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However, if it is felt that financial penalties are insufficient in relation to offences committed against inspectors, revocation of a licence is also available as an additional sanction. Under Clauses 6 and 20, the licensing authority could include a provision in a licence that specified that the licence could be revoked if the licensee committed any offence as set out in the relevant regulations. Moreover, in the case of carbon dioxide storage, the appropriate sanction might not be revocation of the whole licence, but rather withdrawal of the rights of the operator to continue storage activities. That is because we may wish the operator to continue to be bound by the monitoring and remediation obligations under the licence, even if it no longer has the right to continue storage activities.

I hope the noble Baroness will recognise that we have considered these issues very carefully and that the Bill and the Petroleum Act provide the necessary penalties and requirements that she identified in her amendment. I hope she will feel content to withdraw it.

Lord Jenkin of Roding: Before my noble friend does so, perhaps I may ask the Minister one question. He indicated that he thinks that the exclusion from eligibility for a licence of someone who has previously been guilty of an offence could be covered by the regulations made under Clause 5(a), which states that the Secretary of State may by regulations,



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As I understood the noble Lord, he said that the regulations could specify as a class those who had previously been guilty of certain offences. I question whether that would be an appropriate use of that regulation-making power. It could be open to challenge on the grounds that that was not what the legislation had in mind. When legislators talk about classes of persons, they are not thinking of particular people who may have offended the law in another respect. I am not a lawyer—at least it is a very long time since I was involved in the law, and I do not claim any expertise—but I hope the Minister might be prepared to get his lawyers to look at this again and satisfy themselves that Clause 5(a) could legally be used to make a regulation that would exclude the kind of people that my noble friend’s amendment addresses. I wonder whether that would be a viable use of that regulation-making power.

Lord Davies of Oldham: I am grateful, I think, to the noble Lord. I respect the point he made. We would use Clause 5(b), but that may not change the burden of the noble Lord’s point. I shall respond to it in any case. We will look at the clause to make sure that it would be entirely appropriate that any regulations laid down by the Secretary of State about classes of persons could have this element of disqualification in it because the person had committed an offence under an existing licence, which would be the reservation that would be entered. We consider that to be appropriate at this point. He has raised his doubts. If he has doubts, so have I. I will ensure that we look at this further. I assure the Committee that we will be able to respond even more positively to the point if necessary at a subsequent stage of the Bill.

Lord Jenkin of Roding: I am extremely grateful to the noble Lord for that. No doubt he will write to me before Report as I do not want to waste time later. He said that the matter would be covered by Clause 5(b). I think he was responding to a note that was passed to him by the wise people who sit behind him. Clause 5(b) states,

That seems to me to look to the future and to what the person will be required to do, which the regulations will set out. I should have thought that my original suggestion on Clause 5(a) and a class of persons who could be excluded by regulation from being given a licence is what he initially suggested. The noble Lord has undertaken to write to me and perhaps he can cover that point as well. It is very important that we get this right. I may have raised a hare but I am not yet convinced that the Minister’s response deals with it.

Lord Davies of Oldham: I apologise for that. I recognise that the noble Lord has genuine anxiety about this. When I said that I would ensure that we were clear about the matter before later stages of the Bill I envisaged writing to him before Report.



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Baroness Wilcox: I thank the Minister for his reply, and for his reply to the question of the noble Lord, Lord Redesdale. I hope the noble Lord is happy with that reply. It clarified the point for us and for my noble friend Lord Jenkin. I also hope that we will get a copy of any letters sent to him so that we can be clear about the matter. I took on board the answers I was given, which clarified the relevant matter. However, I have an awful feeling early in the piece that we shall keep hearing the words “Petroleum Act” coming up again and again. I had not realised how often I would hear them. The £5,000 fine looks small for the offences and companies we are likely to be dealing with. In ignorance I must ask, how long ago was the Petroleum Act enacted? Has time moved on as regards these sums as it has for the price of houses? Are we working backwards to a fine that seemed a heck of a lot at the time? I am not a lover of retrospection but perhaps the Minister could return to the matter. He may not be able to respond to it now. If I am going to hear about the Petroleum Act I had better check when it was enacted and how relevant it is to the Bill.

Lord Davies of Oldham: I apologise if I referred to that Act at least twice in my responses to the noble Baroness’s amendments. It embodies a regime that governs very similar issues and has proved successful. I emphasise that this could become an indictable offence with unlimited penalties. Therefore, she need not worry about the constraints of the £5,000 fine if it is an indictable offence.

Baroness Wilcox: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 agreed to.

Clause 9 [Offences relating to licences]:

[Amendment No. 5 not moved.]

Clause 9 agreed to.

Clauses 10 to 12 agreed to.

Clause 13 [Inspectors]:

[Amendment No. 6 not moved.]

Clause 13 agreed to.

Clauses 14 to 17 agreed to.

Clause 18 [Licences]:

[Amendment No. 7 not moved.]

Clause 18 agreed to.

Clause 19 agreed to.

