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Fracking and the Finance Bill – extracts from the debate

7th June 2014

MPs wanted to talk about fracking and shale gas this week. The issue came up during the debate on the Queen’s Speech on June 4th and during discussion of the Finance Bill on June 5th. Below, with help from Theyworkforyou.com we’ve included transcripts about shale gas and fracking from the Finance Bill debate.

To see more parliamentary discussion on shale gas and fracking this week, click:

Latest Fracking Week in Westminster

Extract from the Queen’s Speech and 1st day’s debate – House of Commons  (4/6/14)

Queen’s Speech 2nd day’s debate – House of Lords (5/6/14)

Ministerial Statement by Michael Fallon, Energy Minister (5/6/14)

Edward Davey (The Secretary of State for Energy and Climate Change; Kingston and Surbiton, Liberal Democrat)
In order to ensure that the UK can benefit even more from its home-grown energy, we will introduce a final set of measures, subject to consultation, so that Britain can be more secure and reduce our reliance on imports and on coal. The measures are to support the development of the shale gas and geothermal industries. Although both industries are still in their infancy, they are both concerned that the existing legal situation could delay or even stop their ability to drill horizontally deep underground to recover gas or heat. Ironically, given the urgency of climate change and unlike the situation for dirty coal—a landowner or property owner high above a coal seam cannot object and delay work—for cleaner gas and clean heat, landowners and property owners can object.

To assist the shale gas and geothermal industries, we are consulting on how to address those access issues. We published our consultation paper on 23 May, and the consultation will run for the full 12 weeks. Members of the House may respond to that consultation, as may all interested parties. We want feedback and input, because that will help us to refine our proposals, to develop alternative ones or even to convince us that the existing system is fit for purpose. We will listen during the consultation and, subject to its outcome, we will introduce proposals when parliamentary time allows.

Kate Green (Shadow Minister (Work and Pensions); Stretford and Urmston, Labour)
This is of great interest to my constituents, because we envisage drilling to explore the possibilities for shale gas in our area in the coming months. Will the Secretary of State repeat the assurance that the Prime Minister gave in response to Caroline Lucas yesterday, that there will be no circumstances in which someone may legally drill under people’s property without their consent and agreement?

Edward Davey
I am not sure whether the Prime Minister said that in those terms. There will be local community engagement in issues about fracking, not least through the planning process. There will be local involvement, because a company has to get a series of permits and regulatory permissions before it may even start an exploratory drill, which should give the hon. Lady’s constituents and other people the reassurances that they need.

Clive Betts (Sheffield South East, Labour)
I do not know whether the Secretary of State read the comments of Sir Merrick Cockell, the chair of the Local Government Association. Speaking on a cross-party basis, he said that he thought that the benefits or payments to the community promised to areas in which fracking takes place are simply not large enough, considering the enormous amount of revenue to be gained by the companies from fracking activities, in particular given the tax breaks. Will the Government think again about that to ensure that local communities get a lot more benefit from such activities?

Edward Davey
We have already put in place a package of attractive community benefits and as we proceed with the consultation, the hon. Gentleman might want to respond to it. There is talk of further community benefits, but let us be clear what we are talking about. We are talking about drilling at least 300 metres under a piece of land or property, far more than for the underground, the channel tunnel and all those other major pieces of infrastructure. Most shale and geothermals are at least one mile below the service and I think that landowners will be quite pleased to get compensation for that, because it will not affect their land or properties.

Caroline Flint (Shadow Secretary of State for Energy and Climate Change; Don Valley, Labour)
We also heard that, subject to their consultation, the Government intend to bring forward legislation to give oil and gas developers underground access rights without requiring landowner permission. We have always been clear that provided it can be done in a safe and environmentally sustainable way, we will support shale gas exploration, but we have set out six conditions which we believe need to be met, four of which the Government have agreed to. That leaves two—first, an assessment of groundwater methane levels, and secondly, ensuring that all this monitoring is done for a full 12 months before any drilling can proceed, so as to ensure that we have robust baseline measurements to which we can always refer back. That is one of the lessons we need to take on board from the American experience, which did not go as well there.

As the Secretary of State mentioned, the changes to underground access rights announced in the Queen’s Speech will put shale gas on the same footing as other industries such as coal, water and sewage, so we will not oppose them, but we will continue to push for the environmental framework to be strengthened, and for assurances that the responsibility for clean-up costs and liability for any untoward consequences rests fairly and squarely with the industry, not with taxpayers or homeowners.

However, as the Secretary of State knows, companies have only exploratory licences, so full shale gas production is still some years away. Even if it does happen, unless we see significant shale production not just in Britain but right across of Europe, most experts believe it will have little effect on gas prices in the UK. The idea that it will in any way help with the cost of living that people are facing in relation to energy prices is therefore pretty wide of the mark.

John Randall (Uxbridge and South Ruislip, Conservative)
I agree that fracking is not the only answer to our energy problems, but some of the stories put out to frighten people about someone turning up outside the back door with a rig ready to drill through their garden are false. We have to get the legislation right. Strong environmental concerns about water and all sorts of other issues have to be looked at carefully. I do not want us to rush into this because it is a fundamental issue. I hope that we can look at fracking in as non-partisan a way as possible because it is important for the future of our country.

Michael Weir (Angus, Scottish National Party)
I am somewhat perplexed by the apparent headlong rush to do everything possible to allow fracking to take place. I remain sceptical about the potential of fracking and would be more cautious about taking it forward, because despite all the claims that are made of a new energy revolution, the situation in the UK is vastly different from that in the United States, and even there considerable controversy surrounds the technology.

Much of central and eastern Scotland, including parts of my constituency, is included in the latest map of possible sites for unconventional oil and gas. It seems to me, however, that we need to take a balanced, responsible and evidence-based approach, listening to the concerns of communities, and to proceed with caution. I particularly wanted to raise this issue, because I am a little unclear as to what is proposed in the infrastructure Bill. In Scotland, the situation is different to that in England. Although onshore oil and gas is vested in the Crown and subject to the same licensing regime at present as the remainder of the UK, planning law is devolved and the law of property is also significantly different, and both are the responsibility of the Scottish Parliament.

The changes to the law to allow fracking under properties without owners’ permission has already produced a considerable public response. In fact, I received a number of e-mails on the subject overnight. Although I accept what the right hon. Member for Uxbridge and South Ruislip said about the amount of misinformation and misapprehension over what is meant by those changes, I had assumed that the proposed changes to the law would not affect Scotland, since property and land law is a devolved matter. However, the notes to the Queen’s Speech issued by the No. 10 press office state, in relation to the infrastructure Bill: “Subject to consultation, this Bill would support development of gas and oil from shale and geothermal energy by clarifying and streamlining the underground access regime.”

Furthermore, in a section headed “Devolution” it goes on to say: “The provisions relating to roads, Nationally Significant Infrastructure Projects, planning consents for local projects and public sector land assets would apply only to England. The provisions relating to the local land charge aspects of the Land Registry and invasive non-native species would apply to England and Wales. Where the Bill deals with devolved matters, we are engaging with the Devolved Administrations as needed.”

Now, that raises a question in my mind: what is the situation with “streamlining the underground access regime”, as the notes put it? Can the Minister clarify whether it is the Government’s intention to seek changes in Scotland on these issues or is it indeed a specific matter for England? I had understood that the problem was with the specific English law of trespass, a law that is different in Scotland. If the Government’s intention is the former, what specific changes are they seeking? