be patient with me, as I was going to set that out when I introduced clause 2, which introduces a family of clauses that hang together.
May I just confirm to the hon. Member for East Devon that my instincts were right? The Bill will not affect the territory that he was discussing; indeed, the clause will only affect rights beyond the 12 miles of the territorial sea.
The Conservative spokesman asked me about Rough storage facility. I am advised that that is a commercial matter. However, to be helpful, our understanding is that Rough storage probably has quite a long life ahead of it. The more strategic point however is that there is sense in which the UK continental shelf, especially in the North sea, has been a natural store of gas and, indeed, oil for the UK.
Mr. Brian Binley (Northampton, South) (Con) rose—
Malcolm Wicks: Let me just finish my paragraph—although it could be a long paragraph, I do not know, depending on what the hon. Gentleman is going to ask, and I cannot guess. As the UKCS starts to decline and given the fierce international competition for energy resources, many of us feel—I think that this will be shared in the Committee—that we need more gas storage facilities, and the market is indeed coming forward with proposals. I think I am at one with the Conservative spokesman on the importance of that—indeed, much of the Bill will enable it to be facilitated by an appropriate regulatory regime.
As for the types of installation, above water, they will be injection platforms and involve the recovery of stored gas—plus, of course, liquefied natural gas platforms. Indeed, LNG is becoming an increasingly important part of the global energy market. I think that I have dealt with the issue of Rough.
My hon. Friend the Member for Bolton, South-East talked about the behaviour of CO2. This is a critical question. So far, globally, we have relatively little experience of CO2 storage, although the sheet is not blank; there is some experience. The example that I draw comfort from—it is perhaps the one that has been best researched—is the Sleipner gas field in Norwegian waters, where CO2 has been successfully injected for something like 10 years. It is carefully monitored, scientifically studied and the advice is that, geologically, the CO2 is behaving as one would expect, which in layman’s terms means that it is still down there in a very safe state.
I certainly agree with my hon. Friend that, as we enter a century in which we expect to see the development of the safe storage of CO2—frankly, we need to see it—the scientific issues are absolutely vital. That is one reason why we have established a joint working relationship with our Norwegian friends. I discussed this with the Norwegian Minister only a couple of weeks ago, and we have an expert working group looking at all aspects of CO2. My hon. Friend raises a very important point.
One or two of the other issues raised may be ones we can tackle in the course of the morning. As our debates proceed, there are a number of pegs on which we can have some informed discussion on some of these critical questions. That might include the Liberal spokesman’s question about why is the current regime so complex—we might be able to tease out answers to that this morning.
Mr. Binley: Has the Minister finished his paragraph?
Malcolm Wicks: I am sorry. I meant no discourtesy to the hon. Gentleman, but I got so excited by the geological storage of CO2 that I was guilty of a discourtesy. Let me give way.
Mr. Binley: The Minister is very kind; I am most grateful. I recognise that the whole question of the regulator and the relationship with licensing will be dealt with later. However, I am concerned at this early stage about storage in the North sea and its relationship to the pre-combustion extraction of carbon and to the ability to obtain more from the North sea.
I recognise that I am slightly out of order, but one reason why I raise the issue now is that the Minister will know that tests have been set in respect of post-combustion. One proposal involved linking pre-combustion with the extraction of oil. Will he at least comment on that and give me some hope that other ways might be found to help people who want to exploit that facility?
9.15 am
Malcolm Wicks: The hon. Gentleman said that I was very kind to give way. If I may say so, he was far too patient. He should have been waving his Order Paper to remind me that I had promised to give way.
The issue raised goes slightly outside the clause, but let me say that what we are doing this morning is, with the permission of the Committee, putting in place a fit-for-purpose regulatory framework. That brings us back to the Liberal Democrat question. The short answer is that we believe that, at the moment our legislative cover, is not fit for purpose. We are engaged in new territory relating to LNG and carbon capture and storage—later clauses deal with CCS—and we need a fit-for-purpose regulatory framework. That is the essence of the early part of the Bill.
I think that I can reassure the hon. Member for Northampton, South that although there is an interesting debate about whether we have chosen the right technology for our demonstration project of post-combustion—my story there is about its applicability to China, given the imperative of tackling global warming—this framework would be fit for purpose for whatever technologies arise in the future. These clauses are not part of the post-combustion scenario; they are about a wider scenario.
Question put and agreed to.
Clause 1 ordered to stand part of the Bill.
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