14 Oct 2014 : Column GC31

14 Oct 2014 : Column GC31

Grand Committee

Tuesday, 14 October 2014.

Arrangement of Business


3.31 pm

The Deputy Chairman of Committees (Baroness Gibson of Market Rasen) (Lab): My Lords, I have to inform you that if there is a Division in the Chamber while we are sitting, the Committee will adjourn for 10 minutes.

Infrastructure Bill [HL]

Committee (7th Day)

Relevant documents: 2nd, 3rd and 8th Reports from the Delegated Powers Committee

Amendment 95ZBC

Moved by Baroness Verma

95ZBC: Before Clause 28, insert the following new Clause—

“Petroleum and geothermal energy: right to use deep-level land

(1) A person has the right to use deep-level land in any way for the purposes of exploiting petroleum or deep geothermal energy.

(2) Land is subject to the right of use (whether for the purposes of exploiting petroleum or deep geothermal energy) only if it is—

(a) deep-level land, and

(b) within a landward area.

(3) But that does not prevent deep-level land that is within a landward area from being used for the purposes of exploiting petroleum or deep geothermal energy outside a landward area.

(4) Deep-level land is any land at a depth of at least 300 metres below surface level.

(5) This section confers the right to use Scottish deep-level land for the purposes of exploiting deep geothermal energy only in cases where the sole, or main, use of that energy is to be, or is, the generation of electricity.”

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma): My Lords, in the UK, gas provides around three-quarters of our heating needs and a third of our electricity. However, North Sea gas is declining. By 2025 we expect to be importing close to 70% of the gas we consume. Natural gas from shale could play a crucial role in supporting UK energy security, building on our 50-year history of onshore oil and gas exploitation. I ask noble Lords to bear that in mind when weighing up the amendments we lay before the House today. I know some will, rightly, raise concerns about the impact of shale gas development on our climate goals. I see shale as a part of the transition to a low-carbon economy.

Shale gas has a role to play in this. The carbon footprint of UK-produced shale gas would likely be significantly less than coal and also lower than imported liquefied natural gas. As the Committee on Climate Change said last year, for flexible power supply and for heating and industrial use, the UK will,

“continue to use considerable, albeit declining, amounts of gas well into the 2030s”,

14 Oct 2014 : Column GC32

which will leave,

“a considerable gap between production of North Sea gas and our total demand”.

It argues that this demand,

“can either be met through imports or UK production of shale gas”,

and concludes that,

“if anything, using well-regulated UK shale gas to fill this gap could lead to lower overall lifecycle greenhouse gas emissions than continuing to import LNG. It would also increase the proportion of energy produced within the UK, improving our energy sovereignty”.

So the benefit to the UK of using home-grown shale gas is clear. It can displace a proportion of gas and oil imports. We have to face it: North Sea gas production is falling and we are becoming increasingly reliant on gas imports. Domestic shale gas could increase our energy security by cutting those imports. It can benefit the UK in terms of jobs, tax revenues and growth, mitigating some of the falling revenues from the North Sea. Ernst & Young’s recent supply chain report found that the industry could support around 64,000 direct and induced jobs. It can support the UK’s transition to a low-carbon economy by helping balance the intermittent supply of renewable energy.

The Government therefore support the development of shale gas and oil. However, it has become clear that difficulties in obtaining underground access pose a barrier to exploring this new industry. The same problem also applies to the deep geothermal industry, which is likewise at an early stage of development in the UK. There is growing interest in the role that geothermal district heating networks could play as part of the transition to low-carbon heating.

Currently, petroleum and deep geothermal energy companies must attempt to negotiate an access agreement with each landowner through whose land activities pass, no matter how deep the works. For new lateral drilling methods which can cover much larger areas underground, existing means of obtaining underground access can be disproportionately costly and time-consuming in relation to the potential benefits. Where a single landowner, or a group of landowners, refuses access, this can create significant delay and in the case of geothermal is likely to stop the project entirely. This is despite the fact that allowing underground access at depths below 300 metres is unlikely to affect the landowners’ use of their land.

These amendments therefore seek to simplify the current process by granting use of land below 300 metres in order to access petroleum and geothermal resources. Let me be crystal clear: we are not proposing any changes to surface access or to the regulatory system that deals with the potential risks associated with drilling and hydraulic fracturing. These regimes will remain the same. The Government have been clear that shale development must be safe and environmentally sound. A company looking to develop shale or geothermal would still need to obtain all the necessary permissions, such as planning and environmental permits. In addition, the onshore oil and gas industry has committed to engage with communities early at each stage of operations, as well as consulting through the planning application process. I reassure noble Lords that there are robust

14 Oct 2014 : Column GC33

regulations in place to ensure on-site safety, prevent water contamination, mitigate seismic activity and minimise air emissions, and the Government are not proposing to change them.

The government amendment before the Committee follows a 12-week public consultation on our proposals. The consultation attracted a large number of responses and provided an opportunity for the public to voice their concerns. The majority of respondents included campaign text opposing hydraulic fracturing or the proposed change to underground access legislation but did not specifically address the questions to the consultation. Surveys have shown higher public support. For instance, a recent University of Nottingham survey shows that among people who are aware of shale gas, support is more than 50% and more people support its extraction than oppose it. Support for the consultation proposals among stakeholder organisations that provided detailed responses on specific issues was considerably higher than the individual responses. Stakeholder responses from the petroleum and geothermal industry unanimously supported the legislation, as did wider industry, such as manufacturing, the steel industry and engineering associations. There were diverse views among local authorities and land and farmers’ associations, with a majority of local authorities and consultancies in favour of the proposal. Most public institutions and law societies remained neutral to the proposal, often agreeing with the proposal’s rationale, but raising specific issues. Environmental groups and various civil society organisations opposed legislation. Having carefully considered the various issues raised within the consultation responses and whether any compelling new arguments had been presented, we firmly believe that the proposed policy is the right approach. The full government response has been published on our consultation website.

I will now outline our proposals, as set out in these clauses. The first new clause seeks to introduce a right to use land at least 300 metres below the surface for the purpose of exploiting petroleum or deep geothermal energy. The right is limited to these purposes. For deep geothermal energy, the right to use Scottish deep-level land is limited to cases where the sole, or main, use of that energy is the generation of electricity.

The second new clause provides details on the scope of the right of use, and further clarifies the types of ways in which the right may be exercised and the sorts of purposes for which it may be exercised. This clause includes references to passing substances through or into land at depth and includes leaving substances in that land. This applies only in relation to the use of the land for the purposes of exploiting petroleum or deep geothermal energy, so it would not, for example, create any provision for nuclear waste. It does not replace any of the existing regulatory regime, so an operator will still require all the necessary permissions, like planning and environmental permits. Indeed, this clause also ensures that the provisions grant only a right of use and nothing more, so companies will have to comply with existing regulatory requirements.

The third new clause provides the Secretary of State with a delegated power to require companies, by regulation, to make payments to landowners under

14 Oct 2014 : Column GC34

whose land the right is exercised or other persons as defined by the regulation in return for the right of use. The regulation may also introduce a requirement for companies to provide specified information on these payments. The provisions are included only as a reserve power because both industries have made voluntary commitments to make a one-off payment of £20,000 to affected communities for each unique lateral well that extends by more than 200 metres. The key advantage of such a voluntary approach is to enable flexibility on the detailed arrangements. Different sites may require different arrangements depending on their characteristics. However, in case these voluntary payment schemes are not honoured, this clause will ensure that the Secretary of State can through regulation render them mandatory. Any such regulation will be subject to prior consultation.

The fourth new clause provides for a similar delegated power for a notice scheme. As with the payment scheme, the details of a statutory notification scheme would be set out in regulations following consultation. For now, both industries have committed to notifying communities of works taking place at depth, outlining the area of underground land accessed and the payment to be made. At this very early stage in the development of the shale gas, shale oil, and deep geothermal industries, the typical characteristics of a site and the typical timeframe for development are unknown. We cannot with certainty foresee the way in which industries’ activities will develop in different areas across the UK. A voluntary notification scheme is flexible so it can be adapted as the industries develop. The reserve power to create a statutory notification scheme would be applied only in case the voluntary approach proves not to be satisfactory.

The new fifth clause contains supplementary provisions concerning the powers to introduce payment and notice schemes. The clause contains provisions for the enforcement of statutory payment and notice schemes, including financial penalties for companies that breach the requirements. It also permits statutory schemes to confer functions on certain people, including the Secretary of State, such as a duty, or a requirement to consult. A sunsetting provision is included, which provides that the Secretary of State must review the payment and notice scheme provisions after five years and repeal the relevant sections if a power is not exercised within seven years and if the Secretary of State is satisfied there is no convincing case for retaining it. The Delegated Powers and Regulatory Reform Committee has recommended that regulations made by the Secretary of State to repeal these provisions be subject to the affirmative resolution procedure, and we will be looking to table an amendment to this clause before Report to that effect.

The sixth clause contains the relevant definitions and interpretations. Areas that are “onshore” are currently identified by the definition of “landward area” in regulations made under the Petroleum Act 1998. This clause includes a power to make changes to that definition.

Finally, the amendments seek to update Clauses 28 to 31 to reflect the inclusion of the new clauses on the right of use, and set out matters such as when the new clauses will come into force. We have also introduced an amendment to update the Title of the Bill.

14 Oct 2014 : Column GC35

3.45 pm

It is important to note that the issue of underground access we are proposing to address here will not make any changes to the existing regulatory regimes that govern and manage the potential risks of petroleum, deep geothermal activity and hydraulic fracturing. The proposals also provide wider engagement opportunities for individuals. It is also important to stress that the right of use in these provisions will apply at depths so far below the surface that the right will not have any impact on the landowner’s use of the land. For example, the deepest point of the Channel Tunnel is 75 metres; hydraulic fracturing will typically take place at a depth of 1,500 metres. At the same time, the rights of those affected by the development at the surface will not change.

The clauses we have put forward in the Bill will help us unlock exploration for shale gas and deep geothermal, as we move towards a low-carbon economy. Our robust regulation will protect residents while allowing this source of home-grown energy to develop in a way that is fair to communities. I beg to move.

Amendment 95ZBCA (to Amendment 95ZBC)

Moved by Baroness Young of Old Scone

95ZBCA:, Line 8, at end insert—

“(c) outside—

(i) Ramsar sites of international importance especially as waterfowl habitat;

(ii) World Heritage Sites;

(iii) Special Areas of Conservation as designated under European Council Directive 92/43/EEC;

(iv) Special Protection Areas as classified under European Council Directive 2009/147/EC;

(v) National Parks;

(vi) Areas of Outstanding Natural Beauty;

(vii) Sites of Special Scientific Interest;

(viii) Nature Reserves; and

(ix) The Broads.”

Baroness Young of Old Scone (Non-Afl): My Lords, by way of an aside, it is slightly surreal to be debating an amendment to an amendment on something that does not appear in the Bill. I should declare an interest as vice-president of the Royal Society for the Protection of Birds and president of the Wildlife Trust for Bedfordshire, Cambridgeshire and Northamptonshire.

Biodiversity in our species and habitats is not in a good way in this country. The State of Nature report showed that 60% of species are in long-term decline; that is, 755 species in the UK are in danger of extinction. The 2011 UK National Ecosystem Assessment showed that 30% of ecosystem services—the services that we as human beings get from the natural world and the environment—are in long-term decline. It is not, therefore, an issue about “tweety birds”, things that crawl and flowers but the very basic services on which human life depends.

The water framework directive, that highly important piece of European legislation, was responded to by the UK Government, who said that the percentage of waters achieving “good” status by the end of 2015 would increase from 26% to 30%. Alas, we are now in decline, with 25%

14 Oct 2014 : Column GC36

of waters achieving “good” status under the directive—not a great story. Some of the most important ways in which to turn that around are about making sure that those nationally and internationally important protected sites are the jewels in the crown of our ecosystem services, conservation and environment, and are properly protected so that species, habitats and waterbody quality are maintained.

My amendment would require shale gas extraction not to be permitted within these special conservation sites. I am sure that the Minister will say that the welcome reassurances we have just heard about the existing protection measures continuing should be sufficient: there is a body of European and UK law that already applies to all these sites. Alas, we see that being breached increasingly frequently. We are seeing the first signs of rise in damage to sites of special scientific interest since I thought we had put an end to that at the end of the 1980s. It is a heartbreaking turnaround.

The Committee will understand why I am concerned about the impact of shale gas extraction. There is a significant land take. The sites last for as long as 20 years. There are about 120 well pads per site. The impacts are well beyond the immediate site of entry into the substructure for extraction. There are issues such as water stress, and a recent AMEC report showed that up to 25,000 cubic metres of water per well could be required. That is not just about the abstraction of clean water, which already has many competing demands from human beings, wildlife and other uses, including industrial use, but results in waste water that has to be disposed of. We certainly do not have the waste water capacity to do that. There is water stress and water pollution. We have to be aware of the propensity to spills. The fluids used for extraction can pick up toxins, heavy metals and radioactivity from existing substances in the substructure.

Perhaps what I worry most about is habitat fragmentation and loss. We already know from our experience in the construction of onshore wind and solar technologies that unless they are very carefully handled, we see fragmentation and loss of habitat on a much wider scale than is absolutely necessary. I am not knocking those important technologies, but they need careful management. Of course we need to be aware that these sites create noise and activity such as traffic access and we run the risk of disturbance of some of the most important species.

Some 15% of the land that is under consideration for the next round of extraction coincides with special protection areas, special areas of conservation under European legislation, Ramsar sites, which are important globally designated wetland sites, and SSSIs, which are the jewel in the crown of national protection sites. An example that is very close to my heart is that 85% of the global population of pink-footed geese winter in the UK, yet two of the four main overwintering sites for pink-footed geese lie within the possible shale gas extraction sites. We have to pay real attention to those important areas. Potential licence areas also cover some of our most sensitive river systems. All nine of the Chilton chalk streams suffer from low flows as a result of overabstraction so further abstraction of water and the potential for water quality issues would be a real worry there.

14 Oct 2014 : Column GC37

The Government introduced additional planning guidance advising that there should be no shale gas extraction in national parks, the Broads, areas of outstanding natural beauty, natural beauty and world heritage sites except in exceptional circumstances where a public interest test could be shown. We welcome that, but it is not enough. It is guidance rather than having a legislative basis and does not cover sites of biodiversity importance, and our nationally and internationally important wildlife sites.

