Energy Bill

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Clause 25

Injunctions restraining breaches of section 16(1)
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: There might be circumstances in which it is necessary to seek to restrain a person from exploring for carbon dioxide storage sites or from storing carbon dioxide. They might arise, for example, if someone began exploratory drilling activity without a licence. They should be required to stop their activity until they have obtained a carbon dioxide licence. The clause will allow the Secretary of State or the relevant regulatory authority to seek an injunction in such circumstances. In the absence of such a provision, an injunction could be sought only by a person whose private interests were affected or by the Attorney-General. There is precedent the provision in section 187B of the Town and Country Planning Act 1990, which gives a similar power to a local planning authority. We propose corresponding provisions for offshore gas storage.
Question put and agreed to.
Clause 25 ordered to stand part of the Bill.

Clause 26

Question proposed, That the clause stand part of the Bill.
4.15 pm
Malcolm Wicks: It would be useful if I briefly introduce the clause. The clause gives the Secretary of State the power to appoint inspectors to inspect facilities used for carbon dioxide storage or related activities. It also gives the Secretary of State the power to issue regulations setting out the powers, for example, powers to enter premises, to carry out an investigation, to require information, and to take samples. The clause also sets out the duties of inspectors and other persons acting under the Secretary of State’s direction, for example surveyors or other contractors. As well as the facilities and assistance that must be offered to the inspectorate, the Secretary of State may also make payments to inspectors appointed under the clause, which will be of great relief to the inspectors who are employed. Inspection arrangements are an important means of ensuring the effectiveness of any licensing regime because they allow the regulatory authority to physically inspect the relevant premises and to ascertain compliance with the licence and other applicable regulatory provisions.
Question put and agreed to.
Clause 26 ordered to stand part of the Bill.

Clause 27

Criminal proceedings
Question proposed, That the clause stand part of the Bill.
Question put and agreed to.
Clause 27 ordered to stand part of the Bill.

Clause 28

Requirement for public register
Charles Hendry: I beg to move amendment No. 23, in clause 28, page 15, line 8, leave out ‘4’ and insert ‘10’.
This simple amendment would change the period of confidentiality from four to 10 years. Essentially, this is a probing amendment that we have been asked to propose by those involved in the industry. The Bill currently states that information can be excluded from the register if it would prejudice to an unreasonable degree a person’s commercial interest. However, that requirement expires after four years. In relation to the issues that we are talking about and the technologies that are involved, it seems that commercial confidentiality should in many cases last for more than four years. I would be grateful if the Minister could clarify why four years has been chosen when it might be appropriate to have a longer period in which that information could be treated as confidential.
Malcolm Wicks: I thank the hon. Gentleman for moving the amendments. For the benefit of other Committee members, I will explain what clause 28 sets out to do. I will then say why I believe that the amendment to extend the period of time for which information excluded from the register of carbon dioxide licence is presumed to be commercially sensitive is unnecessary.
Clause 28 requires the relevant regulatory authority to maintain a public register of specified information related to carbon dioxide storage licences. That provision is in keeping with the principles of public access to information on environmental matters. Access to environmental information has long been seen by the Government as essential to achieving sustainable development because an informed public can play an active role in effective decision making. The requirement for a public register replicates existing arrangements under the Food and Environmental Protection Act 1985—indeed, I recall that it is under part 2 of that Act. The information to be included in a public register will be set out in regulations and may include, for example, details of the licences issued and the parties to such licences, licences that have been revoked or modified, enforcement action taken, and other prescribed types of information. As with 1985 Act, suitable protections will be put in place to exclude from the register commercially sensitive information and information that prejudices national security interests.
It will be up to the Secretary of State to decide what information should be excluded on the grounds of commercial sensitivity. There is a presumption that information that is excluded will remain excluded for only four years, but that period can be extended at the Secretary of State’s discretion, on application by the person whose commercial interests are affected.
In tabling the amendment, the hon. Gentleman wishes to extend to 10 years the period for which information is presumed to be excluded. However, the amendment is unnecessary for two reasons. First, 10 years is perhaps excessive, and the four-year period in the Bill strikes the right balance between ensuring that companies’ commercial interests are not unduly prejudiced and protecting the public’s right to get at the information. I stress again that the clause replicates the equivalent provision in the earlier Food and Environmental Protection Act, which has worked successfully for a number of years.
Secondly, if it transpires that information is still sensitive after four years, the Bill will contain adequate safeguards. Subsection (4) gives the Secretary of State the power to decide, on application by the operator, whether the information should continue to be excluded after the four-year period. That important provision will allow for periodic reassessment of the excluded information and will help to ensure that information will continue to be protected where there are sound grounds of commercial sensitivity for doing so. Our proposed approach encourages the flexibility necessary to maintain the balance of interests for and against disclosure.
Charles Hendry: I am grateful to the Minister, and that is very helpful. In the event that the company involved wanted the period to be extended, but the Secretary of State did not, the Secretary of State’s wish would presumably prevail. What would be the process for reconciling such differences of opinion?
Malcolm Wicks: If there is a more formal process, my increasingly long letter will contain the answer. One would rather hope, however, that the company’s views could be fully taken into account through discussion and consultation.
Notwithstanding that, I hope that I have given the hon. Gentleman some reassurance that the Bill already contains safeguards, that we can go beyond the four years if necessary and that we would apply our usual reasonable approach to these matters.
Charles Hendry: I was doing quite well at following the Minister until his final sentence. He referred to the Government’s usual reasonableness, but that is not the term that springs to mind when talking about the way in which the Government operate. Obviously, that is a reflection not on the current Government, but on all Governments.
The Minister has given us assurances, and I would be grateful if he could spell out in slightly more detail how the process would work if the Government felt that it was not necessary to continue excluding information from the register, but the company involved felt that it was. I would also be grateful if he could spell out in his letter how long the subsequent periods might be—one year, two years or three years?
None the less, the Minister’s response will give the industry assurances about how the process will move forward. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 28 ordered to stand part of the Bill.

