In this series of updates, we examine the UK Energy Bill (the Bill) following the second Reading in the House of Commons which took place on 18 January 2016.

The Energy Bill was widely debated and substantially amended in the House of Lords. It then passed through the House of Lords to the House of Commons where it had its First Reading on 5 November 2015. As this represents a formal presentation to Parliament, there was no Commons debate.

A helpful Briefing Paper was produced ahead of the Second Reading and can be found at: http://researchbriefings.files.parliament.uk/documents/CBP-7466/CBP-7466.pdf

The second Reading in the House of Commons took place on 18 January 2016. It commenced with a reminder from the Speaker that he has certified clause 79 (Onshore wind generating stations in England and Wales) as relating exclusively to England and Wales so that the “English votes for English laws’ procedures will apply to that clause. This is required to be separately approved by MPs representing constituencies in England and Wales before the Bill can receive a Third Reading.

The Bill was moved for a Second Reading by Amber Rudd, the Secretary of State for Energy and Climate Change.  A lively debate followed as reflected in the comments of Dr Alan Whitehead (Southampton, Test) (Lab) who said:

“We have had a wide-ranging debate on the Bill. Indeed, it has been so wide-ranging that in some instances I forgot there was a Bill in front of us.”

The debate mainly focused around the government’s stance on climate change and emissions, carbon capture and storage, onshore windfarms planning and the proposed end to subsidies, and the impact of the drop in oil prices on the North Sea oil and gas industry.

The Bill passed the Second Reading and it was agreed by the Commons that it was expedient to authorise the charging of fees, imposition of levies and imposition of financial penalties under the Act. It has now moved on to the House of Commons Committee stage and has been committed to a Public Bill Committee with proceedings to be brought to a conclusion on Tuesday 9 February 2016.

The agreed timetable for the Committee meetings is:

  1. at 9.25 and 2.00 pm on Tuesday 26 January;
  2. at 11.30 am on Thursday 28 January;
  3. at 9.25 am and 2.00 pm on Tuesday 2 February;
  4. at 11.30 am and 2.00 pm on Thursday 4 February;
  5. at 9.25 am and 2.00 pm on Tuesday 9 February.

The Bill is being considered in the following order, namely Clauses 1 and 2; Schedule 1; Clauses 3 to 73; Schedule 2; Clauses 74 to 84; new Clauses; new Schedules; remaining proceedings on the Bill.

There has been a substantial number of amendments tabled for discussion at the Public Bill Committee, including a Government amendment to reverse the changes made in the House of Lords to extend the Principle Objective of the Oil & Gas Authority (OGA), as set out in section 9A of the Petroleum Act 1998, to include decommissioning and carbon capture and storage (new clause 8).

Following the Second Reading, there has also been a “Call for Evidence”.  The written evidence received to date has been published ahead of the Committee meetings and mainly addresses windfarm issues. Oil & Gas UK (OGUK) has submitted written evidence in which it:

  • welcomes the Bill and the establishment of OGA as an independent GovCo
  • supports the Government amendment to keep the Principal Objective of OGA focused on maximising economic recovery. Extending the OGA function and remit could compromise the OGA’s ability to deliver Maximising Economic Recovery for the UK (MER UK)
  • states that whilst the offshore industry is not opposed to carbon capture and storage technology, it should remain the responsibility of the Office of Carbon Capture and Storage (OCCS) within the Department of Energy & Climate Change (DECC)
  • supports the government amendment to reverse changes in the House of Lords to carry out reviews of OGA’s performance every 3 years instead of the change to each year (new clause 17). It will give the OGA time to bed in and ensure it can use its time efficiently

The Public Committee proceedings which took place on 26 and 28 January 2016 can be found at:

http://www.publications.parliament.uk/pa/bills/cbill/2015-2016/0092/amend/energy_pro_pbc_0126.1-4.html

http://www.publications.parliament.uk/pa/bills/cbill/2015-2016/0092/amend/energy_rm_pbc_0128.1-4.html 

The key changes agreed to date are:

  1. Clause 2  - add new 2(2)(c) obliging the Secretary of State within one year of this section coming in to force to undertake an assessment of fitness for purpose of OGA’s powers and to submit a report
  2. Clause 8 – deleting Opposition House of Lords amendment to 9A(1) of the Petroleum Act 1998 (proposed extension of function to include CCS and substituting “return” for “recovery”)
  3. Clause 9 – OGA exercising function – rejecting Opposition proposed amendment to extend OGA function to a requirement to address (a) environmental considerations to facilitate Climate Change Act 2008 and (b) the need to re- use North Sea infrastructure for  CCS projects but an agreed amendment to clause 10 now permits the Secretary of State to give directions to OGA in the exercise by it of its functions if the Secretary of State considers that directions are necessary to inform OGA’s role in developing and promoting carbon storage and to meet the Climate Change Act 2008.
  4. Clause 17 – amended to leave out “one year” and insert “three years”.

The next Public Bill Committee meeting is scheduled for 2 February 2016.

Update on MER Strategy

Meanwhile,  following two workshops in Aberdeen and London and a period of industry consultation which closed on 8 January 2016, the Government has issued a revised Strategy which can be found at:

https://www.gov.uk/government/publications/maximising-economic-recovery-of-uk-petroleum-the-draft-mer-uk-strategy

The revised Strategy was laid before Parliament for scrutiny on 28 January 2016 and will remain there for 40 days.  The Government is required to produce this first MER UK Strategy  by April 2016 and the anticipation is that it will meet that deadline.

We also understand that the Government will shortly publish a document summarising the evidence received during the consultation process.

For a full overview of our series on the Energy Bill, please click here.