13:30 Colin Clark (Gordon) (Con)

Would my hon. Friend agree that oil and gas is not a transitional industry on the journey through to a decarbonised world? There are many industries and many people who will be using oil and gas as an energy source, and for other reasons, for many years to come.

I thank my hon. Friend for that point. I am a member of the Environmental Audit Committee, which took evidence from Lord Turner, the former chairman of the Committee on Climate Change. I asked him for how long he saw oil and gas being a major source of energy, heat and power, and he said at least into the next century, which is well over 80 years. He went on to say that in terms of an industrial raw material, we just do not know—we could be looking at hundreds of years. It is important that we realise that we probably cannot bring all the hydrocarbons we have to the surface, but that we certainly have to use them better and in a much cleaner way. I know that is a big consideration, particularly in the City of London.

The UK has signed up to significant carbon reduction. Hydrocarbon production is presented by parts of the media and politicians in this place—I have heard them on many occasions—as part of the problem. Renewables have become a large part of electricity production, but there is twice as much energy transferred by the gas ring than there is by electricity because, apart from on a hot day like this, this is a country that needs heating in our homes. Natural gas produces half the greenhouse gases that coal does. The UK continental shelf industry is part of the solution, not the problem. Each and every one of us gets up in the Chamber as often as we can to remind people that the industry is a very valuable part of the economy.

It was her first visit. She clearly recognises the importance of the sector. Given her unique position, which covers energy and clean growth, I am sure she agrees that natural gas in particular has played a transformational role in reducing greenhouse gases, and I look forward to her continued support.

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14:12 Kirsty Blackman (SNP)

The industry is in a good place, which is surprising after everything it has been through. There is a positive future. One of the amazing things it is doing is focusing on decarbonisation. That seems a bizarre thing for the oil and gas industry to do, but it has more of a need to do it, and more of a responsibility to do it, because it is the oil and gas industry. I am pleased that that has been written into what the Oil and Gas Technology Centre is doing, and that all the oil and gas companies, working together in ways they never have before, are positive about looking toward decarbonisation.

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15:06 Alan Brown (Kilmarnock and Loudoun) (SNP)

The hon. Gentleman mentioned that there are 233 companies in his constituency alone working in the oil and gas industry. That is a fantastic statistic, which shows the importance of the sector to his constituency and the wider Aberdeenshire area. He correctly said that the oil and gas industry should not be seen as a stopgap measure while we decarbonise the economy and that it still has a bright future. I echo that sentiment. He highlighted the resilience of the industry, which is why it still has that bright future.

We should also have had an oil fund. The answer to that request has been a consistent no from the UK Government. Yet Norway’s oil fund, which was started in only 1990, sits at £780 billion. That is a fantastic legacy. Norway is also using and investing it wisely. It has the highest proportion of electric vehicles in Europe. It has invested massively in the renewables sector. It is decarbonising the economy while still wisely managing its oil and gas resources. That is forward planning that the UK Government could still do. We need to look at that.

I must repeat my disappointment about the pulling of the CCS fund. That must be a lesson for the Government going forward because it scared the industry and scares away other people trying to make private investment. Again, the Minister has spoken positively about the future of CCS, so it would be good to hear her reinforce that when she sums up.

I appreciate time is moving on, Mr Sharma, so I will try to hurry up, but I want to mention another renewable energy project that has been developed at Grangemouth and would support the Grangemouth refinery: the Grangemouth renewable energy project, which has been successful in the CfD auction. Because it contains biomass, the whole premise of the project is based on securing renewable heat incentive funding as well. The UK Government are looking at retrospectively capping the amount of RHI funding available to projects to 250GWh. That would put the Grangemouth renewable energy project at risk, so I urge the Minister to reconsider, because the project is so innovative. It is a world leader, it would support the Grangemouth refinery, and it could develop industry for export and help grow the UK economy.

