I beg to move, That the Bill be now read a Second time.
Britain is the first major economy to halve its emissions. That is an incredible achievement. How have we done it? We have increased our renewable electricity capacity fivefold since 2010—nearly half our electricity comes from renewables now, up from 7% in 2010—and just two weeks ago, I set out the largest nuclear expansion for 70 years.
We continue to have some of the most ambitious climate change targets of any major world economy. Here in the UK, we are committed to reducing emissions by at least 68% by 2030 from 1990 levels. Where is everybody else? The EU is committed to 55%, having recently rejected a move to 57%, and the United States is at just 40%. It is clear that, when it comes to climate change, we can be proud of our record and the work that we will do.
We have managed to achieve that while acting to help families with their energy bills. We stepped in to help families struggling with energy prices after Putin’s invasion of Ukraine, and our total support for the cost of living stands at £104 billion—a package that is among the most generous in Europe. Last year, we passed the landmark Energy Act 2023, which lays the foundation for a cleaner and more secure energy system. Our changes to competition, to managing energy consumption and to incentivising investment in new technology will mean billions in savings for consumers as we work towards net zero. We have overseen a huge increase in the number of energy-efficient homes from 14% in 2010 to almost half today, and we are investing more over the next Parliament to continue that important work.
Sarah Champion
The Secretary of State paints a very rosy picture, particularly on renewables, so why has her own energy tsar resigned in protest?
Claire Coutinho
We do not actually have an energy tsar, but we have an energy Secretary of State. I respect the former Member for Kingswood and wish him well in his next job, but if we care about reducing emissions, the question that everybody in this Chamber needs to answer is, “Why would you import fuel with higher emissions from abroad?”
We are investing in more renewable energy, we are starting a nuclear revival, and we will support new technologies, such as hydrogen, carbon capture and fusion. This is our plan to have a balanced energy policy. However, we need to ensure that the transition works for the British public and the British economy. Our plans cannot be based on ideology; they must be based on common sense.
Even the Climate Change Committee’s own data shows that when we reach net zero in 2050, we will still be using oil and gas for a significant portion of our energy. That is because it is not absolute zero; it is net zero. In other words, while our use of oil and gas will diminish rapidly, we will still need both for decades to come. Our Bill will improve our energy security and that of Europe. In the past two years, Europe has had to wean itself off Russian oil and gas. We have responded by tripling gas exports to the continent, and we were a net exporter of electricity to Europe in 2022 for the first time in more than a decade. We do not live in a world in which we can simply turn off oil and gas.
Clive Efford
Is the right hon. Lady saying that the only licences the Government intend to issue are for gas and oil destined for the British market?
Claire Coutinho
I am glad that the hon. Gentleman asks that question, because the Labour party has been spouting an awful lot of nonsense when it comes to this area. In the UK, we are blessed with the geological gift that is the North sea—it is an incredible national asset. Virtually all the gas produced there goes straight into the UK gas transmission network, and it is equivalent to about 50% of our overall gas needs. When it comes to oil, 90% of what is refined abroad is refined in Europe. We are a net importer overall.
The question that the hon. Gentleman should answer is this: if Europe did not get that oil from the UK, where would he like Europe to get it from—from Russia, or from further afield? That question is at the heart of the Bill. We know that we are going to need oil and gas—where do we want it to come from? Only an ideologue would argue that we are better off importing dirtier fuels from abroad than using what we can produce at home. However, it is not just energy security that dictates that we should use our own resources; the economic case also shows that introducing annual licensing is the right thing to do.
Sammy Wilson (East Antrim) (DUP)
Does the right hon. Lady accept that, despite the way in which some Members of this House have tried to rubbish that idea and argue that having our own oil and gas does not mean any energy security for the UK, 88% of the gas that we extract at present stays in the UK? Would they prefer to import that?
Claire Coutinho
I thank the right hon. Gentleman for making that point. Not only is it better for energy security, but gas that we bring in from abroad in the form of liquefied natural gas has emissions four times higher, so if Members care about the environment, they should back this Bill.
