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The amendment would therefore insert the normal materiality test, so that the clause read,

That would bring the offence into line with the approach which is more generally used, and of which the financial and legal community has good experience and knowledge. It would be more practicable in operation while maintaining what we would all agree should be very severe sanctions for lying. I beg to move.

Baroness Wilcox: My Lords, it seems like a sensible amendment with recent legislative precedent. If the Government do not accept it, I shall be interested to know why this legislation is different from the offences that my noble friend mentioned in the Enterprise Act 2002 or the Companies Act 2006. The necessary safeguards that the Bill sets around nuclear decommissioning will already give people quite enough to do without asking them to prove the unprovable.

Lord Davies of Oldham: My Lords, I am grateful to the noble Lord, Lord Jenkin, for the way in which he moved the amendment. The noble Baroness must know that all amendments proposed by the noble Lord are sensible—otherwise, he would not move them—so we take that as read. The issue is whether they pass other tests as well as being sensible.

Clause 57 makes it an offence to provide false or misleading information to the Secretary of State in response to a requirement under the nuclear decommissioning chapter of the Bill. False or misleading information in this context can be taken to mean false or misleading information which a person knowingly or recklessly includes in, or omits from, the information submitted to the Secretary of State. The result of submitting such false or misleading information would be that the Secretary of State would not be in receipt of information that is accurate enough or sufficient for him to discharge his functions under these clauses. We are therefore talking about very serious issues.

We debated these issues in Committee, and an amendment along these lines was considered in the other place which sought to remove “misleading” from the clause. We resisted that attempt because it was felt that it would have the effect of allowing for the submission of information that was misleading, which would inevitably weaken the significant layers of protection that we are putting in place in this framework. Moreover, the Government argued at the time that the action of “misleading” the Secretary of State was a deliberate act. It cannot be acceptable for

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the necessary robustness of this regime that a person should be able to knowingly or recklessly submit misleading information without there being any sanction. The issues are far too serious for that.

We want to encourage transparency and openness in the framework that we are creating but, where there is a deliberate attempt or reckless failure to mislead, it is only right that the framework should be backed up by sanctions, which the Bill contains. We do not think that the issue of whether there could be a “clerical error” would fit within this framework. No prosecution is going to be brought on the basis of a clerical error for such a serious issue. We are talking about “misleading” rather more significantly than by some fault in the document that is just a slip.

The noble Lord’s amendment would clarify this issue in the Bill by setting a materiality threshold for the offence and, as he rightly said, there are precedents for that. He mentioned several Acts: suffice it to say that I am becoming increasingly familiar with the Financial Services and Markets Act 2000, which looms fairly large in our present considerations. I know that the noble Lord is testing accurately when he refers to that Act as well as to others. His amendment seems to be an attempt to bring Clause 57 into line with the approach more generally used in the situation he defined; as he rightly said, the financial and legal communities both have good experience and knowledge of operating the law in those terms.

We can see merit in the proposal, so for the second time this evening I will ask the noble Lord to withdraw his amendment on the basis that we will look further at this issue. I am sure he will recognise that we intend to have a robust offence regime locked into this Bill. That is of critical importance, given the potential size of the liability involved in such a critical and significant industry, but we also want the regime to be practicable. We will, therefore, look at the amendment and come back with a further amendment on Third Reading, if he would be so good as to withdraw his amendment.

Lord Jenkin of Roding: Once again, my Lords, I must express my gratitude to the Minister, who has clearly looked at this carefully. His promise to bring back a government amendment on Third Reading seems to meet the case, and we will look at that with great interest. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 69 [Persons who may be required to submit abandonment programmes]:

Lord Jenkin of Roding moved Amendment No. 9A:

9A: Clause 69, page 59, leave out lines 12 and 13 and insert—

“(a) P is not entitled to derive, and never has been entitled to derive, any financial or other benefit by means of P’s use of the installation for the exploitation or exploration of mineral resources or storage or recovery of gas, and”

The noble Lord said: My Lords, Amendment No. 9A is a rather more complex matter than the last two I have discussed, and I hope that the House will bear with me for a moment if I describe a little of the background. We are dealing here with the decommissioning of oil and gas equipment, where the same broad principle applies; that the operators—I

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use that word in its widest sense—or licence holders are, for instance, to be responsible for the decommissioning and clearing up of an oil rig when it has reached the end of its life. I will not describe this background in great detail, because the noble Lord, Lord Rowlands, went into it at some length in Committee on 24 June, at col. GC 599. The noble Lord, Lord Davies of Oldham, responded in cols. GC 601-02.