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15:26 Dr Alan Whitehead (Southampton, Test) (Lab)

I want to give the hon. Member for Gordon an assurance. I do not think it was deliberate, but he chanced on a characterisation of some of those who consider the climate change debate to be an imperative in considering the future of oil and gas in the North sea—that those people would suggest that oil and gas should not have a bright future there. That is not the case. I regard the climate change imperative as encompassing all that we do in connection with energy, as I think does the Minister. However, that does not mean there is not a long-term need for oil or gas; there is a need for both. The question is not whether we have the need, but what we do with the stuff once we have got it, and what sort of responsibility we take for its subsequent use.

An example, which the hon. Member for Waveney will well recall, is the future arrangements that we might have for decarbonising the gas system. One way might be to develop a hydrogen gas economy—a green gas economy—for heating our homes. The cheapest and most efficient way to produce the necessary hydrogen would be through a steam methane reforming system, and that of course needs gas. We can envisage circumstances in which we would take gas from the North sea and make hydrogen from it—possibly in the Teesside cluster that my hon. Friend the Member for Stockton North described—and, to make sure that it would be climate-efficient, the process would need CCS as well. The carbon captured in the hydrogen-making process would be put back into the North sea repositories, which would have been saved by efficiency in the decommissioning process. By a variety of devices, we could have different ways of using what we had to secure a bright future for the North sea, but it would not necessarily be the bright future that we envisaged hitherto.

It is important to be clear about our intentions for what we extract from the North sea—that what we use should be domestically sourced as far as possible. That would be good news for the UK as a whole, but we would also have the wider responsibility of the climate change imperative behind us. We need to think through what we will do with our North sea products and, on that basis, how we shall sustain the industries that have served the UK so well in the past 40 years or so. I am not one of those who says, “The North sea is finished; it is a mature basin.” There is quite a lot more to get out of that basin. We must do that in rather different ways, with rather different responsibilities, but provided we take that approach the bright future for the North sea and the oil and gas industry there is assured. I hope that we can work together on achieving that in the coming years.

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15:39 The Minister for Energy and Clean Growth (Claire Perry)

I asked for and was able to keep the oil and gas brief when I became the Minister for Energy and Clean Growth because I think it is an integral part of the transition to a lower-carbon economy, as well as an enormous provider of productive employment and benefits to the economy, historically and in the future. It was striking to hear the comments of my hon. Friend the Member for Waveney (Peter Aldous), who perfectly combines those two interests, given his chairmanship of the all-party parliamentary group for renewable and sustainable energy and his frequent strong support for the industry.

There are encouraging estimates of what is left. Vision 2035 has led industry to say that there are between 10 billion and 20 billion barrels of oil equivalent left in the continental shelf, which could be worth up to £1 trillion. If we continue to responsibly explore and extract those hydrocarbons, use them in the most economically effective and responsible way, and work on decarbonisation, there is a great opportunity for north-east Scotland and the whole of the United Kingdom.

We also understand that we not only need to decarbonise generation; we also have to put that work within a cluster, so that dealing with industrial emissions can be put into the same infrastructure and framework. There are only five places in the world where CCS plants associated with generation are running purely on subsidy alone, which is effectively what we have been asking for. The other 16 places rely on enhanced oil recovery as a revenue source. Even the Norwegians, who have the sovereign wealth fund that we have talked about, find it very difficult to get pure subsidy for CCS through their Parliament. That is why I have set up the carbon capture council, which is headed by the best brains, including some of our friends from north of the border, to try to work out how we improve the technology in a cost-effective way. What is the irreducible core of cost and risk that Government have to take in order to move this technology forward?

The CCS cost reduction task force is specifically looking at cost reduction proposals and also committed £100 million for innovation, because without that technology we will not decarbonise either generation or industrial emissions, and I want us to lead on CCS.

I thank the Minister for giving way, especially when she is just winding up. I raised the Grangemouth renewable energy project and the possible application of a retrospective cap on the amount of renewable heat incentive money that the project can claim. Is that something that she can reconsider? We do not want to put this project in jeopardy.

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