I welcome the amendments that we will debate shortly that other noble Lords have raised to introduce stronger environmental regulation around shale gas extraction and I appreciate that the Minister was keen to stress that the rights of owners of surface land and the protection of surface land remain. But additional measures are needed, hence my amendment. Removing these sensitive areas from the 14th licensing round would reduce the total area being offered for licence by just 12%. That is not a huge sacrifice in order to ensure that our most important sites remain protected and that we do not see an increase in the threat to our most globally important wildlife sites that we are already beginning to see from other pressures. I beg to move.

Lord Jenkin of Roding (Con): I thank the Minister for her powerful explanation of the case for developing shale gas. She also mentioned the fact that this legislation and, indeed, the whole consultation extended to geothermal energy. It is about that that I would like to say a few words in support of the amendment which I have tabled to the Government’s first new clause.

I totally support the case for extending the right to underground access. It is essential, and equally essential for both shale gas and geothermal energy. One of the advantages of the Recess was that the Government’s response to the consultation was published when we had a bit of time to look at it. I have read it from cover to cover. I have to say that it was not a particularly interesting exercise. I admire very much the detailed attention which was given to the public’s replies to the consultation, and I was not in the least bit surprised that the exercise was used by large numbers of people not to address the main questions the consultation was about. It evoked a torrent of opposition from organisations and people who have declared themselves totally opposed to any form of shale gas development. One thing that rather amused me was the criticism made by some of the people who put in a response about the inclusion of geothermal energy in the same consultation, as if somehow the Government were spoiling their protest by adding something which they probably supported. Conditions about underground access and the need for a simpler process, which I totally support, apply equally well to both. That is made perfectly clear in the impact statement about geothermal activities, which says:

“Operators wishing to extract geothermal energy have to negotiate with landowners for underground access. This is a time consuming, uncertain and potentially costly process. If a landowner refuses access, that project cannot continue”,

or would go ahead only after a lengthy and expensive process.

14 Oct 2014 : Column GC38

One thing I gained from the report, the Government’s response and the consultation is just how much more needs to be done by the industry and the Government to make the case for the development of shale gas. The Government have made it perfectly clear—indeed, my noble friend repeated it this afternoon—that over the next 20 or 30 years gas is bound to play a significant role in our energy supplies and how much better that we should have indigenous sources rather than being increasingly subject to the vagaries of a flexible and perhaps unpredictable international market.

I have discussed this with the trade association that represents onshore gas developments. It entirely recognises the problem, but I was left a bit unclear about what it is planning to do about it. It is something that has to be done, and the Government certainly have to take a lead on that.

Geothermal energy is important in this context. When I started reading the paper, I was aware that I did not know nearly as much about geothermal energy as I should. I know that my noble friend Lord Teverson is very knowledgeable about it—he has geothermal in his part of the country, Cornwall—but I was not, so I asked a number of people to explain to me what the potential is, how it should be developed and what they were doing about it. I found that immensely interesting.

I do not propose to use this speech to deliver a lecture to noble Lords, but I will make three short points. Geothermal energy promises to be part of the future energy mix of the United Kingdom. It offers a supply of secure, low-carbon energy without the variability of wind and wave. It is derived from heat radiating from the centre of the earth and must not be confused with ground-source heat from solar warming. That is quite important: one is talking about sources of heat that may be a kilometre, a kilometre and a half or even two kilometres deep.

4 pm

Secondly, a number of commercially successful systems already operate in the United Kingdom, including that in Southampton, which is now very well known. The British Geological Survey has located geothermal basins all over the United Kingdom. The opportunities are therefore immense. I am told that less than 1% of the world’s potential supply of geothermal energy is currently being exploited, which leaves an enormous opportunity for a steady, low-carbon source of energy to be used for the benefit of people. China is in fact the largest producer of geothermal heat and the US is the largest producer of geothermal power.

The third point is that geothermal energy comes in a wide variety of temperatures. Much of it is not hot enough to generate electricity and could be boosted only at an unreasonable expense, which in most places is not regarded as worth while. However, it is a source of heat and it can be and is used for providing heat for a variety of sources—not just domestic heat, but industrial heat and so on. That is particularly true of the substantial sedimentary basins at depths of one and a half to even four kilometres, as in Cheshire, eastern England and the Wessex basins. Heat is every bit as important as the generation of electricity—indeed, from this source probably more so.

14 Oct 2014 : Column GC39

This brings me to my amendment to the Government’s new clause. Subsection (5) of that clause refers to Scotland. I have no doubt that my noble friend the Duke of Montrose will enlighten us on this, but all the preceding subsections of that clause refer simply to exploiting deep geothermal energy, without circumscribing the purpose for which it is to be used. Subsection (5) confines it in Scotland to where the “sole, or main, use” of a site is “the generation of electricity”. I cannot understand why. Can they not use geothermal for heat purposes in Scotland? This subsection must have been put in for some purpose, but for the life of me I have not been able to discover what it is—nor, I must say, have those advising me. This impact may be the result of some technicality of devolution, but in Scotland, under this clause, or using the facilities provided under this clause, geothermal can be used only for the production of electricity. I would be very interested to know what lies behind the need for this subsection. I commend this amendment to the Committee.

Lord Borwick (Con): My Lords, I welcome the Government’s amendments. They are critical to allow the shale gas industry to get on with the job of extraction. Furthermore, these amendments involve no disruption to families or communities.

The Government have said that the current rules for agreeing subsurface land access are time-consuming, uncertain and costly, as my noble friend mentioned. Currently, landowners own the land to the centre of the earth. This means that companies involved in shale gas have to negotiate for access to land thousands of metres below the surface, where there is no possible impact to households. However, given that lateral wells could extend for several kilometres, this could involve hundreds or thousands of individual negotiations and make the industry unworkable. On top of this, Greenpeace has set up a campaign—I believe it is called Wrongmove—specifically designed to use this legal loophole to stall the industry by asking people to not allow land access rights. It is important that we get a move on with shale extraction; such delaying tactics will slow the process right down.

These amendments are welcome. They would bring shale into line with other industries, such as coal and telecommunications, which already drill and lay pipes below people’s homes at a much shallower depth. The measures apply only to drilling 300 metres or more below the surface, and the proposals will not impact the robust regulations for shale gas drilling. The Royal Society has concluded that the industry can be undertaken safely. My noble friend the Minister mentioned that it will not affect people on the surface. Indeed, if people on the surface can actually detect that somebody is drilling a mile down beneath their land, they will be in such a state of technological advance relative to other human beings that I am sure they will be able to make a fortune out of that ability to detect fracking. However, I wish that legislation in this area would not insist on the word “petroleum” to refer to everything other than petrol. I appreciate that there are some technical reasons, but it really does confuse matters.

I am very much in support of these amendments.

14 Oct 2014 : Column GC40

Lord Whitty (Lab): My Lords, I have an amendment in this group, Amendment 95ZBH, to go with Amendment 95ZBG. Those noble Lords who are familiar with the proceedings of the Energy Bill and the Water Bill will know that my proposition here has appeared before your Lordships in a different guise in both those proceedings. I am reasonably convinced that shale gas and shale oil should be part of our energy mix. I am somewhat sceptical about the exaggerated claims of the transformational effect of having a supply of shale gas within the UK on our total energy mix, but that is for the future.

I do not wish to impede the proper exploration or delivery of shale gas and oil. However, the Government have to recognise that some reassurance is required. It is not simply about campaigns and nimbyism and general antagonism towards shale gas and fracking; it is a very realistic, logical and understandable apprehension of what impact could result from widespread use of this technology. As I say, I do not wish to impede it, except in certain respects, to which I shall come later. However, I implore the Government to recognise that, if they are to give the go ahead to widespread use of drilling, both exploratory and delivery, of shale and oil through fracking, the public need reassurance about the risks. Secondly, they need reassurance that the proper regulation covers them which, by and large, the Government have managed to assure me is there. Thirdly, I am less reassured about the degree to which the enforcement of those regulations can be guaranteed by the various bodies, particularly the Environment Agency, local authorities and the HSE. At the moment, the resources available to those bodies are being squeezed rather than the opposite. While I have faith in those organisations—and both the noble Baroness, Lady Young, and myself have had some experience of the Environment Agency—they have the ability to do it but not currently the staffing or resources to deal with widespread use of fracking and drilling. Therefore, we need reassuring on the level of resources as well as the rigorousness of enforcement.

The final thing on which we need reassurance concerns the public’s general apprehension that, despite the fact that we have good regulation and that in general the regulations will be enforced, there could be some breach, disasters or unforeseen effects from a major new technology—and a very costly one locally and potentially more widely. History teaches us that we have had previous experience of this. In many ways we know the great benefits which were brought about by the development of the coal industry and, most of us would argue, the nuclear industry, but they have also caused serious risks and serious damage to our environment. No provision was made in the early days of the coal industry—why would it be?—or indeed the early days of the nuclear industry for the contingencies of clear-up of the waste and other damage which might be caused. If we are moving to a new phase of technology, we should begin to make provision for ensuring that the industry that is licensed to undertake shale fracking and drilling has the wherewithal to meet any potential disastrous outcome.

My previous amendments to the earlier legislation on energy and water were slightly more complicated than this, so I have tried to make it a bit simpler and

14 Oct 2014 : Column GC41

also to give the Government some flexibility. The Government could do this in a number of ways. They could require as a condition of the licence that a contingency fund is established by an individual fund or they could require that an individual firm donates to a nationwide or region-wide fund. My amendments therefore leave that with the Secretary of State and the form of the regulations entirely with the Secretary of State, but a contingency fund for that liability needs to be established in one way or another. I think that my amendment makes that principle clear. The Government may not be prepared to accept the precise wording but an indication that in principle they understand and accept that argument would be welcome.

Again looking back somewhat historically, I say two other things. First, the Government make a lot of the fact that this is nothing new—that we have had onshore wells in the UK for decades. I know that in my adopted county of Dorset there is a significant amount of onshore oil drilling. However, it is also a fact, which I was not aware of until relatively recently, that over the last 100 years licences have been given for onshore drilling mainly in England at more than 2,000 wells. For 53% of those wells, most of which were defunct years ago, the ownership is unclear. That means that the liability is unclear and it also means that if at some stage it is found that some damage has been done, we will not know who is liable.

Switching to looking forward, if we are now giving licences to drill to a number of different organisations, some of which are relatively small companies, we need to have the reassurance that in the future—and it may be decades in the future—they will have the wherewithal to meet the costs of clearing up that damage. That is what my amendment seeks to achieve. As I said, I am not wedded to the wording. I can make it much more complex again if the Government insist or they could make it much more complex themselves, but I would like an indication of support in principle for my amendment.

While I am on my feet, I express support for the amendment of the noble Lord, Lord Jenkin, and the reference to heat, albeit that it is not entirely clear why it is necessary and why the Scottish dimension is different from that of everybody else, but certainly heat from geothermal needs to be referred to in the same context as power.

Secondly, in general I support the overall approach of the amendment in the name of the noble Baroness, Lady Young. Surely, at least in relation to national parks, it must be clear that there should not be any above-ground drilling. At the very least, I hope that the Government will be prepared to accept that. A wider range of sites, which I would also like to be protected, is designated in the noble Baroness’s amendment. However, it is pretty clear that the population, whatever their views on fracking and drilling in general, do not want any intrusions into our national parks.

4.15 pm

Lord Teverson (LD): My Lords, I very much support the amendments of my noble friend the Minister. The socialist in me would say that I do not see why individual landholders should have particular rights over ground

14 Oct 2014 : Column GC42

more than 300 metres deep. It does not in any way disturb their properties above; 300 metres is a long way down. Certainly all shale gas, conventional gas or oil, geothermal or hot rocks geothermal extraction takes place below that level.

I thank my noble friend Lord Jenkin for his excellent exposition of geothermal; I can see that the exchange of information will be more than two-way in the future and he will quickly overtake me on this issue. There has been an uncertain legal position over the right to heat; how do you define heat? It is not a substance but a characteristic of substances that you then extract. These proposals make the situation absolutely clear to developers so that geothermal extraction can start to take place and investors can have some confidence in this form of energy.

I had a great experience earlier this month. I went to a quarry called Rosemanowes, near Penryn, some 10 miles away from my home. More than 20 years ago, the then DTI carried out some boring for geothermal experimentation there. Under DECC’s Energy Entrepreneurs Fund, an organisation called Geothermal Engineering Limited has been able to reuse that borehole by putting down another polypropylene pipe for 1.5 kilometres. Water was pumped down and came back up from that depth at a temperature of 60 degrees. The company reckoned that they could increase it to 90 degrees. Obviously, the further you go down the more you can increase the temperature. With the renewable heat incentive introduced by the Government, deep geothermal heat becomes possible. As my noble friend Lord Jenkin said, in the short term, extraction of heat from geothermal will be far more important than the potential for electricity generation; you have to go down to some 9 kilometres to increase the temperature to 200 degrees. With much smaller investments, there is potential to reuse existing boreholes —the noble Lord, Lord Whitty, said that there are 2,000 scattered around England—for geothermal heat. That is why I particularly welcome these new clauses.

I predict that in the medium to long-term future, geothermal will be far more important than shale gas. I also think that the shale gas revolution, which I am not against as a substitute for North Sea oil strategically in our energy security, is probably overhyped. However, if it can be made to work under exacting environmental standards, I do not want to get in its way. I therefore welcome these clauses and accept that they must be considered within the context of very strict environmental control and licensing outside this piece of legislation.

As to some of the other amendments, I agree with my noble friend Lord Jenkin and do not understand why there is an exclusion regarding geothermal energy. I agree also with the noble Baroness, Lady Young, that there should be some specific restrictions in the legislation. I am not sure the whole of her list should be included but we need to be firm about certain areas, and it would be useful if it were stated in primary legislation.

I very much agree with the objectives of the noble Lord, Lord Whitty, but am not sure about some of the detail. Why do we need a whole 12 months of monitoring beforehand, looking at base data? I am sure there are all sorts of technical reasons for that but I wonder if they go a little far sometimes in standing in the way of a development that can go ahead. I agree that there

14 Oct 2014 : Column GC43

are a number of areas that we have to be very careful about. Whether those are put in secondary legislation or in the Bill, I am not sure. I congratulate my noble friend on bringing these amendments forward. They will do great things for our energy mix in future.

The Duke of Montrose (Con): My Lords, I must apologise to the Committee as I have not read the consultation response and so am not up on all the issues that have been looked into. I declare an interest as an owner of land in Scotland.