Domestic oil and gas production adds about £16 billion to the UK economy annually and brings in tens of billions of pounds in tax revenue. To give an example of how that has helped support families with the cost of living, we raised £9 billion in tax revenue last year from the oil and gas sector. That is money that we can use to support families, as we did last winter, paying half the average family’s energy bill, which amounted to roughly £1,500 per household. If we had no oil and gas sector, £9 billion more would have fallen on taxpayers’ shoulders. Why should we concede that tax revenue to other countries? What possible benefit could the British public feel from billions of pounds in tax revenue that could be raised here being sent abroad, all to import fuel with higher emissions?
I now turn to perhaps the most important reason to back this Bill: the workers. There are 200,000 people supported by the sector, in communities such as those in Aberdeen, Grimsby and the north-east of England, and including 93,000 people in Scotland, over 10,000 people in Yorkshire and the Humber, and 14,000 people in the north-west.
Caroline Lucas
The right hon. Lady knows as well as I do that most of the gas we import comes from Norway, where gas production is half as polluting as it is in the UK, so let us not have all this nonsense about imports being so much higher in carbon intensity, because those from Norway certainly are not. Does she accept the fact that most of the emissions are produced when we consume the oil and gas, and therefore will she start looking at scope 3 emissions and not just the production emissions, which are not the greatest emissions in question?
Claire Coutinho
I thank the hon. Lady for her question, but I think it fundamentally misunderstands the energy market. When we cannot get Norwegian gas and when we have made the most of all of our gas, what is the marginal gas that we use? It is LNG, which produces emissions four times higher than the gas we can produce here. If we produce less UK gas, we will need more LNG.
Coming back to what is a really critical part of the Bill—the workers—a recent report from Robert Gordon University found that a faster decline in our oil and gas sector, which the Opposition are proposing, could halve the workforce by 2030, leading to a significant loss of skills for the future energy sector. Those are the workers whose skills we will need for our future energy production. The same report found that over 90% of the UK’s oil and gas workforce have skills that are transferable to the offshore renewables sector. However, if we do not manage that transition correctly—everybody in the Chamber today agrees that we need to transition—we will lose those very important workers and their skills. It is the same people who are working on oil and gas rigs today who we will need on the offshore wind farms of tomorrow: our subsea installation engineers who lay cables, our technicians who remotely operate subsea vehicles, our divers, our project managers, and our engineering specialists servicing our offshore rigs. Those are all essential oil and gas jobs that we know will be critical in the roll-out of our low-carbon technologies. If we do not protect our world-leading specialists, we will see communities decimated, and ultimately a skills exodus that would put at risk the very transition that we are working so hard to achieve.
Alexander Stafford (Rother Valley) (Con)
My right hon. Friend is making a very powerful point about both energy security and getting those jobs—those British jobs. Recently, I visited the Falkland Islands with a cross-party delegation, and when we met the Falkland Islands Government, they said that they are desperate to unlock the Sea Lion oilfield and to get British workers to operate that field—obviously, the Falkland Islands is a British overseas territory—yet they are being stymied by the UK Treasury, which will not underwrite it. Does my right hon. Friend agree that the next thing we should do is back overseas territories by developing their oilfields, so that we can have good British overseas territories oil and gas in the UK and British jobs in the overseas territories, and support our one big happy Commonwealth and overseas territories family?
Claire Coutinho
My hon. Friend makes an interesting point, and I would be very happy to meet him to discuss it further.
Let me turn to investment in the sector. I think we agree across all parties in the House that we want to be a world leader in clean energy technologies. Here in Britain, we have many competitive advantages, and we want to exploit all of them to have a brighter energy and economic future. Right now, the oil and gas sector is investing in hydrogen, carbon capture and offshore wind. A well-managed transition helps ensure that as we get more investment and grow these sectors people can transition alongside in an orderly and organic way. To shut down the oil and gas sector too soon would not only risk that investment, make it harder to do the transition and see those sectors grow more slowly, but risk people’s livelihoods.
The Offshore Petroleum Licensing Bill will give the industry the certainty it needs to invest in this important sector. If we need oil and gas in the decades to come, it should come from Britain where it can. Using the resources on our doorstep to benefit Britain is simple common sense. This new legislation will require the North Sea Transition Authority to run an annual process for new exploration and production licences on the UK continental shelf, subject to key tests being met: first, that the UK is projected to remain a net importer of both oil and gas; and secondly, that carbon emissions associated with UK gas are lower than for imported liquefied natural gas. These tests are in place to provide assurance that proceeding with annual licensing remains the right thing to do.
