Motion to Approve
That the draft Regulations laid before the House on 24 April be approved.
My Lords, the regulations will provide BEIS’s offshore petroleum regulator—that is, OPRED, as referred to earlier—with powers to impose emission limits on atmospheric pollutants from certain types of combustion plant and monitoring requirements for those pollutants.
The regulations transpose two European Union directives and will allow OPRED to impose emission, monitoring and reporting controls on specific atmospheric pollutants from certain types of combustion plant, such as gas turbines and engines, on offshore installations. Obligations from these directives are transposed by amending the existing Offshore Combustion Installations (Pollution Prevention and Control) Regulations 2013.
The 2013 regulations implement provisions of chapters I, II and VII of the industrial emissions directive. The controls are enforced through permits for combustion plant, such as gas turbines and engines, on offshore installations that, alone or when aggregated, have a thermal rated input equal to or greater than 50 megawatts. When the industrial emissions directive was being implemented, there were no offshore facilities with qualifying large combustion plant such as boilers, heaters and diesel engines and none was foreseen. Consequently, those obligations relating to large combustion plant in chapter III of the directive were not transposed. However, there are now two offshore installations with plant that fall within the scope of chapter III of that directive, and relevant provisions in that chapter will now apply. The medium combustion plant directive obligations mean that we now also need to extend our regime to medium combustion plant to include boilers, heaters and dual-fuel engines with thermal capacities in the range of 1 to 50 megawatts.
Twelve offshore installations will be subject to the new requirements. There will be new requirements to control, monitor and annually report data on specified atmospheric emissions from large and medium-sized combustion plant, in line with the directives. Relevant existing permits issued under the 2013 regulations will be revised to incorporate the new obligations. Where necessary, new permits will be issued. The regulations will also ensure that inspection reports relating to large combustion plant are made publicly available. This is not required for medium combustion plant. The Offshore Environmental Civil Sanctions Regulations 2018 will apply to the regulations and will act as a deterrent against non-compliance.
In September 2017, a four-week public consultation on these draft regulations was undertaken. Eight responses were received seeking additional clarifications and concerns were raised regarding combustion plant which would be unlikely to meet the emission limits. The Government’s response addressed the consultation comments and we agreed to publish an updated guidance note to support operators’ compliance with the regulations.
One substantive issue arose from the consultation regarding the provisions in Regulation 15, under which emission limits will be included in permits to control the level of pollutants emitted into the atmosphere. The concern is that, in some cases, those limits may not be achievable because replacement or retrofitted abatement of existing plant will not be possible due to space limitations and technical configuration on offshore installations which were designed many years ago. We took account of industry concerns by making clear that we will work with operators on a case-by-case basis to manage the situation in line with the regulations. We understand the importance of maintaining the security of energy supplies and maximising economic recovery of hydrocarbons and do not want to see offshore installations entering early cessation of production.
The regulations are needed to control and reduce emissions of pollutants harmful to the environment and human health and implement two EU directives. Without additional powers to monitor air pollutants at the individual plant level, it is difficult to accurately quantify the emissions and ensure compliance. The regulations will contribute to our aim of ensuring that offshore hydrocarbon activities are carried out in a safe, clean and environmentally sound manner.
In conclusion, the object of the regulations is to control atmospheric emissions from offshore combustion plant which are harmful to the environment and human health, in line with EU directive requirements. This will be achieved through permits for qualifying combustion plant, to set emission limit values, monitoring and reporting conditions; conducting offshore inspections and investigation of breaches; and the use of enforcement notices to instruct operators to take action to address breaches within specified timescales.
The regulations will enter into force 21 days after being made. The requirements will take effect immediately for large combustion plant, but there is a phased implementation for medium combustion plant. I commend these draft regulations to the House.
My Lords, I thank the Minister for that introduction. He has touched on my concerns, but I want to press him a little further. I appreciate that this is the implementation of an EU directive and we want to maintain compliance with EU regulations, but it is a fact, nevertheless, that the largest volume of offshore installations are in the UK or the Norwegian continental shelf. I am not denying that there are other installations in Germany, the Netherlands and Denmark, but the big ones in the most exposed conditions are in the UK and Norway.
Of course, in the past the EU has attempted to have more direct involvement in the regulation of the North Sea, which has been resisted, I think correctly, by the UK. What I want to explore, and the Minister did touch on this, are the concerns, particularly with some of the mature investments we have in the North Sea, that the difficulty or the disproportionate cost that might be involved in meeting these could affect future production. The Minister has indicated that the Government want to work with the industry, but how sure are they that we will not reach a situation in which significant production or investment could be compromised?
I say that with some hesitation. I know the environmentalists tend to want to shut everything down, or be resistant, and I certainly do not wish to give the impression that I am not keen to ensure that we operate the highest possible standards. But we have to operate within realities and it is true that large installations in really difficult conditions such as the northern North Sea are likely to have larger requirements for generating capacity, which could cause them problems.
My final questions are: given that it is an EU regulation, is Norway applying the same conditions? Is there any question that UK installations would be at any cost disadvantage compared with Norway, or do we have an assurance that Norway is operating at least the same standards?
My Lords, as this is a separate debate, I declare that I am still a board member of the Marine Management Organisation, as far as I am aware. I was going to start by telling the Minister that I very much support this but I am not sure that that is in line with my noble friend Lord Bruce’s contribution. I am sure we are agreed on this. The industrial emissions directive is generally an excellent piece of legislation. It is intelligent, in that it looks at best practice and varies its requirements according to what is possible and as best practice improves over time. Of course, it replaces the rather obsolete large combustion plant directive.