As we venture into this field of land at a depth of more than 300 metres and questions of ownership and interest, I just wonder whether all aspects have been looked at. One thing that is quite useful is that all coal, petroleum and so on are in the power of the Government but there is a chance that, once a shale extraction site has been established and there are large channels out under various properties, people may find that something else can be developed within that property. That might be coal gasification or something like it at deeper levels. I do not know how deep coal mines go in this country. I hope, with any luck, that they are not more than 300 metres but some coal mines are very deep indeed. One has to think of what effect establishing the shale gas network will have on other interests within the land.

I was very interested in the noble Lord, Lord Whitty, talking about the knowledge of the Environment Agency in monitoring this. In fact, it may well be that the skills that my noble friend Lord Borwick referred to in being able to detect deep drilling will become rather more vital. Presumably the Environment Agency can tell that drilling is more than 300 metres deep. It would be perfectly possible to drill a hole 300 metres deep and then put out side-feelers at less than 300 metres, saying “Oh, but we drilled to the depth we needed to”. That is where more surface problems might arise.

I guess that the question of why heat is not included in the Scottish powers is that we did not reserve heat to Westminster when we passed the Scotland Act. No doubt the Minister will tell me what the correct answer is on that. The other thing I thought of is this: supposing this network is established at great cost and somebody then does something to damage it—certainly an earthquake would damage it but you could not blame anyone for that—what rights do the owners of a shale extraction business have to their assets that are underneath other people’s property?

Baroness Worthington (Lab): I will speak to the Government’s amendments to the Infrastructure Bill and to Amendment 95ZBE in my name. We have had an excellent debate this afternoon. The Labour Party’s commitment to environmental protection is absolutely steadfast. We have an excellent track record of delivering protection for the environment in government. We were the Government that passed the Climate Change Act and the Countryside and Rights of Way Act. We also established the national parks. There should be no doubt about our desire to enhance and protect our environment, and tackle climate change. That said, we do not oppose the extraction of new fossil fuels in this country on principle. However, we will insist that they respect environmental limits at both a local and global level.

14 Oct 2014 : Column GC44

I turn to the specific issue of trespass, which these clauses mainly address. They deal with a legal anomaly that was established relatively recently by legal precedent. We believe that this anomaly should be addressed and we do not agree that this somehow takes away a long-established right that people have held dear. It is certain that a legal precedent will be used to hold up the proceeding of geothermal and potentially fracking. People are saying that we need judicial scrutiny of each and every incident of fracking, but that seems to me quite an inefficient and wasteful use of judicial time when we have existing systems for ensuring that these projects go ahead under tight limits.

Equally, I have some sympathy with the numerous civil society groups that have now set themselves in opposition to fracking. My reason is that, unfortunately, this whole issue has been handled so appallingly badly that there is now a deep sense of mistrust and opposition, which is very genuine and heartfelt. Polling shows that as much as a quarter of the population is quite vehemently opposed to fracking, a quarter is supportive and a half does not care, but that first quarter will be vocal and will want to have its voice listened to. The opposition has grown because of the way that this matter has been presented to us. It was offered as a silver bullet to all our energy needs. We were told that this was going to drastically reduce costs and create a huge number of jobs, and that was the basis on which it was promoted.

I was very interested to listen to the Minister’s speech today, which was very different in tone. The emphasis was on energy security and climate change benefits relative to other sorts of fossil fuels. That is very welcome because that is the area where fracking has a role to play in terms of potential security of supply. It is certainly also true to say that, done well with the proper environmental protections, fracking, and fracked gas in particular, can have a significantly lower carbon footprint than imported sources of gas.

I think that there has been a certain amount of overhyping and a certain naive belief that we can look across the Atlantic at what has happened in the US and simply import it here. I am sure that those parallels have been drawn by various people in the Government. That is unfortunate because the US does not have a reputation for strong environmental regulation—quite the opposite. It has also until very recently set itself against action on climate change. Therefore, one can see how the Government saying that we are going to do what the US has done has necessarily upset people and caused them to be deeply suspicious. It is also true that we are in a world where we are trying to take action to tackle climate change, and this is a potential new source of fossil fuel which is being brought to the market and which would otherwise stay in the ground.

Therefore, I understand where the opposition is coming from on this but I do not think that the solution is to hold up this new source of energy through exploitation of an obscure trespass precedent. I think that the answer is to make sure that we have very strong environmental protections and regulations, and a number of the amendments that we have tabled today have been put forward with that precise aim in mind.

14 Oct 2014 : Column GC45

Our amendment is part of our attempt to introduce stronger environmental regulations for fracking for geothermal and gas. We will see fugitive emissions from fossil fuel activities but at the moment there is not really a government policy or an environmental approach to such emissions in this country. My noble friend Lord Whitty pointed out that we have been extracting fossil fuels onshore for a couple of centuries and that we have had some experiences. However, relatively speaking, climate change is quite a new thing and fugitive emissions have not been considered to be an issue before. There is of course monitoring of these facilities but mainly from a health and safety perspective. Companies do not like to have obviously dangerous concentrations of methane because it is potentially explosive, which is a health and safety issue and could damage equipment. There is an incentive for them to do that sort of monitoring but there is little incentive to do monitoring that relates to climate change. Our concern is that, overall, if we are going to see this industry develop—and I remain relatively sceptical that it will happen on the scale that some people hope—we should do this firmly in the knowledge that it must be monitored and managed in terms of our climate change targets and carbon budgets.

4.30 pm

I learnt fairly recently over the recess that at the moment the UK has a network of monitoring stations dotted around the country that monitor background levels of greenhouse gases in much the same way that the Mauna Loa facility does in Hawaii. These are used to try to assess whether our inventory of greenhouse gases is accurate. We have a bottom-up inventory that takes the point sources of greenhouse gases and adds them all together. These monitoring stations are used to cross check to see whether we are capturing what we think is happening. It is complex and a lot of mathematics needs to be done to normalise these data but they exist. It is showing, I am told, that we have far higher methane levels in parts per million in the UK than the inventory would imply.

The methane could be coming from a number of sources and I am not saying that it is all coming from the fossil fuel industry, but given that we have this potential anomaly, it is probably not sensible to be embarking on a huge new industry—if indeed it ever becomes that—that is a source of methane without proper management and monitoring. Our amendment would require the Secretary of State to look into this and work with the Committee on Climate Change to assess fugitive emissions and come up with a plan for reporting, monitoring and managing those emissions so that we can have accurate reporting into our inventory and then a management procedure to make sure that we stay within our budgets.

A number of noble Lords have spoken eloquently this afternoon. The noble Baroness, Lady Young of Old Scone, made a persuasive case for the exclusion of fracking in protected areas. I began as a campaigner working on the CROW Act, so I am passionate about protecting the jewels in our crown, as the noble Baroness described them. However, we need this industry to be well regulated wherever it occurs, not just in the jewels in our crown. If only 12% to 15% is covered by those

14 Oct 2014 : Column GC46

areas, we should not ignore the fact that that leaves 88% that also needs proper protection and for this industry to be properly governed and managed. I am interested to hear the Minister’s response to the arguments put forward by the noble Baroness, which were very strong.

The amendment of my noble friend Lord Whitty raised another interesting issue. The idea of a contingency fund has merit. It is certainly the case that sites have become orphaned in the past and that ownership changes. Some of these companies are not large petrochemical or global energy companies but smaller wildcat companies that may not be around for very long, so there is a risk. This is definitely something that we should explore.

I am always interested to hear from the noble Lord, Lord Jenkin of Roding. I was particularly interested this afternoon in his excellent and hugely encouraging exposition of the role that geothermal can play. The noble Lord, Lord Teverson, is right. We might see the geothermal industry move forward with much less fanfare but with a more solid basis than fracking. The geothermal provisions are important. This is an exciting source of potential renewable energy, particularly renewable heat. As was mentioned, the renewable heat incentive could put this technology on the map. We could become world leaders in it, which would be nice. It should go without saying, but geothermal is ultimately a source of nuclear energy because it is the radioactive elements in the core of the earth that keep the heat. This is possibly a really efficient, effective and cheap way of doing nuclear power, which we probably need.

I will end there. This is a question of balance. We do not wish to impede activities that can improve our security of supply, but we need this to be done in the context of robust regulation. Unfortunately, I do not think that that is the spirit that has prevailed to date. These amendments address a very narrow aspect of fracking and there is not really anything here from the Government on the environmental aspects. That is regrettable. We have tabled amendments that seek to address that and we will debate those shortly.

Baroness Verma: My Lords, I thank all noble Lords, in particular my noble friends Lord Borwick, Lord Teverson and Lord Jenkin, for their support for the amendments. The debate has been informative and measured. I hope, in responding to the amendments, that I can reassure noble Lords and address some of the concerns that have been raised. If I do not satisfy noble Lords today I will read Hansardand write back to them in fuller detail.

The amendment in the name of the noble Baroness, Lady Young of Old Scone, would exclude these proposals at a range of locations, including national parks, the Broads and areas of outstanding natural beauty. She called them the jewels of our great country. Companies will still need all their other permissions to be in place before accessing underground land. Sensitive areas would be protected in exactly the same way as they are now. The Government have recently clarified the strong protections that exist for these areas. Where applications represent major development, planning permission can and should be refused in national parks, the Broads and areas of outstanding natural beauty except in exceptional circumstances where it can be demonstrated they are in the public interest.

14 Oct 2014 : Column GC47

Applicants for licences will also have to show that they understand the environmental sensitivities of the area applied for and are ready and geared up to address them. They will have to consider the implications of the new planning guidance. We do not intend to include any exemptions to these in our proposals, because we believe that the existing regimes have already been clarified to allow for these sensitivities.

The noble Baroness also asked whether this clause would lead to water shortages. Where water for fracking operations has been provided by local water companies, they are obligated to produce and update every five years a long-term plan that has contingency reserves in case of drought. Therefore, water companies will always assess the amount of water available before providing it to operators. The Environment Agency has said that it will not license abstraction above environmentally sustainable levels. The amount of water used for fracking is controlled by an abstraction licence specifying the maximum amount that can be used.

My noble friend Lord Jenkin very eloquently laid out the potential of geothermal—far better than I did. His amendment proposes to extend the right to use deep-level land for geothermal energy where the main use of that energy is, or will be, the generation of heat, as well as electricity. He also asked about Scotland. My noble friend the Duke of Montrose was able to respond to and answer that question for me by saying that the amendment includes geothermal energy for the purpose of electricity generation because, under the Scotland Act 1998, generation is a reserved matter. So the use of deep geothermal energy for other purposes is devolved to the Scottish Government and, for that reason, we have had to exclude it from clauses; however, we are in discussion with the Scottish Government as to whether they wish to extend the scope to cover this area of heat generation.

My noble friend Lord Borwick asked why we used the word “petroleum”. Licences to exploit oil and gas in the UK are awarded under Section 3 of the Petroleum Act 1998, and that Act permits the Department of Energy and Climate Change to grant licences to search for, bore for and get petroleum. So we use “petroleum” in the context of the Bill because the licences granted to operators are petroleum licences under the 1998 Act.

I turn to the amendments of the noble Baroness, Lady Worthington, to which the noble Lord, Lord Davies, has put his name. The purpose is the production of a report on fugitive greenhouse gas emissions from onshore energy extraction, and that the report be produced six months after the passing of this Bill, and will include,

“monitoring, reporting and managing of existing and future fugitive emissions”.

I draw noble Lords’ attention to the fact that these fugitive emissions are reported already at a national level on an annual basis, as part of the UK Greenhouse Gas Inventory. The detailed methodologies and data sources used to inform these emission estimates are provided in that report, which is publicly available.

The noble Baroness of course raises the concerns of certain groups, and we should take all concerns raised by all people very seriously. However, we must remain committed to ensuring that we work absolutely to the

14 Oct 2014 : Column GC48

rigour of the regulators. As I set out in my opening remarks, fracking will enable us to reduce our carbon footprint. I know that both the noble Baroness and I share concerns about environmental impact, and we work hard and closely together. I am very pleased that the Opposition agree that we want to ensure, first and foremost, that it is environmentally acceptable to reduce our carbon footprint and work towards reducing carbon emissions. I have certainly never felt that the Government have seen fracking as the silver bullet. What I have seen and heard many times over is that it is part of the wider energy mix that we need to have in our country to ensure that we have energy security and less dependency on outsourcing it from international markets.

I turn to the amendment proposed by the noble Lord, Lord Whitty, for the establishment of a contingency fund by undertakings engaged in the onshore oil and gas industry in order to meet the cost of any environmental or economic damage caused as a result of onshore oil or gas activities. Let me make it clear that the operator is liable for the shale gas well and any damage or pollution it may cause. When operations finish, the operator is responsible for safe decommissioning of the well and for restoring the site to its previous state or suitable condition for reuse. Regulators and controls are in place to minimise risks and any impact on landowners. Any one of these regulators will consider individual concerns about impacts, as far as they fall within their responsibilities. If any environmental damage were to occur, then, in accordance with statutory requirements and government policy, remediation of the damage would be dealt with under the main regimes for dealing with contamination. These regimes provide for the remediation of environmental damage and contaminated land, including water, and apply to the extraction of both petroleum and deep geothermal energy. Taken together, if a company causes damage, harm or pollution to the environment, companies can be required under these regimes to remediate the effects and prevent further damage or pollution. This is the same approach that applies to other industries and we believe that the existing law is robust.

At present, if a shale gas operator becomes insolvent and no rescue mechanism for the company can be found, in limited circumstances the liability could ultimately pass to the landowner. Environmental regulators and planning authorities have the power to require upfront financial bonds to address this risk wherever they deem this necessary. This is more expensive for companies than a group scheme would be but it provides the reassurance that neither taxpayers nor landowners will be left to foot the bill. As a less expensive alternative to upfront bonds, my department has been working with the industry’s trade body, the UKOOG, the onshore operators group, to ensure the development of an industry scheme that will step in and pay for the liabilities in this situation and any other where the liable company cannot be identified.

4.45 pm

The noble Lord, Lord Whitty, also asked how the regulators would be funded. The HSE and the Environment Agency have confirmed that they have sufficient specialist inspectors to deliver the regime for which they are responsible during the current shale

14 Oct 2014 : Column GC49

gas exploratory phase. If a large number of wells are drilled in order to produce shale gas, the HSE and the Environment Agency may need to increase the number of inspectors accordingly, but there are plans in place to review their resources at relevant times. There is no risk of production increasing too quickly for regulators to keep pace, as has happened in some cases in the US. Before activities can begin, the operator will need to have received the relevant permits from the regulators, so any excess applications would be held until the regulator was able to take a decision.

