On Monday 26 January, 2015 MPs voted to increase restrictions on shale gas and oil extraction at the same time as continuing to try and maximise exploitation of the UK's oil and gas reserves.  But on Wednesday Scotland blocked the granting of permits for fracking and a Lancashire council delayed a decision on two projects, casting doubt on David Cameron's shale gas ambitions.

Wednesday 28 January 2015 also saw the publication of the Environmental Audit Committee (EAC) critical report to inform the Report-stage and Third Reading debates of the Infrastructure Bill. 

Infrastructure Bill

In advance of Monday's debate the party positions on whether Westminster should support the nascent shale industry were set out. The chancellor in particular and the conservative MPs are very keen. Labour's position is that it is willing to permit fracking with some additional checks. A number of Liberal Democrats and the Greens remain firmly anti any fracking.

MPs were only allotted two hours to debate the energy elements of the bill and the majority of the debate was devoted to consideration whether the UK should go "all out" for shale gas.

Proposal for a Moratorium on fracking

The EAC report 'Environmental Risks of fracking' calls for "a moratorium on the extraction of unconventional gas through fracking is needed to avoid both the inconsistency with our climate change obligations and to allow the uncertainty surrounding environmental risks to be fully resolved". 

A cross party amendment for moratorium on fracking was tabled, but rejected by 308 votes to 52.  

Stricter environmental and planning regulations

Labour abstained from the vote on a moratorium on the basis that the Government accepted its amendment for shale-gas companies to comply with stricter environmental and planning regulations. The amendment which was agreed provides:

"Any hydraulic fracturing activity cannot take place:

  1. unless an environmental impact assessment has been carried out;
  2. unless independent inspections are carried out of the integrity of wells used;
  3. unless monitoring has been undertaken on the site over the previous 12 month period;
  4. unless site-by-site measurement, monitoring and public disclosure of existing and future fugitive emissions is carried out;
  5. in land which is located within the boundary of a groundwater source protection zone
  6. within or under protected areas;
  7. in deep-level land at depths of less than 1,000 metres;
  8. unless planning authorities have considered the cumulative impact of hydraulic fracturing activities in the local area;
  9. unless a provision is made for community benefit schemes to be provided by companies engaged in the extraction of gas and oil rock;
  10. unless residents in the affected area are notified on an individual basis;
  11. unless substances used are subject to approval by the Environment Agency;
  12. unless land is left in a condition required by the planning authority, and
  13. unless water companies are consulted by the planning authority."

UK Climate Change objectives

The Government agreed to a further amendment to be tabled in the Lords requiring the Government to set out how its support for fracking aligns with the UK's climate change goals. This means that the Energy and Climate Secretary will now be required to consider research from government advisor the Committee on Climate Change.  If the committee deems shale gas extraction to be contrary to the UK's climate targets, the Secretary will either have to remove companies' licenses or explain why they are allowing fracking to continue. Energy minister Amber Rudd explained:

"We will introduce a further amendment in the Lords to place a duty on the Secretary of State to consider in every carbon budget period advice from the Committee on Climate Change as to the impact of UK shale development on the UK's overall climate change objectives.  If the Committee on Climate Change advises that shale development adversely impacts on climate change objectives, the Secretary of State must either choose to deactivate the right of use provisions or to make a written statement to Parliament explaining the reasons."

The Committee on Climate Change (CCC) was asked to comment on aspects of the current Infrastructure Bill in its role as independent advisers to Parliament on climate budgets. In a statement on 26 January 2015 the CCC said that shale gas exploration "is a new and emerging area and it is important to ensure that future exploitation is consistent with existing carbon budgets and our 2050 target for reducing emissions. The Committee on Climate Change is able to provide that advice to Government and Parliament."  It also stated that it looked forward to reviewing in detail the evidence from the EAC and that some of the CCC's previous work "suggests that some  shale gas exploitation may be consistent with meeting carbon budgets, if suitable regulation is in place".

National Parks

Amber Rudd also agreed to an "outright ban" on fracking in "national parks, sites of special scientific interest and areas of outstanding natural beauty."

Access rights

A Green and Liberal Democrat backbench amendment to prevent changes to trespass laws to allow fracking under people's homes was rejected.

Maximising oil and gas

Notably clause 37 which illustrates the divide between the parties' views on climate change received very little attention.  Clause 37 places on Government an obligation to produce strategies for "maximising the economic recovery of UK petroleum". This was first recommended by Sir Ian Wood in his government-commissioned report on how to maximise the returns from the UK's ageing North Sea oil and gas industry.  A Green and Labour backbench amendment to remove the clause was rejected by the Energy Minister who stated:

"The Government feel that oil and gas recovery makes an important contribution to the national economy by supporting jobs and growth. In June 2013, we commissioned Sir Ian Wood to review UK offshore oil and gas recovery and its regulation, and we have been making good progress implementing the recommendations."