I have only a couple of questions about this because I welcome it. Coming back to one of my noble friend’s questions about cost, the medium combustion plant directive 2015, which is part of the EU’s clean energy package, says specifically that for new plant the directive applies immediately but for retrofit it does not need to apply until 2025 or 2030, which comes back to my noble friend’s point. My only real question on that is: is that the sort of timescale the Government are looking at in their understandable, correct and—lenient would be the wrong word—intelligent approach to getting these installations right? My other question is one I should know the answer to: what is the enforcing authority on this and how is it enforced—how are emissions measured—offshore? It is fairly straightforward onshore but how is that done offshore?
My Lords, once again I thank the Minister for his explanation of the regulations before the House. This instrument widens the scope of the 2013 regulations to include both the industrial emissions directive, IED, which applies to large combustion plant over 50 megawatts, and the medium combustion plant directive, MCPD, which applies to plant with an individual thermal input of up to 50 megawatts.
Previously, the control of pollutant emissions from large combustion plant was not seen to be relevant for offshore facilities. Controls from the MCPD need to be extended to regulating emissions harmful to human health and the environment. The objective of these regulations is to control atmospheric emissions from offshore combustion plant that previously had been limited to onshore facilities under the Department for Environment, Food and Rural Affairs. The Explanatory Memorandum explains:
“The amending of the existing Regulations and widening of permit requirements are already familiar to offshore operators, who will receive a single permit covering all the qualifying combustion plant for each installation”.
We welcome this rationalisation. The memorandum further explains that OPRED, the offshore regulator mentioned in the previous regulations, will have its duties extended to implementing the instrument and will be able to recover its costs through fees charged for permits. Rather like the noble Lord, Lord Teverson, I assume from the previous regulations that OPRED will have the sanctions we have just approved to ensure compliance.
I understand that there are two large offshore plants over 50 megawatts, as the Minister explained, and 13 smaller offshore plants covered by the MCPD. However, the memorandum explains that implementation will apply to plants covered by the MCPD according to a timetable, whether they are new or already in existence. Further expanding on the words of the noble Lord, Lord Teverson, new plants will need a permit from 20 December 2018. However, if they are already in existence, implementation is phased according to whether they are greater or smaller than 5 megawatts. Those greater than 5 megawatts will require a permit from 1 January 2024 and those less than 5 megawatts will require a permit from 1 January 2029—five years later. This begs several questions. First, for what reason are existing plants given this grace period of five or 10 more years? I would be grateful if the Minister explained. Secondly, why is a distinction made between plants over or under 5 megawatts? Of the 13 plants covered, how many will fall each side of the line? What is the significance of that, and does it lead to a discrepancy on costs or to competitive distortion between the various plants? The consultation did not give rise to any comments on this point.
The consultation merely gave rise to issues regarding the ease of monitoring and access to exhaust stacks on existing facilities. I am glad to see that the department is aware of this and that OPRED will be taking a pragmatic approach. However, there could well be issues regarding the monitoring of carbon monoxide for its effects on human health. Can the Minister assure the House that this pragmatic approach will not give rise to possible monoxide risks to human health? With the assurance that these issues are not material, I am content to approve the regulations today.
My Lords, I thank noble Lords for their comments and interventions, and I hope I can deal with most of the points raised. I can give an assurance yet again to the noble Lord, Lord Teverson, that OPRED will continue to be the enforcing authority for the offshore oil and gas sector, but the emissions will be monitored by the operators, which have a duty to report them annually to OPRED. OPRED will then take note of them.
The noble Lord, Lord Bruce, intervened with his concerns about the industry, which he voiced in a Question earlier this week on the position of oil and gas in the UK. We understand his concerns about the industry, which is why in the consultation we wanted to know about the concerns of the offshore operators and how they are getting on. As I made clear earlier, when we originally transposed this directive there were no combustion plants of the size we are talking about, but the nature of the extraction of oil and the sort of oil that is being extracted, some of it being much thicker, has meant that there are bigger, heavier machines. That is why we have to bring in these regulations—to deal with that growth. That is what we are doing and why we want to consult on it.
I can assure the noble Lord that Norway will be following us in doing that as this directive applies to EEA states. It is difficult to say how the costs of compliance for us and for Norway may differ, but it is possible that they will be broadly similar, given that its approach to transposition should essentially be the same.
I think the noble Lords, Lord Bruce and Lord Teverson, asked why we were allowing some plant to operate in a non-compliant mode and why we were phasing implementation. This obviously follows the consultation, and OPRED appreciates that it would be difficult for some operators to ensure that some plant, with safety and environmentally critical elements, continued to comply with the relevant deadlines. OPRED certainly wishes to work with the operators in these circumstances on a case-by-case basis in line with the regulations.
Plant plays a critical role in the safe operation of stabilising and processing hydrocarbons by providing the heat and power I referred to in dealing with oil. Should one or more of those plants be prohibited from operating, it could result in implications for safety in processing the hydrocarbons, with the consequence of hydrocarbons then being lost. One has to balance pros and cons in that field, and for that reason it is clear that a degree of phasing has to come in. That is why we made it clear that further medium combustion plants and phased implementation will apply where prescribed for new plant after December 2018, for existing plant with megawatt thermal input of greater than five megawatts but less than 50 megawatts from January 2024, and so on.
Lastly, the noble Lord, Lord Grantchester, asked whether the civil sanctions regulations would apply to these regulations. Yes, civil sanctions regulations will apply to these offshore combustion insulation requirements.
I hope I have dealt with all the questions.