The noble Lord also asked about long-term ownership and therefore liability. A study conducted by the ReFINE group identified a large number of wells where it was not clear who the operator was, but the majority dated from the 1940s or earlier, so this would no longer be the case.

I hope that my reassurances to my noble friend and to noble Lords have been sufficient and that the noble Baroness will feel able to withdraw her amendment.

Baroness Young of Old Scone: I thank the Minister for her response to my amendment to her amendment but I do not think that I am convinced. At the very least, if the guidance proposed for national parks, the Broads, AONBs and World Heritage sites is all that is on offer, can we at least have that guidance expanded to special protection areas, special areas for conservation and SSSIs? It seems a shame that we are getting reassurances on landscape but not on biodiversity when the UK is already failing its biodiversity internal scorecard. However, at this point, I beg leave to withdraw the amendment.

Amendment 95ZBCA (to Amendment 95ZBC) withdrawn.

Amendment 95ZBD (to Amendment 95ZBC)

Tabled by Lord Jenkin of Roding

95ZBD: Line 16, after second “of” insert “heat and”

Lord Jenkin of Roding: My Lords, I am completely convinced by my noble friend’s reply and am interested to know that the Government are in discussion with the Scottish Government about heat being used. I think that we need to follow this up, but in the mean time I am very happy not to move this amendment.

Amendment 95ZBD (to Amendment 95ZBC) not moved.

Amendment 95ZBE (to Amendment 95ZBC)

Tabled by Baroness Worthington

95ZBE: Line 16, at end insert—

“(6) No later than 6 months after the passing of this Act, the Secretary of State must, in consultation with the Committee on Climate Change, publish a report on fugitive green-house gas emissions from on-shore energy extraction in the UK.

(7) The report must include proposals for the measurement, monitoring, reporting and managing of existing and future fugitive emissions.”

14 Oct 2014 : Column GC50

Baroness Worthington: My Lords, I am afraid that I am not reassured by the noble Baroness’s reply either, welcome though it was. It is good that this is being captured and possibly reported, but my point was that I do not think that it is capturing all the point sources as accurately as it could. More than that, somebody reporting emissions is not really the nub of the problem; it is managing those emissions down and ensuring that they stay within a carbon budget. I believe that the Government need to think again about whether they have a policy package in place to deal with fugitive emissions. I do not think that they do. Therefore, this amendment is important, but at this stage I am happy not to move it.

Amendment 95ZBE (to Amendment 95ZBC) not moved.

Amendment 95ZBC agreed.

Amendment 95ZBF

Moved by Baroness Verma

95ZBF: Before Clause 28, insert the following new Clause—

“Further provision about the right of use

(1) The ways in which the right of use may be exercised include—

(a) drilling, boring, fracturing or otherwise altering deep- level land;

(b) installing infrastructure in deep-level land;

(c) keeping, using or removing any infrastructure installed in deep-level land;

(d) passing any substance through, or putting any substance into, deep-level land or infrastructure installed in deep- level land;

(e) keeping, using or removing any substance put into deep-level land or into infrastructure installed in deep-level land.

(2) The purposes for which the right of use may be exercised include—

(a) searching for petroleum or deep geothermal energy;

(b) assessing the feasibility of exploiting petroleum or deep geothermal energy;

(c) preparing for exploiting petroleum or deep geothermal energy;

(d) decommissioning, and other activity which falls to be continued or undertaken, in consequence of activities undertaken for the purposes of exploiting petroleum or deep geothermal energy.

(3) The right of use includes the right to leave deep-level land in a different condition from the condition it was in before an exercise of the right of use (including by leaving any infrastructure or substance in the land).

(4) The right of use—

(a) does not give a person (“R”) any power which is greater than, or different from, the power which R would have had if the right had been granted by a person legally entitled to grant it; and

(b) does not relieve a person (“R”) from any obligation or liability to which R would have been subject if the right had been granted by a person legally entitled to grant it.

(5) Section (Petroleum and geothermal energy: right to use deep-level land) and this section bind the Crown.”

Amendment 95ZBF agreed.

14 Oct 2014 : Column GC51

Amendment 95ZBG

Moved by Baroness Verma

95ZBG: Before Clause 28, insert the following new Clause—

“Payment scheme

(1) The Secretary of State may, by regulations, require relevant energy undertakings to make payments in respect of the proposed exercise, or exercise, of the right of use.

(2) The regulations may require payments to be made—

(a) to owners of relevant land or interests in relevant land;

(b) to other persons for the benefit of areas in which relevant land is situated.

(3) The regulations may—

(a) specify the amount or amounts of payments;

(b) make provision for determining the amount or amounts of payments.

(4) The regulations may require relevant energy undertakings to provide the Secretary of State, or any other specified person, with specified information about—

(a) the proposed exercise, or exercise, of the right of use;

(b) the making of payments in accordance with regulations under this section.

(5) Before making any regulations under this section, the Secretary of State must consult such persons as the Secretary of State considers appropriate.”

Amendment 95ZBH (to Amendment 95ZBG)

Tabled by Lord Whitty

95ZBH: Line 13, at end insert—

“(c) make provision for any contingency fund prescribed by the Secretary of State under subsection (3A).

“(3A) Regulations shall enable the Secretary of State to require the establishment of one or more contingency funds either by a single energy undertaking, or by a number of energy undertakings or by all undertakings engaged in the on-shore gas and oil industry, and such a contingency fund shall be available to meet the cost of unforeseen damage to the environment or economic damage to any person or persons arising from the operation of oil or onshore gas activity.”

Lord Whitty: My Lords, I am not entirely convinced by what the Minister said. Indeed, her reference to the need for an industry scheme for potential compensation where it is unclear where the liability lies shows that there is an issue here. I would be grateful if between now and Report the Minister could let us have some more information on that and on the bond scheme to which she referred, because I am still broadly of the opinion that this needs to be underwritten by legislation. Subject to that, I shall not move the amendment.

Amendment 95ZBH (to Amendment 95ZBG) not moved.

Amendment 95ZBG agreed.

Amendments 95ZBJ to 95ZBL

Moved by Baroness Verma

95ZBJ: Before Clause 28, insert the following new Clause—

“Notice scheme

(1) The Secretary of State may, by regulations, require relevant energy undertakings to give notice of the proposed exercise, or exercise, of the right of use.

14 Oct 2014 : Column GC52

(2) The regulations may require relevant energy undertakings—

(a) to give notice—

(i) to owners of relevant land or interests in relevant land;

(ii) to persons of other specified descriptions;

(b) to display notice within the area in which relevant land is situated or elsewhere;

(c) to publish notice (otherwise than by displaying the notice).

(3) The regulations may make provision about the information which the notice is to contain, including provision about information relating to—

(a) any payment scheme regulations which are in force;

(b) the application of any payment scheme regulations to the proposed exercise, or exercise, of the right of use;

(c) the method for obtaining a payment under any payment scheme regulations.

(4) The regulations may make provision about the manner in which notice is to be given, displayed or published, including provision requiring notice to be—

(a) displayed at specified places or places of specified descriptions;

(b) published in specified publications or publications of specified descriptions.

(5) The regulations may require relevant energy undertakings to provide the Secretary of State, or any other specified person, with specified information about—

(a) the proposed exercise, or exercise, of the right of use;

(b) the giving of notice in accordance with regulations under this section.

(6) Before making regulations under this section, the Secretary of State must consult such persons as the Secretary of State considers appropriate.

(7) In this section “payment scheme regulations” means regulations under section (Payment scheme).”

95ZBK: Before Clause 28, insert the following new Clause—

“Payment and notice schemes: supplementary provision

(1) Regulations under section (Payment scheme) or (Notice scheme) may make provision about the enforcement of relevant requirements, including provision for the imposition of financial penalties in respect of breach of relevant requirements.

(2) Regulations under section (Payment scheme) or (Notice scheme) may confer a function on—

(a) the Secretary of State, or

(b) any other person, apart from the Scottish Ministers or the Welsh Ministers.

(3) The functions that may be imposed include—

(a) a duty (including a restriction or prohibition);

(b) a function involving the exercise of a discretion;

(c) a requirement to consult.

(4) The provisions of sections (Payment scheme) and (Notice scheme) and this section which specify particular kinds of provision that may be made in regulations under section (Payment scheme) or (Notice scheme) do not limit the powers conferred by that section to make such regulations.

(5) The Secretary of State must carry out a review of sections (Payment scheme) and (Notice scheme) and the preceding provisions of this section as soon as reasonably practicable after the end of the period of 5 years beginning with the day on which they come into force.

(6) The Secretary of State must by regulations—

(a) repeal section (Payment scheme), and make any consequential amendments (including repeals) of the other provisions of this Act that the Secretary of State considers appropriate, if the relevant conditions are met in relation to the power under section (Payment scheme);

14 Oct 2014 : Column GC53

(b) repeal section (Notice scheme), and make any consequential amendments (including repeals) of the other provisions of this Act that the Secretary of State considers appropriate, if the relevant conditions are met in relation to the power under section (Notice scheme).

(7) The relevant conditions are met in relation to the power under section (Payment scheme) or the power under section (Notice scheme) if—

(a) that power is not exercised within the period of 7 years beginning with the day on which that section comes into force, and

(b) the Secretary of State is satisfied that there is no convincing case for retaining that power.”

95ZBL: Before Clause 28, insert the following new Clause—


(1) For the purposes of deciding whether land is deep-level land—

(a) the depth of a point in land below surface level is the distance between that point and the surface of the land vertically above that point; and

(b) in determining what is the surface of the land, any building or other structure on the land, and any water covering the land, must be ignored.

(2) In sections (Petroleum and geothermal energy: right to use deep-level land) to (Payment and notice schemes: supplementary provision) and this section—

“deep geothermal energy” means geothermal energy in deep-level land (including in water or any other fluid in deep-level land);

“deep-level land” has the meaning given in section (Petroleum and geothermal energy: right to use deep-level land)(4);

“landward area” has the same meaning as in the Petroleum Licensing (Exploration and Production) (Landward Areas) Regulations 2014 (see regulation 1(2) of those Regulations);

“petroleum” has the same meaning as in Part 1 of the Petroleum Act 1998 (see section 1 of that Act);

“relevant energy undertaking” means a person who proposes to exercise, or exercises, the right of use;

“relevant land” means land in respect of which the right of use is proposed to be, or is, exercised;

“relevant requirement” means a requirement imposed by regulations under section (Payment scheme) or (Notice scheme);

“right of use” means the right conferred by section (Petroleum and geothermal energy: right to use deep-level land);

“Scottish deep-level land” means deep-level land in Scotland or beneath waters adjacent to Scotland;

“specified” means specified in regulations under section (Payment scheme) or (Notice scheme);

“substance” includes electricity and any other intangible thing.

(3) The power of the Secretary of State to make regulations under section 4 of the Petroleum Act 1998 includes power to make such amendments of the definition of “landward area” in subsection (2) above as the Secretary of State considers appropriate in consequence of any other exercise of the power under section 4 of the 1998 Act.”

Amendments 95ZBJ to 95ZBL agreed.

Amendment 95ZBM

Moved by Baroness Worthington

95ZBM: Before Clause 28, insert the following new Clause—

“Shale gas extraction: baseline monitoring

(1) No shale gas extraction may take place before the operator has measured the baseline levels of methane in the groundwater over a 12 month period.

(2) After section 199(1) of the Water Resources Act 1991 (notice etc. of mining operations which may affect water conservation) insert—

14 Oct 2014 : Column GC54

“(1A) Notices under subsection (1) must, in the case of shale gas extraction, include baseline levels of methane in the groundwater.

(1B) Where a notice under subsection (1) includes baseline levels of methane in the groundwater, the Agency must issue a notice under subsection (2) requiring the levels of methane in the groundwater to be measured over a 12 month period.””

Baroness Worthington: I shall speak also to Amendments 95ZBN and 95ZBP. This carries on from where we left off in the last debate. As we said, we are absolutely committed to improving our environment and meeting our legally binding climate change goals. A key aspect of any new development, specifically an energy development based on fossil fuels, is that we need to ensure that the industry is set up in a way that is fit for the 21st century and the challenges faced by the 21st century.

We understand that this industry is really just getting going, but that is not the case everywhere. In the US, we have seen the industry grow very quickly with minimal regulation. That has been the cause of a high degree of concern. There are conflicting reports, but it seems that you can have increased methane emissions to air and groundwater from these activities.

Our first amendment would require that we get a handle on this issue and have a process for establishing a baseline of methane emissions to groundwater. Obviously, this is a complex issue and the exact wording of the amendment may not be precisely as it would need to be to address the problem. However, we have tabled it now because we are absolutely committed to ensuring that this is done in the right way. We hope that the Government can share that concern and goal. As I mentioned, the existing monitoring of methane is more geared towards health and safety than environmental concerns. That is what I allude to when I say that this must be governed in a way that is fit for the 21st century, where those global environmental concerns now have greater weighting than they have done.

There is obviously the question of how you go about the monitoring. Also, as touched on in the previous debate, there is the question of the cost. I hear anecdotally that the Environment Agency recently put in an application to the department for a sum of money to enable a very accurate form of laser monitoring to take place. That request for additional funds was declined. Are funds being made available so that the Environment Agency can do this job properly, so that we can start out on the right foot and ensure that we are using the best technologies that we know exist to get a good and accurate data set to enable us to manage this?

Amendment 95ZBN covers a number of different issues, beginning with the mandatory use of environmental impact assessments. At the moment, we know that the industry is volunteering to do environmental impact assessments for all fracking applications but we do not think that a voluntary approach is the right way forward. We also heard evidence from a number of groups that they see applications coming in that are conveniently sized at 0.9 hectares, which is just a tiny fraction below the statutory requirement. If you are a hectare in size, you must conduct an EIA. The RSPB made representations to us that it has been asked to comment on planning applications where no EIA has been shared with it. Even if the industry says that it is going forward on a voluntary basis, in practice it is not

14 Oct 2014 : Column GC55

at all clear that that is actually the case. I suppose that the particular issue is that the footprint of fracking seen above ground is quite small but its impacts in terms of the wider local and global environment can be extensive. There is definitely a need for an EIA, irrespective of the size of the footprint of the site, because it has such potential extended impacts from its operation.