The problem is not who should be liable. There is general agreement that the clause should be drawn in such a way that anybody who has had an actual operating interest in the rig should share the cost of decommissioning. The problem has been how to achieve that in a way that meets the Government’s objective of protecting the taxpayer from having to pick up the bill or any part of it at the end of the day. As I understand it, it has primarily been a problem of drafting.

When the noble Lord, Lord Davies, replied to the noble Lord, Lord Rowlands, he spelt out the matter using identical language—perfectly reasonably and properly—to that used earlier by Mr Malcolm Wicks, the Minister, when he wrote to John Robertson MP a letter dated 14 May. I have the letter but I shall not weary the House by reading it out. He set out to describe the type of activities undertaken from an installation that will give rise to a potential decommissioning obligation on a person. The amendment seeks to reflect word for word exactly what Mr Wicks wrote to Mr Robertson. As the noble Lord, Lord Davies, will recognise, they were also the words that he used when he replied in Grand Committee.

9 pm

The purpose is to rule out any future conflict between the Petroleum Act 1998 and what was in the Minister’s letter. If such a conflict were to arise—and one can never be sure that one has sewn up everything exactly—and it was a matter of law that came to the courts, the courts would have to apply the legislation and what is actually in the Bill. They are now, under Pepper v Hart, allowed to look at the intention, but if there is no ambiguity in the Bill then whatever the Minister may have said or written is not relevant to the construction. It is something that has given rise to a great deal of uncertainty for companies when they are making decisions about trading of assets and co-operation on the use of the infrastructure.

It is a question of trying to define who the people are to whom a notice can be given under Section 29 of the Petroleum Act 1998 so that they would be liable for decommissioning and maybe abandonment but, anyway, the cost of getting rid of and clearing up the installation. Intended to be excluded are people who have never had any kind of direct interest, financial or otherwise, other than perhaps as a contractor or a subcontractor of one of the operators of the licence and the installation. If somebody has a contract to provide food and sustenance to the crew of the rig, for example, they would not be expected to bear any costs of decommissioning, although it might be said that they derive a financial advantage from being involved with the rig. It is simply a question of how you draw the line between those who should be liable and those who clearly should not.

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As the noble Lord, Lord Rowlands, said, these arrangements of ownership and sub-ownership can be immensely complicated as they develop over the years. That is what gives rise to the problem that we address here. Simply to refer, as subsection (7) does, to,

is unclear. It could be argued that it covered a wide group of licensees who have not been involved in activities relating to the exploitation or storage of hydrocarbons using the installation in question. Therefore, that definition in the Bill needs to be modified by the insertion of the qualifier set out in the Minister’s letter to John Robertson, and repeated by the noble Lord, Lord Davies, on 24 June—specifically, that the person who may be served with a notice under Section 29 must be, or at some stage have been,

Without that amendment, people who happen to hold an interest in an unrelated part of the licence, or who have received an incidental benefit through the use of the installation—of course, numerous examples could be given for that—may be inadvertently captured within the ambit of Section 29. One could imagine the situation. If you have a number of licensees who are responsible and one of them becomes insolvent for any reason, of course the authorities are going to try and get the money back from whoever they can. It is really very important at this stage that one should be absolutely clear who can and who should not be caught.

Since the debate in Grand Committee, there have been, as I think Ministers recognise, long discussions. It appears that there is complete agreement on the principles; the difficulties lie in finding the right drafting. The department has made it clear that my amendment does not sufficiently protect the taxpayer. As I understand it, the Government intend to bring back their own amendment at Third Reading, having taken advice from parliamentary counsel as well as from the people in the department responsible for the matter. It has been represented to me that I shall not get everything I want. We will have to see. Once again I ask whether the Government’s amendment could be tabled in good time so that there can be consultation with the trade association, Oil and Gas UK, so that we can really satisfy ourselves that it will meet its requirements. What it is not prepared to do—and what I think at an earlier stage Ministers were asking—is to rely solely on the ministerial undertaking and letters. Given what I said earlier about how a court would interpret that, that is not acceptable and would not give the certainty necessary for the people who deal in these licences.