Consequently, if the Lords approve the Bill, the Government will have a legal obligation to "maximise" oil and gas extraction, although it remains unclear what that may entail.

Scottish Moratorium

Developments took another turn in Scotland on Wednesday 28 January 2015 with the announcement that Scottish Government was introducing, with immediate effect, a moratorium on the granting of planning consents for all onshore unconventional oil and gas developments, including fracking," Let me make this absolutely clear: that means that no planning permissions will be grated for that activity." 

In his statement to the Scottish Parliament Energy Minister Fergus Ewing said the Scottish Government would undertake additional work "to increase the evidence base for decision making on this issue".

The Energy Minister gave a number of undertakings on behalf of the Scottish Government:

  • Consultation: "launch a full public consultation on unconventional oil and gas extraction", "in around two months' time" (i.e. March), "It will last for the standard period of 12 weeks".
  • Health Impact Assessment: "we plan to commission a full public health impact assessment"; but no timescale was given.
  • Planning Guidance: "we are working to further strengthen planning guidance".
  • Environmental regulation: "we wish to tighten hat further" via SEPA.

The Energy Minister also rejected the need to hold local referenda because no planning permission would be granted while the moratorium is in place. 

He also referred to received advice that local referenda would be complex and costly.

Note that on the basis that planning competencies are not developed offshore the moratorium does not apply to offshore activities, such as the UCG proposals for the Firth of Forth.

Direction to Scottish planning authorities and SEPA

The moratorium was accompanied on the same day by a Direction to all Scottish planning authorities to give effect to the new policy with immediate effect. The Direction sets out new arrangements for notifying planning applications to the Scottish Ministers. It includes new notification requirements so that Scottish Ministers are notified of any new planning application within 7 days of its validation. Further authorities are also restricted from granting planning permission without first notifying the application to Scottish Ministers. This requirement applies to both new planning applications and any that are currently being considered. To ensure consistency of regulatory regimes, the Minister for Environment, Climate Change and Land Reform issued a similar direction to SEPA for relevant new controlled activity regulation licences. 

What happens next?

The Conservatives and Labour both tried to take credit for the amended bill. Labour's shadow Energy and Climate Minister said in a statement responding to the debate that the opposition had successfully forced a "massive U-turn" by the Government. The Infrastructure Bill will now move to the Lords for consideration of the commons amendments.  The Lords may decide to return the Bill the Commons, or they may pass it into law. 

For Scotland the Energy Minister confirmed that, "the moratorium will apply until the process of evidence gathering and consultation has been concluded." Assuming the health impact assessment is carried out in parallel and within the timescale indicated for the consultation this process is not likely to conclude much in advance of the Westminster general election in May which may also see some changes in Scottish representation in Westminster.

Fergus Ewing noted that the only way that Scotland could take full power and control in decision making in relation to onshore shale would be through the devolution of licensing.  The recent Enduring Settlement proposal  includes draft clauses for a new Scotland Act which would have the effect of devolving the licensing of onshore oil and gas extraction and responsibility for mineral access rights for this to the Scottish Parliament.  The draft clauses must be the subject of debate in both the UK and Scottish Parliament, which may now be unlikely before the Westminster general election and possibly the next Scottish Parliament general election is due to be held in May 2016.  It may be therefore that the moratorium will have a longer duration.

Industry will be relieved by the rejection of the moratorium proposal by Westminster and the approval of the main deep level land access provisions of the Infrastructure Bill which will facilitate fracking.  

However, this Wednesday also saw Lancashire Council defer the decision on whether to give Cuadrilla planning permission for two developments. Cuadrilla submitted revised plans after the Council released a planning report recommending its applications be rejected last week.   Council planning officers recommended refusal on the grounds of “unnacceptable” noise and heavy truck traffic which saw Cuadrilla submit revised proposals.  The Council's legal function advised that being “substantive” the revised proposals had to go out to public consultation.  Councillors on the planning committee accepted the legal advice and deferred the decisions. Councillors will meet again in March to make a final decision.

Scotland is estimated to have around 80trillion cubic metres of shale gas resources, it is estimated this would cover all of Britain's gas needs for more than 30 years. After this week's events it seems clear that the future of unconventional oil and gas in the UK remains uncertain as we move towards the General Election.