Among those impacts is the use of fracking fluids. This is another great difference between the UK and the US. In the US, there was minimal regulation: you could literally do what you liked and did not need to tell anybody. That has not given the industry a good reputation. We do not want that repeated here. There is a need to disclose the fracking fluids. Obviously, when they are a mile down they are perhaps not of huge concern to local populations, but they come back up and there is the question of their handling above ground. It is not just a question of saying that they are too far away for us to care about. These fluids obviously have to get into the ground, but then they come out again, so there needs to be proper disclosure. Only then can you build up the trust needed to get the social licence for these projects to go ahead.

The third element is that water companies should become statutory consultees. This touches on another and controversial aspect of fracking: its use of water. Water often powers the fracking and the demand for water is extensive. We are fortunate in the UK that, at certain times of year, we do not have a shortage of water, but at other times of year we do. We have the issue of abstraction from water courses. We would not want to see this industry exacerbate areas already under stress. I know that the industry will say that we are moving to recycled use of water, but in reality a significant proportion of the fracking fluid stays underground and does not ever come back, so recycling is only part of the solution. There is also the potential for pollution of wastewater and drinking water sources, so it is correct that the water companies should be statutory consultees on applications.

5 pm

We set out a couple of years ago a list of six environmental criteria that we wanted to see addressed in order for fracking to go ahead. We know that some have been addressed to date but we are concerned that, in bringing forward these amendments to address the trespass issue, the Government have not taken the opportunity to introduce regulations that can improve the environmental management of this industry. It can only be good to build confidence and demonstrate that you are taking those environmental questions seriously.

This is even more important when we have a Prime Minister who attends a climate change meeting in New York and uses it as a platform to say that fracking is the answer and that we have to get rid of the green tape holding it back. That is not the way to engender trust and support among the general public and it is totally inappropriate in the context of the international climate change negotiations. We can see where the distrust comes from and it needs to be addressed. That can be done only when the Government come forward with comprehensive regulations that ensure that the environment is put at the heart of this and is not just seen as an afterthought. I beg to move.

14 Oct 2014 : Column GC56

Lord Young of Norwood Green (Lab): My Lords, I wanted to address this series of amendments not because I am opposed to any of them but to make a plea for looking at the genuinely objective evidence that is available. Durham University is conducting a lot of independent, objective analysis of fracking incidents and the potential threats. I agree with my noble friend Lady Worthington that there is a need to build public trust, but sometimes it is hard to do that when certain organisations are totally hostile to fracking applying in any circumstances whatever. They make allegations that are, quite frankly, unsubstantiated. That is my concern. When we look at evidence, we need to look at evidence that is substantiated.

Another website that is worth looking at is that of the US Environmental Protection Agency. It frequently asks questions such as: why does there need to be a two-year analysis of what is going on, and why can we not say now that fracking is terrible, ruins the environment and so forth? The response is that that is not the case. There have been some quite dreadful things. To my eternal shame, a BBC programme endeavoured to show that fracking was the cause of methane contamination, which meant that you could light the gas as it came out of the tap. My plea is that of course we should have proper safeguards and we need to build public trust, but we also need to ensure that we are not repeating unsubstantiated allegations and that we look at objective evidence. Of course fracking will not be the total solution but there is no doubt that, certainly in America, it has substantially cut emissions and it could have a role to play here, although the environment is somewhat different.

Lord Jenkin of Roding: My Lords, I do not think that any of us is in any doubt about the importance of baseline monitoring for the purposes of environmental control. I totally agree with much of what the noble Lord, Lord Young of Norwood Green, said about the misrepresentation that is going around on the whole question of fracking. This must be scientifically based. To my mind, that is where both the Government and the industry have so far failed to convince the public of the case for fracking. As the noble Baroness, Lady Worthington, said in her opening speech, my noble friend Lady Verma made the case for the need for shale gas on environmental grounds. That is the case we need to go on pressing.

With regard to the amendment moved by the noble Baroness, Lady Worthington, an enormous amount of work is being done by the British Geological Survey on the baseline monitoring of contaminants of various kinds, and on the protection of water. This has been sparked by examples in America, where there never has been any proper baseline monitoring. That is an example of the imperfections of their system of regulation, of which our people have taken full account. They recognise that if we are to control contaminants—it is very important that that should be done—we need to know where we are starting from. That is the heart of the noble Baroness’s amendment.

I am told that the British Geological Survey is about to publish a further study. It originally put in the 12-month period on the grounds that there might be seasonal variations. Its latest work on the contamination

14 Oct 2014 : Column GC57

of drinking water has shown that there are no seasonal variations: there is no evidence of that at all. I would not be in the least surprised if, in its further report—this is the advice I have had—it finds the 12-month period to be unreasonable and that the best method of assessing baseline monitoring for methane should be scientifically based. The work that is done by the BGS in this country is, for the most part, to the highest standard. The Government are entirely justified in putting their faith in it.

I do not know what the Minister will say in response to the amendment, but I would guess that everything the noble Baroness, Lady Worthington, is asking for is, in one way or another, already being achieved or will be achieved by the Government’s existing policy. I am interested to hear my noble friend’s reply. I share the view of the Committee that baseline monitoring is absolutely crucial if we are to have effective regulation.

Baroness Young of Old Scone: My Lords, I shall comment on baseline monitoring. We need to learn from other monitoring schemes that are already in place as a result of regulatory regimes and the planning system.

There are two issues here. First, the 12-month period may not be required for methane monitoring but it certainly is for biodiversity monitoring, which is also mentioned in one amendment in the name of the noble Baroness, Lady Worthington. Too often, I have seen planning appeals and inquiries get hideously beached as a result of inadequate 12-month monitoring of biodiversity impact. If a species is present only at certain times of the year, it is quite difficult to do a baseline account of it if you are doing that in a season when the species is not present and is not expected to be present. That causes delays in planning processes. It is important to make it very clear that some of these impacts and baselines can be dealt with only on a 12-month basis.

I accept the commendation by the noble Lord, Lord Jenkin, of the work done by the BGS and other statutory agency baseline surveys and ongoing monitoring processes. However, the other point of principle we ought to regard as important is the need to make commercial organisations that want to undertake commercial activities responsible for ensuring that the baseline monitoring that needs to happen before they begin is undertaken—and undertaken at their expense. That is an important principle commonly adopted in many regulatory regimes and in much of the planning system. We must not move away from that. It is important that the commercial organisations get their heads around what the issues of their impact are before they start to put forward their propositions, rather than relying on somebody else’s baselines and not really understanding, when their propositions come forward, what they will need to monitor and how they will need to monitor it. That is an absolutely fundamental principle.

Lord Borwick: My Lords, I entire agree with the noble Baroness when she says that the task is to increase people’s confidence in this process of fracking, but I am absolutely certain that the 12-month baseline suggested here is not the right solution, because of the

14 Oct 2014 : Column GC58

work done by the British Geological Survey mentioned by my noble friend Lord Jenkin. I understand that it was published on Monday 6 October as an interim study and found in its conclusions that background methane in aquifers is generally low and that the majority of sites that it has studied over time have shown little change in the methane levels. That suggests that a risk-based approach should be taken, rather than monitoring in every individual site proposed.

On the second amendment in this group, Amendment 95ZBN, the danger I see is the composition and amount of fracturing fluid cannot necessarily be told immediately at the beginning of the planning process. If this amendment was passed, if it was decided to change the chemical make-up of the fracturing fluid, the whole planning process would have to be gone through again —and, if it turned out that a greater quantity was needed than originally proposed, it would be necessary to go through the planning process again. Given that that process is in danger of taking many months or years to go through, a small geological change that increases the amount of fracking fluid that is required might delay the process right in the middle and make the situation more dangerous than it would otherwise have been. All this is being looked at by the Environment Agency and, with its rules, we should increase the confidence of people in the work that is being done on the regulation of fracking by that agency.

Lord Whitty: My Lords, I want to underline one point under Amendment 95ZBN, which will be tedious because it was raised during the course of the passage of the Water Bill, on the role of water companies. I understand the exasperation of my noble friend Lord Young and the noble Lord, Lord Borwick, who referred in similar terms earlier to scares being raised about shale gas, and their not necessarily being very scientifically based. However, I do not think that Thames Water or Severn Trent Water fall into the category of scaremongering green organisations. They really ought to be brought into this process, because the biggest anxiety is about the effects on the water system and giving the water companies a statutory consultee role would help to reassure a number of people about the effect of fracking operations on the water supply. I therefore hope that proposed new subsection (3) in that amendment is adopted by the Government.

Baroness Verma: My Lords, again, I am extremely grateful for the measured way in which this debate is taking place and for the very eloquent way in which noble Lords have presented their arguments, whether supporting what the Government are doing or raising amendments to show concerns. I welcome the spirit behind the amendments, which are aimed at ensuring that environmental safety is fully protected throughout the shale gas extraction process and reassuring the public that that is the case. My noble friend Lord Borwick said that to enable trust we need to ensure that the regulators are presenting a trustworthy way in which to approach the regulatory system.

We have among the most trusted regulators in the world. The commitments the regulators—the Environment Agency and so forth—have undertaken has allowed the debate to become much more measured.

14 Oct 2014 : Column GC59

5.15 pm

We fully agree with these aims and appreciate the noble Baroness’s desire to support this industry’s development as long as these aims are met. However, we believe the existing system already delivers these aims, underpinned as it is by site-specific decision-making from experts in the environment, health and safety and local planning. In addition, a number of existing industry commitments address elements of this amendment, even where the expert regulators might not deem them necessary.

In weighing up these amendments, I hope noble Lords agree that we must follow a risk-based approach to shale gas development, one that gives confidence to the public because it is firmly rooted in the best available science. It has to be evidenced, as the noble Lord, Lord Young of Norwood Green, stated.

On the first element of the amendments, we agree with the Opposition that baseline monitoring is essential before production begins, in addition to ongoing monitoring throughout the period of activities. The UK already has a good set of regional groundwater data, thanks to work conducted by the British Geological Survey, to which my noble friend Lord Jenkin referred. In addition, the Environment Agency has confirmed that it would typically require baseline monitoring of groundwater methane for each specific site proposing to undertake fracking. The agency would not normally require baseline monitoring for sites without fracking because they do not include any form of fluid injection, so there is no discharge to the environment.

For fracked sites, the precise length of time the agency would require would depend on the risks and characteristics at that site. However, typically this would be a three-month period, not 12 months as proposed. This is because methane levels do not fluctuate from one season to another, as the BGS’s extensive work has revealed. As such, a risk-based approach would not require the lengthy period suggested by the noble Baroness. I am particularly conscious of the need to follow a risk-based approach on this issue because the period suggested could, as my noble friend Lord Borwick said, take a site out of production for a whole year. Therefore, while I appreciate the sentiment behind this amendment, a blanket approach of 12 months for all sites does not feel proportionate.

On the second element, the industry has already publicly committed to carrying out environmental impact assessments for all fracking sites, and this commitment has been seen through in the planning applications submitted earlier this year. This goes beyond EU requirements, which require environmental impact assessments to be undertaken for production above certain levels or where the scheme exceeds certain other thresholds and is likely to have significant effects.

Operators appreciate that at this early stage of development, public confidence is key. They have therefore voluntarily agreed to conduct EIAs whenever fracking is involved. We welcome this industry agreement. Nevertheless, we are concerned that legislating to force this, and to do so for all shale sites even where hydraulic fracturing is not proposed and the development is unlikely to have significant effects, would be disproportionate. The proposal was discussed as part of the recent

14 Oct 2014 : Column GC60

revision of the EIA directive and was roundly rejected by member states, including the United Kingdom. We appreciate the desire to build public confidence at this early stage but believe the desired outcome is already being achieved through industry commitments.

The third element, chemical disclosure, is already required on a well-by-well basis. Operators must notify the environmental regulator of the volume and composition of the frack fluid and seek its permission prior to proceeding. The regulator will set this out when publishing the permit, including each chemical and the maximum concentration authorised for use. In addition, the industry has committed to publish this information, including each of the chemicals used, the total volume of frack fluid used and the maximum volume of each chemical within that.

Turning to the fourth element on making water companies statutory consultees, the Government understand the concern over not just water pollution but water use. On the former, the environmental regulator checks the potential impact on groundwater of any hydraulic fracturing operations ahead of any hydraulic fracturing taking place and will not grant a permit where the risk is unacceptable, such as if there were a risk of hazardous chemicals entering an aquifer.

On the question of water use, the water industry and shale operators have agreed an MoU to engage early and share plans for water demand and waste management.

Currently, if a water company has concerns about this or any other aspect such as water usage it is able to comment through the consultation that the planning authority undertakes on each planning application, which is open to the public. If the authority wishes, it is already free to consult the water company to seek the company’s views on the planning merits of the development. Making the water company a statutory consultee would add very little to this process other than removing the important local discretion that a planning authority has to decide for itself when it needs the views of others, based on the specifics of the case. Importantly it would also oblige the water company to make a response whether it wished to or not. Given the opportunities already available to do so and the broader controls that apply, we do not think adding this obligation enhances the level of environmental protection already in place.

The noble Lord, Lord Young of Norwood Green, referred to the work done at Durham University. The noble Lord was not present for the debate on the earlier amendment where I referred to the ReFINE report. I completely agree with him on the importance of considering relevant analysis, reports and evidence. I am sorry that he missed the important contribution that I made earlier on.

The noble Baroness, Lady Worthington, asked about the programme of research monitoring methane emissions from shale, oil and gas exploratory sites. The UK Onshore Operators Group has committed to monitoring work being undertaken on its sites. The noble Baroness, Lady Young, asked who paid for the baseline monitoring. The operators pay for this and arrange for it to be carried out.

14 Oct 2014 : Column GC61

I hope I have managed to convince noble Lords that we have taken and take very seriously the issues of public confidence and trust, and of ensuring that we do absolutely everything we can to monitor and report on this, keeping safety for the environment and local people at the forefront of all that is undertaken. I hope the noble Baroness will withdraw her amendment.