3.45 pm

Clause 20 [Terms and conditions]:

Baroness Wilcox moved Amendment No. 8:

The noble Baroness said: The amendment addresses the section which allows the Secretary of State to change the terms and conditions of licences for gas importation and storage. The Bill gives the Secretary of State the power to modify the terms and conditions

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with or without the consent of the licence holder. There may very well be circumstances in which that is necessary. However, this open-ended power still makes us on this side of the Committee shudder a little. Therefore, our amendment would make a simple change, requiring that there be consultation on changes to the licence arrangements.

It has been said before and will be repeated throughout our debates on this Bill that industry confidence will be a cornerstone to the success of the Bill’s provision. Thus we seek to provide another layer of transparency to make certain that concerned parties will have their say. If the goalposts keep moving, we will not see progress.

I suspect that the noble Lord, Lord Bach, will tell me that the amendment is unnecessary and that any sensible Government would consult on changes that are of any degree of importance. However, without such an assurance in the Bill we will never be certain—and I hope that the Minister will reassure me with a further explanation. I beg to move.

Lord Redesdale: We support the amendment. Although CO2 has been pumped into the North Sea over many years to recover oil supplies and is therefore not a new technology, the scale on which we are looking at the recovery of CO2 from power stations onshore and pumping it through a line system down into a reservoir that shall be capped is a massive undertaking. Of course, one problem that has been highlighted with the move towards the competition for carbon storage and capture is that the whole process relies on government subsidy and a potential tax advantage to make it workable. That is why two of the schemes that went forward failed on that basis.

The purpose of the amendment is very welcome. One problem that many companies will face is that an enormous amount of investment will be needed to undertake this. If regulatory positions suddenly change without adequate consultation, and if the tax regime changes for one reason or another, the investment will be in jeopardy. If there is to be change in the regime, it seems only right and proper that in respect of the enormous amount of investment and risk that these companies are undertaking they should be kept informed of why any change in the regulation is taking place and how it should affect them. I know that the Minister says that this is all speculative, but there have been a number of complaints from companies in the North Sea about changes in the regulatory system that have changed the very nature of their investment opportunities and how they operate within the North Sea. This will be very detrimental in this new area of carbon capture and storage.

Lord Jenkin of Roding: I shall want to comment on carbon capture and storage, but I shall reserve that for a debate that will follow on Amendment No. 15, to be proposed by the noble Lord, Lord Redesdale. I know that that refers to the competition, but it raises the whole issue of the policy for encouraging CCS and the alternatives that exist. I support my noble friend’s amendment, but I will not become involved in the fuller argument until a little later.



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Lord Woolmer of Leeds: Like the noble Lord, Lord Jenkin, I, too, look forward to the discussions on the new clause amendment.

On Amendment No. 8, the nature of carbon capture and storage means that the facilities will have a very long life. Indeed in theory, as far as we are all concerned, they will have an infinite life, or at least hundreds and hundreds of years, which is their whole attraction. That gives rise to the question of the length of the licence. What length of licence is envisaged in this area? Secondly, the licence will carry certain obligations to deal with the maintenance of the facility. Once it is full, it is still storage and it still has to be maintained.

Things could go wrong over a very long time. If there is a similarity to anything, it is to nuclear waste disposal. It would therefore be helpful if, at this early stage—we may well come back to this later—the Minister could now, or later, tell us a little about the Government’s thinking on the length of the licences and how, given the peculiarly long lifetime of the investments in the facilities, they intend to deal with matters such as long-term maintenance, long-term reassurance about things going wrong and the kind of financial provision that would have to be made.

Lord Bach: I thank all noble Lords who have spoken in this short debate. Let me deal first with what Clause 20 attempts to do. I will then look at the amendment and do my best to answer my noble friend’s questions.

Clause 20 allows licences for carbon dioxide storage and related activities to be granted on such terms and conditions as the licensing authority—that is, the Secretary of State or Scottish Ministers, as appropriate—or an authority to which the licensing function is transferred, sees fit. The power will allow case-specific requirements to be included in licences in relation to each carbon dioxide store. The clause also provides an inexhaustible list of examples of the sorts of conditions that licences may contain, including financial security provisions, the right for the licensing authority to modify the licence and provisions about closure of the storage site and termination of the licence. In addition, we expect that all licences will include provisions relating to monitoring and remediation, reporting, record-keeping, notification obligations and the requirement to have a valid lease from the Crown Estate for the relevant site.

This general power in Clause 20 is in turn subject to regulations that may be made under Clause 21, which may prescribe the terms and conditions that must be contained in licences. In circumstances in which the licensing authority is other than the Secretary of State or the Scottish Ministers, regulations made under Clause 21 will help to ensure that provisions that the Secretary of State or the Scottish Ministers consider to be essential will be included in all licences.