Clause 29

Abandonment of installations
Question proposed, That the clause stand part of the Bill.
Charles Hendry: We are cantering through the Bill at such a pace that I wish I had the army of back-up support that the Minister has immediately available to him.
My questions on the clause relate particularly to the explanatory notes, which state that
“the operators of such installations may be required to decommission them in a timely manner after operations have permanently ceased.”
I am concerned that the explanatory notes say that operators
“may be required to decommission”,
rather than that they will be required to decommission. I cannot imagine in what circumstances they would not be required to get rid of the installation in the way described.
Will the Minister also give us some clarity on how such things will be paid for? Will it be from the fund that will be set up, or will there be other ways in which the Minister can ensure that funds are available for decommissioning work?
Malcolm Wicks: May I say that the hon. Gentleman would make a useful member of my proof-reading team? I am advised that he is right and that we should have been talking about “will be”.
Charles Hendry: I have a range of children, aged 11 and nine, who do support work for me. Obviously, they could be seconded to the Department if that would be useful. I am grateful for the Minister’s clarification on that matter.
Question put and agreed to.
Clause 29 ordered to stand part of the Bill.

Clause 30

Termination of licence: regulations
Charles Hendry: I beg to move amendment No. 15, in clause 30, page 16, line 3, after ‘facility’, insert
‘and about the examination by inspectors of the closing of the facility.’.
This important amendment concerns the way in which facilities will be closed, and the examination by inspectors of such closures. It reaffirms the role of inspectors in examining a facility that has been closed for any reason, and says that the operator should be responsible for all such costs. The Bill does not make it clear that when inspectors need to go in to ensure that work has been done properly, that cost will be reimbursed by the operators. I seek the Minister’s assurance that they will be required to pay for that.
Malcolm Wicks: Again, I thank the hon. Gentleman. My speaking note always says thank him before seeking to persuade him that I cannot possibly accept his amendment, however well intentioned. As he knows, a key area covered by the regulatory framework in the Bill is the closure of carbon dioxide storage facilities. Operators, as commercial entities, cannot be responsible for carbon dioxide storage facilities indefinitely because of the geological time scales involved, as we discussed this morning. Clause 30 provides the Secretary of State with the power to make regulations specifying requirements for the termination of licences and the arrangements for the long-term stewardship of those closed stores. We expect licences to include provisions requiring the carbon dioxide store to be monitored for a period of time after closure to ensure its safety and security. That is provided for in clause 19. During that time, responsibility and liability for the store will remain with the licensee. Only when there is sufficient evidence to confirm that it is safe and secure would we expect to consider terminating a licence. I made that clarification earlier.
The amendment would include in the clause express provision to allow inspectors to examine closed carbon dioxide stores. That is not necessary, because there are already powers in the Bill that will allow us to deliver that aim. First, requirements for the inspection of carbon dioxide stores during both the operational phase, when carbon dioxide is being injected, and the monitoring phase could be included in the specific licence terms and conditions of any carbon dioxide facility. The power for the licensing authority to prescribe such conditions is contained in clause 19, which governs the terms and conditions of licences.
Secondly, the amendment would duplicate powers in clause 26, which gives the Secretary of State powers to appoint inspectors and make regulations prescribing their powers and duties. It allows the Secretary of State to specify their inspection responsibilities regarding both operational and closed carbon dioxide stores, and in relation to any inspections that might be needed prior to the termination of a licence. In summary, I am confident that the provisions in the Bill will provide the necessary environmental, safety and financial protection properly to regulate the inspection of closed carbon stores prior to, or as part of, the termination of licences. I therefore ask the hon. Gentleman to consider withdrawing his amendment.