Baroness Worthington: My Lords, I thank the Minister for her response although, again, I am not wholly reassured. Particularly, one of her final comments served to illustrate why there is a level of distrust in the current approach. Put simply, if you leave it to the operators to do everything on a voluntary basis, including paying for all of this, where is your reassurance that it is done to the correct standards? Obviously, a profit motive drives this. Let us not try and beat about the bush. This is about not UK sovereignty of energy but shareholders and people making money. If you ask them to pay for monitoring, they will do monitoring in the best way they think fit. That may well be simply a handheld device or the very minimal level of monitoring, which will not be good enough to establish whether we have a problem, either in terms of establishing the baseline or keeping on monitoring against it.

Baroness Verma: Of course, the Environment Agency has to be satisfied. As the noble Baroness is aware, it is among the toughest of the regulators we have.

Baroness Worthington: Absolutely, but the noble Baroness will also be aware that it is under quite considerable pressure in terms of its budget. This is an additional new task that it is being asked to perform but is it being given the budget to do it properly?

Baroness Verma: Again, I apologise for intervening but I should like to reassure the noble Baroness that the Environment Agency has reassured us that it has adequate resources.

Baroness Worthington: Then perhaps my anecdotal point about the money being asked for in order to do the very best in laser monitoring is not true. Perhaps we can have some more correspondence about that before Report.

I will not dwell on this for too long. I think it is fine to say that we are going to take a risk-based approach but exactly how are we going to do this, what level of monitoring will be done and how are the Government going to keep monitoring all these voluntary approaches that are being proposed—voluntary EIAs, for example? The industry can say that but are the Government monitoring whether applications are going in at a local authority level without EIAs? I have certainly had representation from groups saying that they are going in without publicly available impact assessments. I hope that that is not the case but my sense is that the Government are taking rather a lackadaisical approach to this in thinking, “Well, if the industry says it’s doing it, it must be doing it, so that’s fine”. I am afraid that that is not how you engender trust.

14 Oct 2014 : Column GC62

I hope that more can be said about the role of the water companies as well. It is not just us who think that they should be statutory consultees; this is coming from Water UK. Therefore, it is certainly something that the Government should take seriously. Of course, if the water companies are required to make a response, they do not have to make it a voluminous response; it can be very short. However, they will then at least be part of the process and there will not be the potential for them not to be involved, which would severely weaken the level of information and knowledge that local planning officers have.

I shall leave it there. I am sure that we will return to this on Report but, at this stage, I am happy to beg leave to withdraw the amendment.

Amendment 95ZBM withdrawn.

Amendments 95ZBN and 95ZBP not moved.

Amendment 95ZBQ

Moved by Baroness Worthington

95ZBQ: Before Clause 28, insert the following new Clause—

“Application of emissions limit duty

In Schedule 4 to the Energy Act 2013 (application and modification of emissions limit duty), after paragraph 1(1)(b)(ii) insert—

“(iii) substantial pollution abatement equipment dealing with oxides of sulphur, oxides of nitrogen, heavy metal emissions or particles is fitted to the generating station.””

Baroness Worthington: On to another topic, although a related one. Many of us in this Room today spent a good deal of time last year working on the Energy Bill. That received Royal Assent and passed into law and we are now working through the detail. One aspect of the suite of measures brought in under the Energy Act was an environmental performance standard. This was to be applied to new installations of large-scale generation and would bring in a limit on the amount of CO2 per kilowatt that could be emitted by substations. In effect, it ruled out the building of new coal stations without CCS.

We had a good old debate about that and noble Lords may remember that we sought to amend that legislation to address what we considered to be quite a serious loophole. That was that, in applying these performance standards to new coal, there was a danger that old coal, which is less efficient, older and less reliable, would escape from such a regulation and people would then seek to continue in operation. Essentially, companies owning these assets would continue to sweat those assets for as long as they possibly could use whatever method they could. We warned that under the capacity mechanism—another key aspect of the Energy Act—such old coal plants would be able to receive generous amounts of money that would enable retrofits to be carried out to keep the plant limping along and meet the international environmental regulations. Therefore, we would see coal not only in the system for longer but operating at higher load factors than would otherwise be the case. During the debate, we were reassured that this was not a necessary

14 Oct 2014 : Column GC63

provision and that everything was fine. Coal was going to be phased out and we should not worry our heads about it.

Why have we retabled this amendment? We have done so because, as we said before, half the projects under the Infrastructure Bill are energy related. We have to get a clear set of messages out to investors about what type of investment to pursue. Given that we are trying to solve quite a complex set of challenges, including moving to a lower carbon economy, there has to be a clear signal about the need for investment in low carbon. Unfortunately, the combination of the capacity market and the absence of any kind of EPS backstop on coal mean that there are conflicting signals.

5.30 pm

This amendment is timely because in the past couple of weeks we saw the publication of the list of qualifying stations applying for contracts under the capacity mechanism. As we warned, a considerable chunk of old coal is applying for three-year contracts. The significance of the three-year contract is that it indicates a certain level of investment in those plants to keep them running at higher load factors and, potentially, for longer periods. In total, 8 gigawatts of old coal have come forward. Of it, 2 gigawatts already have filters fitted to meet the European standards and 6 gigawatts are proposing to undertake investments to meet those standards. That is, potentially, 6 gigawatts of coal that would otherwise be steadily running down and closing to be replaced by cleaner plant.

In addition to coal bidding for capacity, we see some new gas capacity. That is welcome. It is roughly 8 gigawatts in capacity—pretty much the same as the old coal, as it happens. This is clearly an issue because, overall, there is more capacity than we need. There is more existing and proposed capacity than is needed to keep the lights on. In the auction that is about to take place, someone will not get what they want. Will it be the old coal stations or the gas? This is the question that we are now looking at. If it is the coal stations—which exist, so the level of investment is necessarily lower than building something new—we will see higher than necessary emissions from those plants because they will be able to base load with their new investments.

When we set out on the Energy Bill, I do not think we thought that its result would be a huge upgrading of coal capacity, but that is potentially what we are seeing. In the discussions over the summer, this was theoretical. We said there was a problem, the Government said there was not, and so we carried on. This is no longer theoretical. These stations have come into the capacity market, the plans are now being enacted, and we do not have a policy to address the emissions from these stations. I think the sensible way forward is to look at this again.

Things have changed since we debated them in the summer. The price of coal is falling, making the price you need to switch from coal to gas ever higher. Just to say, “We’re going to use emissions trading”, is not going to cut it. The emissions trading scheme does not deliver the prices that you get to switch from gas to coal, and nor would you want it to because that is a broad-based measure that applies to a huge swathe of

14 Oct 2014 : Column GC64

industry. You do not want a €45 per tonne price in the European trading scheme, but that is what it might take to tip these stations out of the merit order at the moment. We have got to have a plan that sees a transition away from old, inefficient plant which, by fitting these filters, will become less efficient. I want to stress “less efficient”. These things are already sub-40% efficient. In fact, they are closer to 30% efficient. They are going to be knocking that efficiency down further when they fit these filters, and they will be able to base load if the economics stack up.

That is not a situation we wanted to see coming out of the Energy Bill. We have an opportunity here to look at it again. We have tabled this amendment now simply to say that this is no longer theoretical. These auctions are happening now. We, as the Opposition, do not want to inherit a problem in 2015 that has come about because of the combination of the effects of the capacity market and the lack of an EPS. Let us take this opportunity. Let us revisit this. I am very much looking forward to hearing the Minister and other noble Lords, who I am sure will remember the debates we had and who perhaps took part in the votes on this issue which we ultimately won in the Lords, only to be overturned in the Commons. We said there was a problem. I think the evidence now is that there is a problem. We need to take a backstop policy to address it, otherwise we will be remiss and will not be giving the signals that investors need to ensure that we get the right investments in the long-term future of the low-carbon economy. I beg to move.

Lord Jenkin of Roding: I listened to the noble Baroness with great interest. I had not interpreted this amendment as being directed at the question of whether coal-fired plants should be able to apply under the capacity mechanism. I, too, have been rather disturbed to see that as a possibility not only for coal-fired stations in this country but for those in other countries as well, which will be able to apply. If this is indeed the case, we need to look at this very carefully.

What puzzles me is the connection with the amendment that the noble Baroness has tabled. I understood that we had always been in favour of attaching abatement technologies to coal-fired stations that may have some life left in them to reduce nitrogen oxide, sulphur dioxide and other toxic gases. The noble Baroness is right to say that it puts up the price; a very good example of that is the difficulties that Drax has been having over recent years, where abatement plants were put in years ago. For the life of me, I find it very difficult to understand why attaching that sort of plant to an existing power station should necessarily be an occasion for the exercise of the powers under the Energy Act, to which she refers—a question of abatement of the emissions limit. Perhaps the fault is mine. The amendment is one that I had not studied before, so I listened to her with great interest. Bearing in mind that we have always encouraged the addition of abatement plant to coal-fired power stations, I would have thought that to make it a trigger in the further reduction in carbon emissions would be counterproductive. I see the noble Baroness shaking her head at me; it may be that I have completely misunderstood her purpose.

14 Oct 2014 : Column GC65

Lord Teverson: My Lords, when I saw this amendment, I thought that it looked remarkably familiar. It took me back to the trauma of four years of the Energy Bill, and the White Papers before it. However, I am actually very pleased to see it because it was an important principle of an amendment that we tabled at the time. To explain this a little more from where I stand, this is one of the areas where white is black and black is white in coal terms. Making coal plants far better for the world in their nitrous and sulphur emissions, which we all want, means that they can escape the rundown that is caused by the European directives that mean that these coal stations have to go. The way in which the emission performance standards were written into the Energy Bill means, effectively, that they have a free life up to about 2044, or something like that—if you can keep them going—when we can change the emissions performance standards and they lose their grandfather rights. That is the issue.

I have not gone into this matter in the great detail that the noble Baroness, Lady Worthington, has, but I can see that there are ways by which being able to participate in the capacity mechanism gives enough financial stability for the energy companies to take on the investment that would enable them to comply with the large plant combustion directive and its successors and so continue to be high carbon emitters in this economy for many years to come. That has to be a bad thing. I will not go all the way through the arguments that we had in previous debates but, clearly, it is bad in terms of emissions. Coal is not good in that regard. I am not absolutely against coal being part of the capacity mechanism. I would prefer it if it was not, but I do not think that it is absolutely fundamental. What worries me is that, by investing to comply with European directives, we then have them for a long time into the future, which we would not otherwise. That is bad, but, at a time when an argument has emanated from the Treasury wishing gas to be particularly strong, it works against gas investment as well. That is investment that the Government has rightly said is important for medium-term fuel strategy and clearly is half the level of carbon emissions.

Without going through all the arguments again, this sort of amendment gives a double win for the Government on greater incentives for gas investment in the medium term and on meeting its carbon targets more certainly as time goes on. I hope that the Minister and her colleagues will find a way to realise those objectives, which are from both sides of the coalition, by looking at this very carefully.

Lord Whitty: My Lords, I support the amendment and my noble friend. The arguments she made during the Energy Bill have come to pass—I do not think that Bill lasted for four years, as the noble Lord, Lord Teverson, said, but it felt like it. The reality is that while in America the arrival of shale gas has driven out coal, to the benefit of carbon emissions—this links back to previous debates—it has also had the knock-on effect that the world price of coal has gone down. Therefore, the economics of coal in the rest of the world now look much more attractive. The economics of continuing to run coal-fired stations look dramatically more attractive.

14 Oct 2014 : Column GC66

A number of things were not clear during the debate on the Energy Bill and when it passed, including the exact way in which the capacity mechanism would work and who would be eligible. Some of that has become clearer with the regulations that have gone through. We now know which plants are being put in as a capacity mechanism; it includes some pretty old coal plants. Plants that companies such as EDF gave a clear indication, seven or eight years ago, would close about two or three years from now are now being rolled forward. The way to square that would have been for the performance standard to apply to old coal as it does to new coal plants, but it does not.

While the noble Lord, Lord Jenkin, is right that we encourage all plants to fit this abatement of sulphur et cetera, we have not applied the new emission standard in the Energy Act to all this old coal plant. As I understand it, the purport of the amendment is to ensure that they will be treated in the same way as new plants. That would change the economics of coal.

The other thing that has changed since the debate on the Energy Bill is that it was assumed at that time by some of the modellers that, as was originally intended, there would be a ratcheting up of the carbon price floor. That would also have altered the relative price of keeping on old coal, to the detriment of the coal industry. Of course, within a few weeks of the Energy Bill receiving Royal Assent, the Chancellor announced that we are no longer going to ratchet up the carbon price floor. Leaving aside the principled arguments about the use of a carbon price floor, the effect of that is that the economics do not look the same as they did when we were discussing that Bill. Clearly they were expressed as looking that way by the Government. As the noble Lord, Lord Teverson, said, it could mean that old coal plant could be running for decades as a result of the emissions performance standards not fully applying and the abolition of the carbon floor price ratcheting up.

The amendment is intended to ensure that that is not the case. As the noble Lord, Lord Teverson, has said, the immediate effect is to make our energy supply more dependent on old coal and less attractive to investment in new gas. Therefore, the higher the level of old coal that qualifies under the capacity mechanism, the less investment there will be in new, efficient gas generation.

In all terms, the economics have been made more difficult. The environmental cost of carbon emissions could be substantial. I therefore hope that the Government at least understand part of that argument and recognise that they have to do something along the lines my noble friend is arguing in support of these amendments.

5.45 pm

Lord Oxburgh (CB): My Lords, briefly, I support the thinking behind the amendment. I have two points. There has been significant discussion of the gas price and the coal price. One should bear in mind that both of these could go up and down fairly dramatically. It is quite likely that the shale gas price in the US will rise, simply because the majority of the shale gas in the US resource is not economically exploitable at the present price of between $3 and $4. This is not of great importance, except to emphasise that coal and gas can

14 Oct 2014 : Column GC67

change. It is important that we see the long-term perspective here and that we do not legislate now on the basis of how these prices look today.

I am not sure that the wording that we have here is right, but the Government need to come back to the House and let us know how they are actually going to meet their obligations under the Climate Change Act in the light of the elevation of the carbon price and the other considerations to which noble Lords have drawn attention.

Baroness Verma: My Lords, I am grateful to the noble Baroness for tabling these amendments. I know that many of us heard the well rehearsed arguments during the passage of the Energy Bill. I agree with the noble Lord, Lord Whitty; I do not think it was four years, although it probably felt like four years. Whatever, we all got a lot of grey hairs from it—I remember that.

