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Lord Jenkin of Roding: The noble Baroness has argued a case which we shall wish to examine carefully. On the face of it, it seems to deal reasonably with the alternative situations: first, where it would be perfectly reasonable to expect a plant to operate pending an appeal; and, secondly, the wholly exceptional emergency prohibition notice required to deal with the serious risk of damaging pollution. Somewhere a line has to be drawn.
We shall study carefully what the noble Baroness said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1, as amended, agreed to.
Clause 4 [Short title, interpretation, commencement and extent]:
Lord Jenkin of Roding moved Amendment No. 37:
The noble Lord said: We are nearing the end of a marathon Committee stage which seems to have gone on for three times as long as anyone anticipated. I claim my share of the blame for that.
This is a probing amendment. I have already referred to the offshore oil and gas industry in a number of earlier amendments. I do not seek to argue that it should not be subject to environmental controls. Indeed, the UK offshore oil and gas industry already complies with over 200 environment regulations, 35 of those international, 48 derived from the European Union, and 159 UK regulations.
It would be helpful to clarify whether it is the Government's legal advice that the offshore industry comes within the terms of the directive. I also wish to probe the Government's intentions about their plans for the environmental regulation of the industry.
I have studied Directive 96/61/EC from beginning to end and I can find no reference to the industry. A great many other industries are described and mentioned in the various annexes, in particular, Annex 1. There is nothing about the offshore oil and gas industry.
The European Commission's Large Combustion Plant directive (88/609/EEC), which broadly has the same objective but is limited to atmospheric conditions, specifically excludes the offshore industry. I have already noted that the industry is directly regulated by the DTI, and that it has as yet seen no draft regulations.
However, there are other worrying indications. I am advised, for instance, that Denmark has indicated that it will not implement the IPPC directive offshore. What about other countries? The British Government's position reflects the stand they took with regard to the Environment Impact Assessment Directive. In 1998 the UK Government introduced regulations requiring consideration to be given to carrying out environmental impact assessment before undertaking certain offshore oil and gas activities. Those British regulations are applied to all drilling activities on the UK continental shelf. Virtually all other EU member states take the view that the directive does not apply to exploration drilling but only to development drilling after hydrocarbons are found. If the UK is going it alone and imposing more intensive environmental control on the offshore industry, will not this have significant serious implications for UK competitiveness? On Second Reading, the noble Lord, Lord Whitty, said that the Government wished to implement legislation in a way that minimises the burden of compliance. The industry very much welcome that, but it is concerned that there is a differential between the way in which the UK Government and others are interpreting the directive. It could be a very serious matter. When one thinks in terms of the enormous economic importance of the offshore oil and gas industry, one would have thought that the Treasury might have been concerned too.
It is clear from recent press reports that the oil industry is facing major structural changes in order to meet the challenges which exist under the current difficult trading conditions. Only last week a major oil company published its first ever major quarterly loss. It is having to meet the challenges of current difficult trading conditions in order to remain competitive into the next century. A recent report from Wood MacKenzie suggested that investment committed to new projects in 1998 was only £1.5 billion, compared with more than £4 billion in 1997. That is mirrored by a 35 per cent. decrease in drilling and exploration of appraisal wells last year. Therefore, a sustained period of low oil prices will not provide a reasonable or adequate rate of return for investors and we could see investments being channelled to other lower cost and less regulated provinces overseas.
The effect of that would be devastating on jobs in north east England, Scotland and London. What is the Government's plan to ensure that all EU countries have comparable levels of environmental regulation in this very important area? If this is not going to happen, and countries such as Denmark are simply going to go it alone, what will the Government do to safeguard the competitiveness of the UK industry?
I am aware of the initiative which the Government are taking to investigate, through the Government and the oil and gas industry taskforce, the means by which the life of the UK Continental Shelf can be extended and can survive current low oil prices. I am sure that Ministers will recognise that this laudable objective will not happen while at the same time the Government are imposing heavier regulatory burdens on the British industry than are being imposed by partner countries on its competitors. Can the Minister indicate the current status of the work of the taskforce? Is consideration of the impact of IPPC regulation on the industry being included in its work? Will the industry's regulators be obliged to take account of the recommendations of the taskforce?
I hope that I have said enough to indicate that the industry has very real concerns and I look forward to the Minister's response. I beg to move.
Lord Whitty: I wish to reassure the noble Lord that the Government recognise the importance of preserving the competitiveness of the North Sea oil and gas industry. However, our legal advice in relation to the activities listed in the directive, and the legal advice of the Commission, is that it should apply to the continental shelf and beyond territorial waters unless there are indications to the contrary--and there are none--in the IPPC directive. The directive clearly applies to large combustion plants which are listed, and it applies onshore and offshore. Our legal advice indicates that this applies to those offshore within and beyond territorial waters. Therefore, our legal advice stresses that all member states have a legal obligation to comply with the directive and this is our way of ensuring that the UK does so. If the noble Lord is correct that another member state has indicated that it does not intend so to do, our legal advice is that it runs
It is true that other member states will have different and precise ways of implementing the directives, depending on their own current underlying regimes, but that is a different matter. The directive and its end result are obligatory on all member states. As the noble Lord indicated, the offshore regulation is the responsibility of the DTI rather than my department. However, I can assure the Committee that the draft regulations which apply will be published before the Report stage.
The DTI's stated objective is to maximise the economic benefit to the UK of its oil and gas resources, taking into account the environmental impact. That is why we intend to implement IPPC efficiently. It is also true that in addition there are other important improvements for protecting the environment which we shall need to make. It seems sensible, as we are doing for land-based installations, to use the powers in the Bill where appropriate to set up an efficient, coherent and consistent regime across the board.
Those other changes include improvements to the regime for the use and discharge of chemicals offshore, which the UK is required to introduce this year under the OSPAR international agreement. If recollection serves me correctly, I saw that agreement through this House when I was spokesman for the Foreign Office. We shall also need to consider the recommendations on dealing with oil spills and discharges in the review of the noble and learned Lord, Lord Donaldson, on salvage and intervention following the "Sea Empress" disaster.
I understand that discussion between the UK Offshore Operators Association and the DTI has been substantial and that my honourable friend the Minister for Energy and Industry, John Battle, had a positive meeting with it. That will continue to inform the way in which we prepare the regulations. The noble Lord asked specifically about the taskforce which is looking specifically at environmental regulations. The DTI Minister who chairs that group may be able to give in writing further information on its progress.
We consider that there is a legal obligation. We are using this opportunity to provide the basis for establishing a regulatory framework which would include dealing with other international obligations and obligations which might arise elsewhere. I hope that the discussions already undertaken by the DTI with the offshore operators association will lead to some degree of consensus on the regulations and the way in which they will be applied.
Lord Jenkin of Roding: At this hour, it would be wrong to go into the Minister's answer in detail. I seek to make only two points. It is not just the way in which different countries will administer the regulations: if most other countries do not apply the environmental impact directive to exploratory drilling but only to development drilling, whereas we are applying it to both, it is not a difference in the way of applying but it is ignoring half the regulations. The Government need
Secondly, Ministers in the Department of the Environment, Transport and the Regions, have been extremely forthcoming during the course of the debate. Large parts of the Bill have been rewritten. If, at a later stage, we return to issues connected with the oil and gas industry, perhaps one of their colleagues in the DTI will come along and take part. Perhaps there would not then need to be such urgent consultation. As a former Minister I would recommend that course when asked questions to which one does not know the answer. I leave that thought with the Minister. It is the Environment Minister's Bill, but the industry comes under the regulation of the DTI. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[In the Title]:
Page 3, leave out lines 16 to 19.
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