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Storage of Carbon Dioxide (Amendment and Power to Modify) (EU Exit) Regulations 2018

Volume 795: debated on Wednesday 13 February 2019

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Storage of Carbon Dioxide (Amendment and Power to Modify) (EU Exit) Regulations 2018.

My Lords, this draft statutory instrument ensures that the UK’s regulatory regime for the geological storage of carbon dioxide continues to function when the UK leaves the EU. This will be required in the event that the UK leaves with no deal, but may also be required in a negotiated outcome.

There is broad consensus that carbon capture, usage and storage—CCUS—is vital to keeping temperatures below 2 degrees and at least cost. For example, the Intergovernmental Panel on Climate Change, the IPCC, estimates that, globally, it could be almost 140% more expensive to meet the target of 2 degrees without CCUS; that equates to an additional $12 trillion. That is why this Government are committed to progressing CCUS, which has the potential to support meeting our 2050 climate reduction target and forms an important part of our industrial strategy, supporting the transition to a low-carbon economy.

A functional regime for the storage of carbon dioxide is essential for enabling the deployment of CCUS across the UK. In 2009, the EU introduced the CCS directive, which established a legal framework for the environmentally safe geological storage of carbon dioxide. It covers all carbon dioxide storage in geological formations in the EU for the entire lifetime of the storage sites. The UK implemented these requirements through the Energy Act 2008 and subsequent regulations. This SI ensures that the UK’s regulatory regime for the geological storage of carbon dioxide will continue to function in an environmentally safe way when we leave the EU.

The purpose of this instrument is threefold. First, it corrects references to the UK as a member state and removes obligations to consult with the EU Commission during the licensing and permit process. This will ensure that the UK continues to be able to issue licences and permits to future CCUS projects, and that licences already issued remain fully functional.

Secondly, it will give a new power allowing the Secretary of State to update technical requirements relating to storage site characterisation and monitoring in the light of technical or scientific progress. This is an equivalent to that held by the EU Commission under the CCS directive. I stress that this power can be used only to reflect technical and scientific progress and for no other purposes. It has similar safeguards to the current EU Commission power, ensuring that its use cannot adversely affect the standard of monitoring or level of safety of the carbon dioxide storage sites. Thirdly, this instrument will ensure that there continues to be robust monitoring and safety standards for carbon dioxide stores consistent with the current legislation.

To varying degrees, these amendments make provision in respect of devolved matters, for which we have sought and received formal consent from Scotland, Wales and Northern Ireland. In developing this instrument, we also consulted the Oil and Gas Authority as the licensing and permitting body.

These amendments will not have any adverse impacts or place any additional burdens on CCUS projects, including, for example, the Acorn project in north-east Scotland, which was recently awarded a carbon dioxide storage licence by the OGA. The effect of all these changes will be to ensure that the UK continues to have an effective, robust and safe regulatory regime for storing carbon dioxide, a vital component of supporting the progress of CCUS in the UK.

To conclude, the Government are committed to supporting the development of CCUS. To meet this commitment, it is imperative that we ensure we have a fully functioning regime for the safe and permanent storage of carbon dioxide in the UK. The amendments proposed by this statutory instrument do just that. They are an appropriate use of the powers of the withdrawal Act and form an important component in fulfilling our commitment to ensuring that the UK has the option to deploy CCUS at scale during the 2030s, subject to costs coming down sufficiently. I commend the draft regulations to the Committee. I beg to move.

My Lords, when I read this, particularly the Explanatory Memorandum, I started to feel it was an exercise in irony. Despite all the urgency of the potential Brexit, here we have a situation where it will probably be necessary to pass this legislation by 29 March 2029, given the current government decarbonisation strategy.

In 2017, as the Minister will probably remember, the Public Accounts Committee in the other place pointed out that the Government had wasted some £168 million on CCS projects—including £100 million on the one cancelled by George Osborne in the 2015 Budget—with no progress whatever.

Having said that, I agree with Claire Perry, the Minister responsible for the clean growth strategy. In the CCUS Cost Challenge Taskforce report, she said that,

“we want to have the option to deploy CCUS at scale during the 2030s”—

as long as the pricing is right.

The Minister mentioned the Acorn project. I agree that there may be some necessity to do this, but it reflects the rather tragic trajectory of government action. The fact that this core part of the clean growth strategy will not be implemented until the 2030s is most unfortunate.

The clean growth strategy called for a new CCS council—or CCUS as it is called nowadays. Has that been established and is it operating now?

As the Minister knows, I am interested in areas of international agreement, such as the Ospar Convention, which prevents the deposit of waste in marine areas of the north-east Atlantic. I seem to recall that the Government got an allowance through the Ospar Convention process for CCUS—it is seen as disposal of waste at sea, even though it is under the sea—potentially in the North Sea. The UK and the European Union are signatories of this. I am interested to understand whether the UK itself has enough permits under the convention, or a derogation in our own right to be able to continue this, rather than it being done in agreement with the European Union, with it as the signatory. Will we need any treaty revisions or further derogations from the Ospar Convention to move this forward once we are out of the European Union?