The measures in the Bill and our electricity market reforms have demonstrated that they are already working and starting to deliver new investment in electricity infrastructure: a clear demonstration of industry confidence. In April, we announced the allocation of the first contracts for difference to eight renewables projects. These projects included offshore wind, coal-to-biomass conversions and a dedicated biomass plant with combined heat and power. By 2020, these projects alone will be able to provide up to £12 billion of private sector investment, supporting 8,500 jobs, and could add a further 4.5 gigawatts of low-carbon generation capacity to Britain’s energy mix. This builds further on the major growth in the UK’s renewable electricity sector that we have seen, with capacity more than doubling since 2010 and with renewables now providing around 15% of our electricity. I wanted to point that out before I came back to the noble Baroness’s amendment.

We recognise that the intent behind the Energy Bill amendment was to achieve outcomes broadly consistent with those to which the Government are firmly committed. The potential uncertainties of applying the EPS in the way proposed by the amendment, on balance, pose risks that the Government should be unprepared to take.

The noble Baroness has already helpfully explained that existing coal-fired power stations will need to invest in fitting equipment in order to meet the requirements of the EU industrial emissions directive. That directive succeeds the large combustion plants directive and sets much more stringent limits on emissions of oxides of sulphur and nitrogen from 1 January 2016. However, I recognise that there have been a number of developments since last year as we have set about implementing our electricity market reforms.

I do not share the noble Baroness’s analysis of the current position or her prediction of the future. I am therefore not convinced that in the case of this amendment there is a need to revisit the conclusion reached by both Houses on this point less than a year ago. I do not think that I want to go back and rehearse the arguments made during the debate on the Energy Bill that led to the rejection of the amendment previously. They highlighted the risk that it could lead to a scenario where coal plants closed earlier than might otherwise be necessary to most cost-effectively achieve

14 Oct 2014 : Column GC68

the decarbonisation of the electricity system. Were this to happen, the need for more generation capacity to be built earlier than we currently project could result in an increased cost to consumers. The noble Baroness may be prepared to risk imposing such unnecessary cost but I am not. The argument in recent months has been how consumers feel about the cost of energy.

I think there is almost unanimous consensus on the need substantially to decarbonise electricity generation by 2030. There is similar consensus that there will be little or no role left for unabated coal generation in future. However, we continue to believe that applying the EPS as proposed by the amendment is unnecessary and potentially a risky intervention to the market. It is our other EMR policies that will work to deliver the outcomes that we all wish to see but without risking our security of supply and ensuring that we are able to give consumers energy at as low a cost as possible.

The noble Lord, Lord Whitty, asked why we allow existing coal stations to participate in the capacity market. We do it so that the market ensures security of electricity supply at the least cost to the consumer. It is important to reiterate that all existing coal plants still need to meet their environmental commitments and will be subject to the carbon price floor. I assure the Committee that it is also about the fact that we have seen 7 gigawatts of new gas plant come forward seeking capacity agreement, which indicates that the capacity market is bringing on new investment.

I am not convinced that we need to revisit this argument. I know that the noble Baroness is absolutely committed to raising this issue again but I hope that I am able to convince her that the steps we are taking in the broader argument are ensuring that we are able to deliver at a cost value to the consumer and that security of supply remains, and that we remain committed to bringing on as much low-carbon energy as possible through the reforms that we have made in the Energy Act. I hope that on that basis she is able to withdraw the amendment.

Baroness Worthington: My Lords, I am grateful to the Minister for her reply. I am particularly grateful to the noble Lords who contributed. It is certainly true that the noble Lords, Lord Teverson and Lord Whitty, explained what the amendment does more clearly than I was able to do. For the avoidance of any doubt, we were simply seeking to limit the amount of time that old coal-fired power stations could run so that they did not provide base load power. That is the purpose behind it. It would not mean that they should shut or that they should not upgrade; it would simply mean that we had a mechanism for preventing them from base loading and thereby displacing otherwise clean capacity.

It is true that one of the cheapest ways of reaching a lower carbon intensity is to run your gas stations first and your coal stations as peaking plant; that is just incontrovertible. Every kilowatt hour produced with gas produces half the emissions compared with a coal station. In the act of upgrading these stations, those kilograms of CO2 per kilowatt hour will increase. That is because it takes energy to run the filters. So we are taking an already inefficient station, making it less

14 Oct 2014 : Column GC69

efficient and more carbon intensive, all apparently in the interests of keeping the lights on, when, in fact, we have seen that far more capacity than is needed is coming forward. This coal will displace investment in gas if that gas turns out to be more expensive. Therefore, it does not deliver on security of supply, and it does not deliver on cost-effectiveness because it forces us to do more of the more expensive things. We will have to decarbonise in other ways if we do not close coal, and that will be expensive. It is about cost-effectiveness, and that is why we want this amendment.

The Government do not have a coal policy. They do not have a plan for phasing out coal. Everyone can say fine words about it but coal stations are in the ownership and hands of the private sector. If they can make a profit from running these plants, they will. The Government put nothing into the Act dealing with EMR that stopped old coal—in fact, the reverse. They have created a new incentive, and by allowing firms to apply for three-year contracts the Government are paying them to upgrade. Eight gigawatts of coal is a lot of capacity. Eight gigawatts of new gas would engender a large amount of lower-carbon capacity that would be more flexible and, in the long run, cheaper and more reliable.

We listened with great care to the arguments put forward in the previous debate. The world has changed since then, not least—as my noble friend Lord Whitty pointed out—because policies have changed. The Government took the opportunity in the Budget, shortly after Royal Assent, to freeze the carbon price floor, which was a key defence mechanism. I shall not go on any further. This is a fundamental flaw in the Energy Act. I would like to revisit it, and I am not persuaded by the arguments that have been made. However, at this stage, I beg leave to withdraw the amendment.

Amendment 95ZBQ withdrawn.

Amendment 95ZC had been withdrawn from the Marshalled List.

Amendment 95ZCA

Moved by Baroness Worthington

95ZCA: Before Clause 28, insert the following new Clause—

“Decarbonisation target range

In section 1(5) of the Energy Act 2013 (decarbonisation target range), omit all the words after “2030”.”

Baroness Worthington: My Lords, it is approaching 6 pm and we have been here for some time, so I do not propose to speak for long on this amendment. However, it relates to another important aspect of the Energy Act that we need to revisit. The Act’s first sections are about the need for decarbonisation. Indeed, that was the justification for all the measures that followed; we were about to embark on a process of decarbonisation, which was why we needed contracts for difference and to make all the interventions that we did. However, those sections are very oddly worded and actually prevent a decarbonisation target from being set until criteria are met. In effect, rather than setting a decarbonisation target, the Act prevents one from being set and ties the hands of a future Government. That is not good

14 Oct 2014 : Column GC70

lawmaking and certainly, if there is a change of Government, we would wish to set a decarbonisation target as soon as possible to clear up the mess, and give the signal to investors that this is the target we are aiming for them to meet and that that is how they should make their investments. The provision in the Act is inappropriate, and this amendment seeks to delete the part that restricts the setting of a decarbonisation target and ties the hands of future Governments. It has no place in the Energy Act.

If it is true that the Government’s intention is to use the Act to decarbonise, why would you then restrict the decarbonisation target from being set? It makes no sense. Let us be clear that the Minister rightly pointed to some investments coming into renewables. That is being driven by a legally binding European target that expires in 2020. That is just around the corner in energy investment terms. There is absolutely nothing in the Government’s policies that means we will continue to do renewables—nothing, at least, that is legally established. If we see the continuation of opposition to all renewables on the basis that they are more expensive—when, in fact, their costs are falling rapidly—we could see that whole industry being undermined and stopped, post 2020, in the absence of any other target at a European level.

Now, I do not happen to agree with targets being needed at a European level on renewables specifically, but we need decarbonisation targets. We need a clear plan and to create the right investment climate so that people can make the right decisions—not the wrong ones. This amendment is simply to allow us to do that. Should we have a Labour Government in 2015, we are absolutely clear that we would set a decarbonisation target. We seek to move this amendment so as not to have our hands tied by what is a very inappropriate piece of legislation in the previous Energy Act. I beg to move.

Lord Teverson: Since we are in Committee, why did the noble Baroness not just delete the whole of subsection (5) altogether?

Baroness Worthington: That is a good question. In the interests of taking out the most annoying part of the Act, we restrict ourselves to simply removing the part that restricts us in the timing of when a decarbonisation order could be set. That is the reason.

6 pm

Baroness Verma: My Lords, as I made clear during previous discussions on the Energy Bill—now the Energy Act—a decision to exercise this power is absolutely not something that should be rushed into or done in isolation. We had some very long discussions around this target so I will not go back and repeat those. But such a target would have a significant implication for the power sector, the so-called “non-traded” sector, for consumers and the wider economy. It is therefore vital to understand fully, based on evidence, whether a target represents the best approach to meeting our economy-wide carbon budgets cost-effectively and, if so, at what level it should be set.

It is for these reasons that the Government have maintained that the right time to consider whether to set such a target is in 2016. That is the point at which,

14 Oct 2014 : Column GC71

in line with the requirements of the Climate Change Act, we will undertake extensive analysis to set the level of the fifth carbon budget in law which will cover the year 2030. This will allow us to consider the target in the context of the whole economy and what is required to ensure that the UK not only meets its 2050 emissions target but also remains competitive with other member states. In 2016 we will also have a better understanding of how the market will respond to the reforms that this House debated in the passage of the Energy Act and a clearer idea of EU and global climate change ambition. It is about timing. We laid out very clearly that 2016, in line with the fifth carbon budget, is the right time for this. I suspect that the noble Baroness and I will not agree here but I hope that at this point she will withdraw her amendment.

Baroness Worthington: My Lords, I do not propose to detain us any longer on this. I listened to that response. I sincerely hope that whoever is in government will set a challenging decarbonisation target in 2016. It would be better if we let the next Government make that decision but I am very happy to withdraw at this stage.

Amendment 95ZCA withdrawn.

Clause 28: Consequential provision

Amendment 95ZD

Moved by Baroness Kramer

95ZD: Clause 28, page 28, line 23, leave out “this Part” and insert “any of the following provisions of this Part—

(a) section 26 or 27 or Schedule 5;

(b) section (Maximising economic recovery of UK petroleum) or (Levy on holders of certain energy industry licences) or Schedule (The Licensing Levy);

(c) any of sections (Petroleum and geothermal energy: right to use deep-level land) to (Interpretation).”

Amendment 95ZD agreed.

Amendment 95A not moved.

Amendment 95B

Moved by Baroness Kramer

95B: Clause 28, page 28, leave out line 25 and insert “the application of any enactment (but, in the case of an Act, only if the Act was passed before the end of the Session in which this Act is passed).”

Amendment 95B agreed.

Clause 28, as amended, agreed.

Amendment 96

Moved by Lord Berkeley

96: After Clause 28, insert the following new Clause—

“Part 4ALevel crossings

Level crossing bill

Within 12 months of the day on which this Act is passed, Her Majesty’s Government shall introduce into Parliament a bill to give effect to the recommendations of the Law Commission and the Scottish Law Commission on level

14 Oct 2014 : Column GC72

crossings (Cm 8711), and which is substantially based on the draft Level Crossings Bill prepared by the Law Commission and the Scottish Law Commission.”

Lord Berkeley (Lab): My Lords, I will also speak to Amendment 100. These amendments are nothing to do with fracking. They take us back to infrastructure of the road and rail sort. This amendment came about because, quite conveniently, the Law Commissions did a study on the legal situation of level crossings. I believe they took about seven years to do that, so they must have done it extremely thoroughly. They produced an excellent report about this time last year which made a number of recommendations and, very helpfully, included a draft Bill to implement them.

The purpose of it all was because, as we will see, some of this legislation goes back to the first railway. Some 150 years or so ago, there were of course no internal combustion engines and if there were level crossings they were probably to take horses and carts across. It is very different now when in some places, as noble Lords will know, the pressure on level crossings for access is pretty extreme whether it is from the railways or the roads, and particularly in urban areas. When the railways want to run more trains, they find that they cannot because people complain too much that the gates are shut too often and vice versa. Obviously, the solution is to build a bridge or tunnel but that does not really go down very well in urban areas either.

This report by the Law Commissions really deserves some detailed consideration. I tabled these amendments in July and the Government had not responded so I was tempted to try to get a response by tabling the Law Commissions’ draft, which was about 50 pages long. The noble Baroness was quite pleased when I withdrew from that. However, it has resulted—we can debate whether it is a result or a coincidence—in the noble Baroness kindly sending to me and colleagues the government response to this report, and putting a copy in the Library. It is an excellent response, so my purpose in moving this amendment now is to see whether we can press the Government a bit more for a timetable and to discuss one or two of the issues on which I think they might not agree with the Law Commissions.

One issue which covers the whole thing is whether level crossings should be subject to the Health and Safety at Work etc. Act, as most similar activities are. It may come up on Report when we start talking about the strategic road company, which the Minister kindly gave some of us a briefing on yesterday, and the comparison of safety relationships between road and rail. But on level crossings, the Government have moved a good way in accepting many of the recommendations to make the thing simpler. I do not know how many of the Committee have managed to read these 28 pages overnight but perhaps I could mention a couple of issues. If your Lordships have not, it does not really matter.

For me, if the Government went ahead with their recommendations it would be 90% good and I hope that they will. They are quite right to query again how much this should apply to heritage railways, especially when there are volunteers. That needs taking with a bit of a pinch of salt because dealing with a level crossing

14 Oct 2014 : Column GC73

on a 100 miles per hour railway is not the same as dealing with one on a 25 miles per hour railway, so they have done well to question that. I mentioned the Health and Safety at Work etc. Act; we could go through that again.

It is a good idea to get rid of all this old legislation. I am told that there are 800 Acts applying to level crossings. Network Rail has to deal with all these things and if we started talking about how much all these changes might cost, I get the impression from Network Rail that a lot of money would be saved—especially on lawyers, which is always a good thing. On whether the Office of Rail Regulation should introduce codes of practice, I think that it should but it is not really the end of the world if it does not. But on the regulations, I worry about what happens when it comes to consultation between road users, planners, highways authorities and rail people, and whether the Government have got it quite right as to who has the last word on how discussions will take place as to who gets priority. That needs a lot more consultation but it is still in the report. As I said, the legislation goes back to 1839. I shall not read out all the different bits of legislation because it will take too long but this certainly needs further work.