I will not dream of pressing the amendment tonight; it is there to give Ministers an opportunity to explain to the House how they now intend to deal with this and to undertake—and I hope there will be a very clear undertaking—to bring back their own amendment at Third Reading. I beg to move.

The Minister of State, Department of Energy and Climate Change & Department for Environment, Food and Rural Affairs (Lord Hunt of Kings Heath): My Lords, that was a remarkable tour de force by the noble Lord. Not only did he eloquently put his own case, he also anticipated my response. I shall, none the less, respond in detail. The noble Lord is absolutely

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right: there is no disagreement in principle, but there clearly continue to be drafting problems. I agree that we need to avoid ambiguity if we possibly can.

I do not need to go into the detail of the matter; the noble Lord has already done that. We have been in regular discussions on the clause with the companies that might be affected. It was clear at an earlier stage that there could be some doubt about whether a company would be seen as being entitled to derive a benefit from an installation. The Government have sought to make it clear that entitlement to a benefit must arise from the exploitation or exploration of mineral resources or storage or recovery of gas from the installation in question. I understand, and the noble Lord, Lord Jenkin, has confirmed, that there is still doubt and uncertainty within the industry, which he has sought to resolve by adding further clarity to the provision. Our discussions with the industry this week indicate that its concern is that licensees should only be liable for decommissioning if they have benefited from the exploration and/or the oil or gas production of the installation in question.

An issue that has been raised is that many licence areas are very large and may include a number of separate field developments. A small field may often be developed by linking it to the installation on another field; this is known as a “tie back” to a host installation. The Government take the view that it would be unrealistic to expect the companies responsible for the tie back to bear the liability for the host installation and vice versa.

I know that the noble Lord has taken the response of my honourable friend Mr Wicks, when he was Minister for Energy, and used it as a basis for his amendment. Alas, sometimes Ministers’ letters do not easily translate into legislation. My advisers have concerns that the amendment is not specific enough. We are therefore going to have another go between now and Third Reading at seeking the clarity that all agree must be achieved. I take the noble Lord’s point about wishing to see that amendment as soon as possible, and will certainly do everything that I can to ensure that he does so.

Clearly, the balance is that we want clarity while having to protect the taxpayer. However, I agree with the noble Lord that we must avoid ambiguity. I hope that, on that basis, he will be satisfied that we are dealing with this matter in a sensible way.

Lord Jenkin of Roding: My Lords, I was asked to make two points. First, the industry is in fact extremely grateful for the amount of time and trouble taken on this matter. Secondly, the noble Lord, Lord Rowlands, asked me to tender his apologies for not being able to be here this evening; I am sure that he would have wished to join in the discussion.

Once again, the Minister has said that the Government will bring back an amendment, and kindly said that he will try to produce that as soon as possible so that it can be consulted on and, if necessary, amendments tabled. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Lord Teverson moved Amendment No. 10:

10: Before Clause 80, insert the following new Clause—

“Use of biomethane

(1) In section 32(8) of the Electricity Act 1989 (c. 29) (obligation in connection with electricity from renewable sources), in the definition of “renewable sources” insert at the end “and shall include the use of any gas drawn from a gas network to which premises supplied by the supplier are connected where, at the time the gas is drawn from the network, the supplier has arranged for the shipping to the consumer at those premises of the same quantity of renewable biomethane gas and that quantity has been introduced to the gas transmission or distribution system to which the consumer’s premises are connected;”.

(2) In section 124 of the Energy Act 2004 (c. 20) (imposition of renewable transfer fuel obligations), after subsection (5) insert—

“(6) For the purposes of this section, “supplied” shall include the supply of any gas or other fuel drawn from a gas or other fuel network to any premises where, at the time the gas or other fuel is drawn from the network by a consumer, the supplier has arranged for the shipping to the consumer at the same premises of the same quantity of renewable transport fuel and that quantity has been introduced to the gas transmission or distribution system to which those premises are connected.””