In a way, I am glad that BEIS has given this some priority—perhaps it is a sign of movement at last. I look forward to seeing those future plans for CCUS. We do of course have Drax, but I do not think it requires any geological resolution of storage, which this SI is all about.

I am grateful to my noble friend for moving this statutory instrument. I have just one question. He said that there has been consultation with only the Oil and Gas Authority, which presumably is the regulator in this instance. Page 5 of the Explanatory Memorandum says that it will apply to,

“activities that are undertaken by small businesses”.

Was a conscious decision taken not to consult widely with the industry, and, if so, what was the reason for that? Obviously the regulator will have a view, but those who work in the industry might have an alternative view.

My Lords, I am standing in for my noble friend Lord Grantchester, who cannot be with us this afternoon. This is another of the no-deal Brexit SIs, which would be completely unnecessary if the Government were to do the right thing: agree with Labour and others and rule out the possibility of a no-deal Brexit. If the Government were to do that, this House and the other place could spend more time dealing with far more important and relevant issues, and save the Civil Service, the ministerial Opposition and industry time and money—a simple solution.

This SI has already been through the other place, where it was passed in 10 or 11 minutes, so we are giving it a little more scrutiny in this House than in the other place. I note Dr Whitehead’s comments and those made by the noble Lord, Lord Teverson. On carbon capture itself, Dr Whitehead’s said that,

“it would be rather nice if we had some carbon capture and storage to put into those regulations”.—[Official Report, Commons, 28/1/19; col. 5.]

I have a couple of questions to add to the others asked by noble Lords. As the noble Baroness, Lady McIntosh, said, the Explanatory Memorandum details that BEIS engaged with the Oil and Gas Authority and the devolved Administrations. Could the Minister enlighten us as to the response from the authority and the Administrations?

The Government have stated that no specific monitoring arrangements are needed for this. Can the Minister detail whether the Government envisage any situation where the instrument will need to be looked at again? On the Minister’s second point, on changes to technical or scientific specifications, will there be any parliamentary scrutiny or oversight, or do those changes sit in the hands of the department and the Minister?

My Lords, I am again grateful to all noble Lords for their contributions. On the last point made by the noble Lord, Lord McNicol, I am not aware that there will be any further parliamentary oversight of this order once it has gone through. Of course, as I said in my opening remarks, we are clear that this deals with a no-deal situation, but it might possibly also be necessary in the event of a deal. We have to see what the deal is, and then see what precisely is needed. The important thing at this stage is to provide a degree of certainty to the industry to make sure that it knows what is happening; that is true of a large number of the regulations coming before us.

The noble Lord, Lord Teverson, seems to think that the Government’s action was not sufficiently vigorous, that we have not done enough over the years and that nothing will happen until 2030—that we could leave this order until 2029. I suspect that neither I nor the noble Lord will be here by that stage—the noble Lord, Lord McNicol, looks so young that I am sure he will still be here debating orders of this sort, which he will greatly enjoy. The important thing, as I said in response to the noble Lord, Lord McNicol, is to get certainty.

I believe that we have been ambitious. My right honourable friends Claire Perry and the Secretary of State are ambitious, and, moving wider than CCUS, we have acted well on all other matters relating to renewables. As I said in a recent debate, this applies both to the coalition Government, and therefore to the Lib Dems, and to the previous Labour Government, who passed the Energy Act with all-party support—all sides of the political spectrum have been acting well on this. We have an ambitious action plan designed to enable the first CCUS facility in the UK, with commissioning from the mid-2020s.

I also assure the noble Lord, Lord Teverson, that the CCUS Council has been established. It is co-chaired by James Smith; it held a meeting at the end of last year and will meet again in March. The noble Lord can be assured of action on that.

I can also offer assurance about consultation on the specific point raised by the noble Lord, Lord McNicol. As I said, both the OGA and the devolved Administrations were consulted; the latter, as is appropriate, gave their consent, and the OGA was also content.

My noble friend Lady McIntosh was concerned about consultation. She will not be surprised that we rather expect questions on consultation on all of these regulations, because that seems to be what has been happening. We have not formally consulted, as noble Lords will be aware, on this particular statutory instrument, as the impact on businesses and government will be minimal. This is because the changes are technical and enable the regulatory regime to continue functioning largely as it does now. We did not think it was necessary to consult formally on this, but, as I said, we consulted those particular bodies and published a technical notice in October setting out the climate change requirements in a no-deal scenario.

The noble Lord, Lord Teverson, also asked about the Ospar Convention. I apologise to him because I am unsighted on that matter, but I will write to him. With that, I commend the regulations.

Motion agreed.