The closures need to be made simpler. Network Rail has told me that it costs a great deal of money, time and effort to get closures. Some people will debate whether Network Rail should be allowed to make closures, but when you look at the railway safety statistics, level crossing accidents come very high up the list of causes of accidents—leaving suicides aside, which are slightly different. As we try to make our railways more efficient, run faster and more frequently, we need to look at protecting the public by making some of these closures. I hope that the Minister will accept that they can go ahead. I am not going to go through any more, particularly the Scottish ones. We can possibly leave those to the Scottish Parliament if we get some devolution, which is another issue.

In her covering letter, which is very helpful, the Minister said:

“I have … asked officials to develop, as a matter of urgency and no later than the end of 2014, an action plan which will outline where we believe further work is required and how this will be taken forward”.

That is very good and I welcome it, but there are always two sides to these things. Perhaps the Minister can answer either tonight or in a letter how many of these changes actually need legislation—primary legislation, secondary legislation or none at all? The Law Commissions proposed one great big Bill but it does not have to be done that way. I worry after the next election. Which Government would want to bring in a level crossing Bill in their first session? They would not because they would have other priorities.

Therefore a timetable would be good, showing what could and could not be done. We could then start a process of discussion about some of the issues in this government response, which would be very helpful. It really is important. It will save Network Rail a great deal of money and it will help avoid some of the disputes that take place between road and rail users and their operators. Everyone must agree that we

14 Oct 2014 : Column GC74

should get rid of legislation going back to 1830-something. Now is the time to do it. With that quick introduction, I beg to move.

Lord Hodgson of Astley Abbotts (Con): My Lords, I support the noble Lord, Lord Berkeley, and in particular his request for the Minister to consider a timetable. I will not pretend that I have the knowledge of the railways that he has, but I have worked with the Law Commission on a number of its proposals and Bills. It is punctilious about avoiding political controversy and exceptionally thorough in its consultation; as the noble Lord pointed out it has been involved in this in the seven years of consultation. It therefore does an exceptionally valuable job in updating, tidying up and spring cleaning our legislation.

There is, however, a danger attached to that, which is that the Law Commission regards legislation proposals that it has brought forward that have not been implemented within a certain period as needing to go back for further consultation because it needs to make sure that the public mood and the facts have not moved on. I support the noble Lord, Lord Berkeley, in this because I hope my noble friend will realise that if this matter is left on the shelf, the Law Commission will say that it is no longer fit for purpose and will need to start consultation all over again to see what has happened in the intervening period since the last consultation was carried out.

I support what the noble Lord is suggesting and I hope that my noble friend will be able to act as Dyno-Rod for departmental inertia to make sure that it is brought forward quickly to avoid having to go round the whole course again.

6.15 pm

Lord Davies of Oldham (Lab): My Lords, I will briefly intervene, not because I have the expertise of my noble friend Lord Berkeley; if he believes that he may be pushing at an open door as regards the Minister’s response, that is very good news indeed. My qualification for speaking about level crossings is that I live on the border of Hertfordshire and Essex, in one of the flattest parts of the country, the Lea Valley. The railway line there is plagued by the problem that it has a very large number of level crossings of all kinds, from the latest state-of-the-art crossings in some parts, to those where people open a little gate and run for it, dragging the dog behind—because they usually have a recalcitrant animal as well—and take risks getting across. Incidents on the line are constant.

I know that my dear friends at RoSPA—the Royal Society for the Prevention of Accidents—indicate that there are only nine deaths per year and that limited numbers of people are injured. We have 6,000 level crossings, and they are not all on the line that I know so well, but as my noble friend Lord Berkeley has emphasised, there is no doubt that because of the improved efficiency of the railway line—which is not just for local stations but is also the Stansted line, and which therefore supplies an important service to Stansted —very fast trains cause greater problems when you have some crossings which to all of us look exceedingly casual.

14 Oct 2014 : Column GC75

There was a tragic case only two weeks ago, when one of the most experienced local cyclists—someone who had travelled all over the world on his bike and raised lots of money for charities, who rode his bike all the time and was very advanced in years—decided that he could beat the train. Of course, this happened on one of our crossings, which is a bit posher than some, with an automatic gate that comes down on one side, and an automatic bar that comes down on the other side. However, if you are prepared to take the risk, you can wiggle between the two, and this poor fellow took the risk and got hit by a fast train.

We need to address this issue. We all know that with so many crossings, it is quite unrealistic to expect the problems to be resolved overnight. We are also aware at the present time that the whole responsibility falls on Network Rail. The costs and responsibility for safety all rest on Network Rail, while it is quite clear that other users create so many of the problems. That is why, at the very least, there should be some sharing out of the costs where it can be established that the local authority responsible for the road access may well not have played its part as fully as it ought to have done.

I am therefore looking forward to the largely positive reply from the Minister; it is an absolute delight to anticipate such a response. I emphasise that we were somewhat disappointed that there was nothing in the Queen’s Speech about a Bill, given that there was a small number of Bills—and rather pot pourri Bills as this one is to a certain extent—covering a range of issues. We were concerned that there was nothing about a level crossing, but I am very glad that my noble friend has raised the issue with this amendment, and I look forward to the Minister’s response.

The Minister of State, Department for Transport (Baroness Kramer) (LD): My Lords, I am very grateful to the noble Lord, Lord Berkeley, for raising this issue. I know that he speaks also for the noble Lord, Lord Bradshaw, who has had to leave. I welcome the opportunity to discuss this matter. It is an area in which the Committee rightly takes a very keen interest.

As we all know, the UK has the best level crossing safety record in Europe. We want to ensure that it is maintained and, of course, to see that it is improved. We are absolutely not complacent about level crossing safety. The noble Lord, Lord Davies, rightly pointed out that, as we run more trains and operate many of our lines at full capacity, the issue becomes more acute. He mentioned that the relevant cost fell on Network Rail. I can understand why people say that other road users should pay for the provision we are discussing. I do not want to fight over who is going to pay. When it comes to taking a decision on a closure, we need to move forward in an accelerated fashion. Therefore, I will accept a little injustice in order to make sure that we are really efficient when we need to be. I do not think that is what is inhibiting the system although I take the point that the noble Lord makes.

This amendment is about the law surrounding level crossings. At present, the legislative framework surrounding the management and operation of level crossings is, frankly, antiquated and complex. I have been passed a note informing me that 10,000 Acts

14 Oct 2014 : Column GC76

apply to level crossings. I did not even know that we had 10,000 Acts. That is the most extraordinary figure and it says it all. Indeed, that complexity is the reason why we, or, rather, the Government of the day, requested the Law Commission and the Scottish Law Commission to undertake a review in 2007. The review was initiated in 2008. I take this opportunity to place on record my thanks to the Law Commissions for the tremendous amount of hard work which has gone into developing their report, and recommendations which were published in September 2013. The examination of 10,000 Acts is demanding work.

The Committee will appreciate that this is a highly complex area which touches on a wide range of issues including railways, highways, health and safety, planning, land and criminal law. The Law Commissions’ 86 recommendations represent the culmination of five years of investigation. Following legal and policy analysis, the Department for Transport has published its response. I apologise that noble Lords have not had a little more time to read it. I suspect that the noble Lord, Lord Berkeley, was always going to be the most dedicated reader and I congratulate him on going through it. The response indicates which of those 86 recommendations we intend to accept, reject or implement in a modified format.

We accept the case for reform which the Law Commissions have presented and have accepted the majority of their recommendations. However, in some key areas—for example, closures and the application of the Health and Safety at Work etc. Act, as the noble Lord, Lord Berkeley, mentioned—the Department for Transport’s response indicates that we believe we need additional policy and legal consideration. This arises very much as a result of talking to the industry. The Committee will understand that some level crossings are site specific and that that creates additional complexity. However, we believe that we have to pursue these issues because in some cases there may be alternative proposals that work rather better.

On closures, the department needs to be convinced that the process recommended by the Law Commissions would shorten timescales and cut costs, which it is meant to do. We need convincing that that is what it would do. Stakeholders from both road and rail have voiced concerns about the possible implications and have pointed out to us areas where there is lack of clarity. We need to explore those further.

I very much understand that this is a probing amendment but I am told by those who understand procedure that it is a real oddity to put in a piece of legislation a clause which would legally commit a future Government to introduce a complete Bill. Although I know that is not the purpose of the amendment, technically there is an issue there. I should also draw the Committee’s attention to the fact that the Law Commissions’ recommendations contain significant devolution elements which we must and will discuss further and reach agreement on with the Scottish and Welsh Governments before implementation could proceed. As I said, we are also aware of stakeholder concerns about some of the recommendations. They must be addressed because this is highly practical, operational stuff and we have to get it right.

14 Oct 2014 : Column GC77

We want to move quickly, but we recognise that there is work to be done, and we are trying not to set ourselves an artificial deadline. However, I am very concerned that this does not get kicked into the long grass—as, I suspect, are all of your Lordships who have spoken.

We have said that we will come forward with an action plan. We will produce it by the end of 2014. It will be an outline of where we think further work is required and how it can be taken forward as a priority. I point out that that action plan will address some of the specific issues raised. The noble Lord, Lord Berkeley, asked whether most of this requires legislation. Unfortunately, it does, but we will look for those areas where we do not need legislation, because that will give us a little flexibility. There are also additional complications that flow from our need to get the Law Commission to consider whether it can simplify some of its recommendations. The action plan will cover that issue as well.

I hope that the noble Lord, Lord Berkeley can agree that this is the best way forward; I hope that he will feel comfortable to withdraw his amendment, because it seems to me that we are all pretty much on the same page on this important issue.

Lord Berkeley: I am very grateful to the Minister for a comprehensive reply. It was a probing amendment, and one would not want the text to commit a future Government. She has outlined many of the challenges. I am sorry that I got the number of Bills wrong by a factor of about 12, which is pretty bad. If we can have a timetable, with all these issues addressed and listed, including issues relating to Scotland, Wales, the EU and whatever, that would be extremely helpful. If the noble Baroness can get the agreement of Network Rail and, we hope, all the train operators and everyone else, that is a major step forward. I again thank the Minister and the Law Commission, because it has got the issue on the agenda. Let us hope that we can see it driven to a conclusion in less than the seven years that it has taken to produce its report. On that note, I beg leave to withdraw the amendment.

Amendment 96 withdrawn.

Amendment 96ZA

Moved by Lord Jenkin of Roding

96ZA: After Clause 28, insert the following new Clause—

“Part 4AImpact of infrastructure spending on costs for consumers

Provision of impact data

(1) The Treasury may by regulations make provision for the regulators to provide data, in a manner prescribed by the regulations, about the anticipated impact of infrastructure spending on the cost of products for consumers.

(2) Regulations made under subsection (1) may prescribe—

(a) the type of infrastructure spending about which data must be provided;

(b) the nature of the data to be provided;

(c) the methodology for collating and manipulating the data, including assumptions that should be made;

14 Oct 2014 : Column GC78

(d) the form in which the data should be presented;

(e) the persons that should receive a copy of the data.

(3) The regulations may make different provision for different regulators where necessary.

(4) The Treasury must scrutinise data provided under subsection (1) and assess—

(a) the cumulative impact of infrastructure spending on the cost of products for consumers;

(b) the affordability of any anticipated increases in the cost of products for consumers, taking into account factors other than infrastructure spending that are also likely significantly to impact the cost of products; and

(c) differences in affordability between different groups of consumers, if any.

(5) The Treasury must publish data provided under subsection (1) and the assessment made under subsection (4) in such manner as it reasonably deems appropriate.

(6) The Treasury must take into account the assessment in subsection (4) in making decisions about the extent, prioritisation or timing of infrastructure spending.

(7) In this section—

(a) “consumer” means any business, individual or household of individuals that purchases a product or products;

(b) “product” means a good or service the provision of which is regulated by a regulator;

(c) “a regulator” means any of—and “the regulators” means all of them.”

(i) the Northern Ireland Authority for Utility Regulation;

(ii) the Office of Communications;

(iii) the Office of Gas and Electricity Markets;

(iv) the Office of Rail Regulation;

(v) the Water Industry Commission for Scotland; and

(vi) the Water Services Regulation Authority,

and “the regulators” means all of them.”

Lord Jenkin of Roding:My Lords, I beg to move the new clause standing in my name. To begin with, perhaps I may say that I was very grateful for the opportunity to talk to my noble friend Lady Kramer about this and for the help that the department was able to give me.

As the heading suggests, this is about the impact of infrastructure spending on costs for consumers. That is an issue that has achieved a rising level of importance. My noble friend Lady Verma said in an earlier debate that the effect of rising prices on consumers is of growing concern in the country.

There is wide support across society for increased investment in infrastructure, but the question of how much of the cost will fall to be borne by consumers is, I have to say, a great deal less certain. The new clause is aimed to get the Treasury to lift the veil, as it were, so that we know more about what it will cost consumers.

That this is primarily a matter for Treasury Ministers rests on two facts. First, the responsibility for projected infrastructure investment is spread right across Whitehall and covers a great many departments. The costs fall to be met in many different ways: investment by private companies, local authorities; government departments; and, no doubt, other ways as well. In most areas, regulators also have a key role, but it is only the Treasury that can cover the whole field, bring it all together and assess the impact on the cost of products for consumers. That is what subsection (1) of this new clause provides.

14 Oct 2014 : Column GC79

6.30 pm

The second reason is that ministerial responsibility rests very firmly in the hands of Treasury Ministers, particularly in the hands of my noble friend Lord Deighton, the Commercial Secretary to the Treasury. He is in charge of the specialist unit, Infrastructure UK, which is an agency within the Treasury. When I asked my noble friend’s department who was going to respond to this new clause today, I was not altogether surprised that my noble friend Lady Kramer would do it, but I was even less surprised when I was told that she would be doing it on the basis of a brief from the Treasury. I hope I am not doing her an injustice. It will be her response that we hear.

I say straightaway that this new clause is not breaking new ground. In 2013, the National Audit Office published an interesting report, Infrastructure Investment: the Impact on Consumer Bills. It spelled out the purpose of the study:

“The report focuses on infrastructure investment that domestic consumers pay for through bills, with a specific focus on the energy, water and, to a lesser extent, telecoms sectors”.

It started with a number of key facts, saying:

“£310bn the estimated value of planned investment in UK infrastructure identified in the government’s 2012 National Infrastructure Plan … 67% of the £310 billion is expected to be financed privately, and repaid through consumer bills in the energy, water and telecoms sectors. Unknown aggregate financial impact of planned infrastructure investment on consumer bills across all sectors”.

That sums up the problem very neatly.