The noble Lord said: My Lords, I do not intend to go into huge detail, as the noble Lord, Lord Jenkin, has done so impressively on the past three amendments. The tables for renewable energy production in the United Kingdom show, always surprisingly, that biogas plays a major part. We all think of wind power, solar and all the other, very visual, technologies. Anaerobic digestion will, we hope, be even more important in the future and, again, continental Europe—particularly Germany—is well ahead of us. Waste tips have been a major source of biogas. In the past that has been a considerable problem because it involves methane, which is both a powerful greenhouse gas and very explosive. That has been dangerous for people living near waste tips that have not been well looked after, although that is not so much of a problem now. The other area is farm waste.

Biogas sometimes has been quite considerably wasted by flaring. As my noble friend Lord Redesdale said when a similar amendment was spoken to in Committee, we do not now allow flaring on oil installations. It is quite staggering that we still now waste this resource by, on occasion, burning it off on land.

The amendment would ensure that the renewables obligation regime is applied to biogas. I noted the Government’s comments in our previous debate but we seek further reassurance. We need to be able to feed biogas into the local grid and take advantage of the renewables obligation certificates. We should harness this form of renewable energy. It should be allowed to thrive and take its rightful place in the country’s renewable energy mix. The amendment’s provisions would be particularly useful as regards combined heat and power. I beg to move.

9.15 pm

Baroness Wilcox: My Lords, this amendment sparked an interesting debate in Committee when the noble Lord, Lord Redesdale, moved it. I was pleased to hear the Minister confirm then that biomethane was considered a renewable. The noble Lord, Lord Teverson, was right to stress the part that biomethane could play in meeting our CO2 reduction targets. We have already

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had a debate on the role of heat as regards renewables, and biomethane plays an important part in that. I should be interested to hear more from the Minister about what work is being done on the feasibility of injecting methane directly into the gas network. As I understand it, there are still some technical issues to be worked out. I hope that he can indicate when these are likely to be resolved.

Lord Hunt of Kings Heath: My Lords, I am grateful to the noble Lord for raising this important matter. Noble Lords will know that earlier this year my department announced that £10 million will be made available for the construction of new commercial-scale anaerobic digestion plant, and we have proposed doubling the amount of support that it has received under the reformed renewables obligation.

Lord Teverson: My Lords, I am sorry to interrupt the Minister so soon, but it would be useful if he could tell us what is happening with that initiative. I think that we all welcome it, but I have not heard much about its practical delivery and application.

Lord Hunt of Kings Heath: My Lords, I do not have the details but I shall be happy to write to the noble Lord about that. The important announcement concerned the money. I do not know how far the initiative has developed, but I shall find out and let him know.

Of course, there is great potential in this area and we all have high expectations. However, while in principle we agree with supporting biomethane, we do not believe that supporting its use in the gas transmission system should be achieved through an amendment to the renewables obligation. Electricity from biogas is already supported in various forms under the renewables obligation, and some forms, such as landfill gas, have made significant contributions to the growth in renewable electricity generation over the past few years. Proposals in the Bill will help us to make further progress with the use of biogas for electricity generation. Our new banding proposals mean that electricity generated directly from the gas formed by the anaerobic digestion of wastes such as manures and waste food will receive two renewables obligation certificates for each megawatt of electricity generated.

I think that we are all agreed about the benefits of such a measure, but the proposed new clause would mean that, if renewable biomethane gas were fed into the gas grid, an equivalent amount of gas used by a specified consumer could be treated as renewable for the purposes of the renewables obligation, even if supplied to a fossil-fuel gas-fired station. Such a move would risk widening the definition of a renewable source of electricity while breaking the direct link of award of ROCs to actual generation. That is the fundamental principle of the RO system, which is important for investor confidence in renewable electricity generation projects.

As noble Lords will know, two-thirds of the gas supplied through the grid is used for heat and not for electricity generation, so most of the biogas injected into the grid would be used for heating purposes and could be an important source of renewable heat. Here comes the constructive point. An alternative to supporting biogas through the renewables obligation would be to

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support it through any financial mechanism to support renewable heat. We are already reflecting further on how we could bring forward a financial mechanism for renewable heat, with the aim of returning to the issue at Third Reading. I wonder whether the noble Lord would let me take this away to see how we might include biomethane as part of any financial support mechanism for renewable heat, rather than deal with it in the way suggested.

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