This Bill will provide the industry with certainty on the future of licensing rounds, increasing investor and industry confidence. It will increase our energy security, protect 200,000 jobs, secure tens of billions in tax revenue and help us reach net zero. Members should not just take my word for it; voices across industry recognise the need for new licences for net zero and for our energy security. In fact, Stuart Payne, the chief executive of the North Sea Transition Authority, recently wrote that
“producing as much of the oil and gas we need as possible domestically is the right thing to do, for security and the economy.”
Offshore Energies UK has said:
“The UK needs the churn of new licences to manage production decline”.
National Gas has said that by backing gas today
“we can create jobs, secure energy independence, deliver net zero, and keep costs down for households and businesses.”
The general secretary of the GMB has said that not proceeding with new licensing risks
“leaving the UK even more dependent on energy imports to heat homes and power industry in future. That’s bad for our national security and prosperity.”
I have no doubt that the Opposition will whip their MPs against the Bill. They want to shut down new oil and gas licences, and they have been very clear about that. I suspect there are many in the Labour party who understand what turning off the taps would mean for British workers, and they will vote against this Bill with a heavy heart. They know that the right hon. Member for Doncaster North (Edward Miliband) has got this wrong. Is it not just common sense that, if we need oil and gas, it should come from UK waters rather than from foreign and often unreliable regimes abroad? Is it not better to produce our own gas instead of shipping in liquefied natural gas that has four times the production emissions of our own? Is it not right that the billions of pounds in tax that we raise from this sector stays here rather than being sent abroad? Is it not the position of an ideologue to say, “We will not support 200,000 British workers, but we are happy for those jobs to go to Russia or further abroad”?
The position of the Labour party and the SNP is not right for the environment, not right for the economy and not right for the energy security of this country. As the head of the GMB warned this weekend, it would be “exporting jobs” for the sake of “importing virtue”. It would mean thousands of jobs lost, communities decimated, tax revenue forgone, and all so that the right hon. Gentleman can appease his friends in Just Stop Oil. They are putting the interests of extreme climate ideologues over those of ordinary workers.
What of Labour’s wider energy policy? The truth is that, when it comes to this critical policy area, its policies are as clear as mud. We know that it hinges on borrowing £28 billion, which would mean thousands of pounds in extra taxes for every family. While we are cutting taxes, the Opposition would see them soar, which is not what the people of this country need. The right hon. Gentleman should level with the British public: what taxes would he raise to pay for this extra £28 billion of borrowing? When he was shadow Business Secretary, he said that £28 billion is the “scale of investment required”. The Opposition have said that they need to spend £28 billion to meet their 2030 decarbonisation ambition. So why will the right hon. Gentleman not set out which taxes he would raise? How is he going to squeeze more money out of hard-working families to achieve his 2030 pipedream? If he really thinks £28 billion in extra spending is essential, he should have the courage to explain how much worse off taxpayers will be.
While the Labour party struggled to back its own plans, over the past few months we have secured £30 billion-worth of private investment in clean energy. That is the difference between them and us: we know private investment is key to transition, but they would rather taxpayers shoulder the costs alone through more borrowing and higher taxes.
That is the choice the House must make today: do we support the oil and gas sector and the private investment that comes with it or do we leave taxpayers to foot the bill? We cannot afford to lose the skills, the revenue or the investment the sector provides; to do so would put net zero in jeopardy. We must deliver this transition in a proportionate, pragmatic and realistic way, ensuring that we make the most of the energy we produce right here in the UK.
That is common sense, and that is what the legislation represents. With this Bill we will protect 200,000 jobs, strengthen our energy security, secure tens of billions of pounds in tax revenue, ease the transition to renewable energy, and supply ourselves with gas that has only a quarter of the production emissions of LNG imports. Or we could follow the approach of the Opposition and decimate communities that rely on the oil and gas sector, rack up borrowing by £28 billion a year, send taxes soaring to pay for it and send British jobs and tax revenue abroad, all to import fuel with higher emissions. The choice is very clear: we are on the side of common sense, not ideology, and I commend this Bill to the House.