Charles Hendry: Given the Minister’s assurances, I am happy to beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.30 pm
Question proposed, That the clause stand part of the Bill.
Charles Hendry: I am glad to have the opportunity to raise a couple of additional questions.
Clause 30 talks about the circumstances in which a licence may be terminated. Would the Minister clarify the circumstances? Would he give us examples of what he has in mind? Operators need to have that level of guidance, given that they are to invest tens of millions of pounds in these facilities. They need to know in what circumstances the licence could be removed from them. We are not looking for an exhaustive list but some indication of the level of offence that would result in such a draconian step.
The Minister said earlier that one did not include the obvious in the Bill; one only included the unusual and less obvious. The challenge to him is to come up with a range of less obvious activities and offences that might require the licence to be revoked in these ways. It would be important for those being asked to invest to have greater clarity.
What about compensation where a licence is withdrawn? Licences could be withdrawn because a new technology comes forward which gets rid of CO2 in a different way—maybe a science which we do not yet understand. The hon. Member for Bolton, South-East may say it is impossible that this might be developed, based on his own scientific knowledge but, on the grounds that we should not rule things out, it could be that a day will come when the Government deem that capture and storage is no longer the appropriate way to deal with CO2. In such circumstances would it not be right for operators to be entitled to compensation where they have invested millions of pounds in good faith but the Government have changed their policy for dealing with CO2?
Malcolm Wicks: I will see how far I can progress in tackling the hon. Gentleman’s specific questions in the time allowed.
Operators as commercial entities cannot be responsible indefinitely for carbon dioxide storage facilities, as we have discussed, due to the time scales and the geology involved. We expect licences to include provisions requiring the carbon dioxide store to be monitored for a period after closure to ensure their safety and security. Only when there is sufficient evidence to confirm that the stores are safe would we expect to consider the termination of licences.
Carbon dioxide storage licences provisions under clause 19 of the Bill may stipulate the procedure for terminating the licence after certain requirements are satisfied, relating, for example, to the safety and security of the store or the payment of a surrender fee. I might be able to answer quite quickly. However, where the licensing function is being carried out by another authority, the Secretary of State may wish to restrict by regulations that authority’s discretion in accepting termination of licences, for example, by placing the licensing authority under an obligation not to agree to the surrender of a licence until it is satisfied that the store is safe and secure. The regulations may also prescribe circumstances additional to those stipulated in the licence in which termination may be accepted.
The Crown Estate may have to be reimbursed for any costs incurred in carrying out the long-term stewardship of the closed carbon dioxide stores. This clause gives the Secretary of State the power to take on financial obligations in relation to such stores, which may include providing an indemnity to the Crown Estate.
There may some misunderstanding about the meaning of termination. This clause relates to the surrender of a licence. We would consult on when the termination takes place but it is likely to be when it is safe and secure.
The hon. Gentleman asked me about compensation for licences that are withdrawn, and the clause deals with the termination of licences at the end of their operating periods. Compensation falls outside the scope of the clause, so we must consider the matter a little further. I see the point of his question, and, with his permission, it may become part of the increasingly impressive letter that I will write to him.
Question put and agreed to.
Clause 30 ordered to stand part of the Bill.
Clauses 31 to 33 ordered to stand part of the Bill.
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