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Monday January 18th is the all-eyes on the Commons day for the Sandbag team, with the Energy Bill coming to its second reading, which marks an important moment in the development of UK’s energy and decarbonisation policy. This Act has already developed significantly through the House of Lords and the very fact that we are now speaking of an interconnected energy & decarbonisation policy is in fact the achievement of this very process.

Damaged oil platformThe current form of this Bill represents quite a departure from its initial form, which almost exclusively focused on fossil fuel extraction. It now has a much wider focus,with some regard for the country’s industrial future. While the first draft of the Bill had no support for Carbon Capture and Storage (CCS) and focused almost exclusively on fees associated with fossil fuel extraction, it was transformed by cross-party agreement in the Lords. Decarbonisation through CCS now included in the long title of the Bill itself.[1]

As Conservative peer Lord Deben said:

“We live at a time in which the issue of energy, in particular oil and gas, is changing so fast that we have to be extremely careful that we do not set up systems that are not capable of easing alteration to meet new circumstances…there may well be an interim period in which we will need to use more fossil fuels than we would like, and the only way we can do that without having a damaging effect on the climate is of course by using carbon capture and storage.

 

A sentiment that was echoed by Labour peer (and founder of Sandbag) Baroness Worthington,

“If we want to maintain our industrial activities and investment, we have got to have technologies that allow us to do that with low carbon – and that means CCS. It does not just mean CCS on its own; it can be combined with electrification, once we have a low-carbon power system. But CCS is going to play a huge role”

Following the passage of the Energy Bill through the House of Lords, the Oil and Gas Authority (OGA) will now be legally compelled to have regard for CCS development. This balances the need for secure and affordable energy with climate considerations and decarbonisation.

A proper grappling with the topic of CCS took place during the Committee stage, initially in connection to the Bill’s provisions concerning the decommissioning of North Sea oil and gas infrastructure. As a result the current form of the Bill states that before any North Sea oil platforms and pipes are decommissioned, the OGA has to assess whether they can be used for CCS. This amendment could save the taxpayer and industry billions of pounds, as well as kick-starting a new CCS industry. Regional initiatives might then emerge, with the possibility of a “North Sea alliance” to introduce CCS to the area. In the meanwhile, a CCS strategy expert group has been set up under the leadership of cross-bench peer Lord Oxburgh.

However, further coordination of policies is needed if irrelevance is to be avoided. In parallel with Energy Bill negotiations, the £1 billion CCS competition was dropped in the November spending review. Legislative successes have been countered by funding set-backs.

The House of Lords have now raised the bar quite high. Will the Commons send it flying even higher or let it drop?

As pointed out during Baroness Worthington’s last speech as Shadow Energy and Climate Change Minister in the House of Lords,

“On energy policy, the best way to engage with Europe is to engage positively with new ideas, take our vision to Europe and persuade it that our technology-neutral, all-of-the-above, focus-on-least-costly way is the right way to do this.”

Sandbag will also be watching closely as MPs debate the policies needed to ensure the government can keep its commitment to phase out coal by 2025; discuss enshrining a net zero goal in the UK Climate Change Act; and look at important improvements in the UK’s greenhouse gas accounting.

 


[1] The Energy Bill [HL] 2015-2016. A BILL to make provision about the Oil and Gas Authority and its functions; to make provision about rights to use upstream petroleum infrastructure; to make provision about the abandonment of offshore installations, submarine pipelines and upstream petroleum infrastructure; to extend Part 1A of the Petroleum Act 1998 to Northern Ireland; to make provision about the disclosure of information for the purposes of international agreements; to make provision about fees in respect of activities relating to oil, gas, carbon dioxide and pipelines; to make provision about wind power; to make provision about the crediting to and debiting from the net UK carbon account of carbon units; and for connected purposes

Oil platform image with thanks to Dean Terry on Flickr. Used under a Creative Commons Licence.