Amendment No. 8 would insert a provision requiring the licensing authority to consult the licence holder prior to making any modifications. However, the licensing authority—the noble Baroness made this point—would retain the power to modify the licence without the operator’s consent, provided that the operator had been duly consulted. The noble Baroness will not be surprised to hear me say that we believe that the clause

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already allows for such consultation to be carried out, as it gives the licensing authority power to modify a licence “in specified circumstances”. Such circumstances, which would be specified in the licence, could include a requirement to consult the licence holder prior to introducing any modifications to the licence. Indeed, our intention is to consult the licence holders in any event, in keeping with the current practices in the oil and gas regulatory regime.

So far, I have not disappointed the noble Baroness; now I am going to surprise her. In the interest of regulatory certainty and to reassure the future operators of carbon dioxide stores, we recognise the benefit of making the intention explicit in the Bill. I hope that finds favour with all sides of the Committee. If the noble Baroness would be good enough to withdraw the amendment, we will consider it further and respond at the next stage of the Bill.

Before I sit down, I must do my best to answer the preliminary questions asked by my noble friend Lord Woolmer. He may not be entirely satisfied by what I have to say, but this is just a starting point. How long would a licence last? It is obvious to say that it would be decided on a case-by-case basis. While carbon is injected, which I am advised may be for 20 to 25 years, depending on the size of the store, the licence holder will be in charge of the store. That licence holder will also be in charge for a number of years after that, to ensure that the store is safe and secure, and the licence will then be terminated. On that basis, the licence would last for anything between 30 and 35 years in that instance, which certainly for all of us here is a long time; I agree with my noble friend.

My noble friend asked what happens with ongoing monitoring and maintenance of the store after it is effectively closed. The licence would stay in force until the Secretary of State is satisfied that the store is both safe and secure. After the licence has been terminated—which is the expression that is used—the responsibility for the store will pass to the state, and monitoring will continue for as long as is necessary and at such frequency as is necessary to ensure that the store is safe. Those are the kind of parameters, by way of example, that I can give my noble friend at this stage.

Lord Woolmer of Leeds: To clarify that, in this particular kind of investment, the businesses that are properly meeting our needs are making money setting up the store and storing the liquefied carbon dioxide. When that is full, the state will take on all obligations of risk and maintenance for ever, as it were, in this instance, as I understand it.

Lord Bach: That is not so immediately the store becomes too full, as it were. There will be an obligation on the licence holder, as I understand it, who will be in charge for a number of years, to ensure that the store is safe and secure. So the licence holder’s obligations will not end on the day that the store is full; there will be obligations for that time.

The comparison with the nuclear industry is obviously in my noble friend’s mind. We will come to that in due course in debates on the Bill. The arrangements are

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intended to protect the taxpayer against long-term cost, so far as is reasonable. We think that it is reasonable for the licence holder to have an obligation for a number of years after a store is full, with the licence continuing, but the licence will be terminated once the store is safe and secure, and it will then become the obligation of the state.

Lord Woolmer of Leeds: To press the matter, for clarification, how many years do the Government have in mind? That is not in the Bill, so we do not know what it will be. We are agreeing to a particular system. If this was nuclear waste, a lot of questions would be asked about that kind of detail. How long after the storage facility is full would the ongoing liability, and hence a licence on different terms, be given for?

4 pm

Lord Bach: The best answer that I can give to that today is to say that there will, no doubt, be examination and inspection to the extent that when the store is considered to be safe and secure, consideration will be given to terminating the licence and moving on to the state. I hope that reassures my noble friend. Consultation is taking place on these points as we speak.

Baroness Wilcox: I thank the Minister for his reply. I listened to it very carefully, and I was pleasantly surprised by part of it, for which I thank him. I also thank the Liberal Democrats, who put the case better than I did. I was very convinced by their argument so, as it is my amendment, I am deeply grateful, because this is the one thing that the Government have kindly said that they will look at and will come back with their own adjustment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bach: I have not done this before, but I understand that in Grand Committee it is now usual to invite the Committee to adjourn for 10 minutes at around this period. I do not think it is obligatory, but the general feeling might be that a 10-minute break in the middle of our proceedings may be suitable. I am in the hands of the Committee.

The Deputy Chairman of Committees (Viscount Ullswater): The Committee stands adjourned for 10 minutes.

[The Sitting was suspended from 4.01 pm to 4.11 pm.]

Lord De Mauley moved Amendment No. 9:

“( ) provision about obligations of a licence holder to advise the Secretary of State of any accidents, near accidents or leakages relating to the facility.”

The noble Lord said: Apart from our concerns about consultation, to which my noble friend referred earlier and which the Minister said he would take up, Clause 20 seems to be perfectly sensible, so far as it goes. Yet, as with the Bill as a whole, it is missing some important components. Remarkably, I can find nothing

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in the licence rules that deals with events such as accidents or leakages, and I do not think that I heard anything about that in the list of matters which the Minister read out while responding to my noble friend’s Amendment No. 8.

We appreciate that there will be an inspection system, and we share the Government’s view that inspections should be thorough and robust, but Amendment No. 9 would place the onus clearly on the operator of a facility to report accidents and near accidents. The amendment stems from the firm belief that safety is paramount and that the risks to both the public and the environment must be minimised.


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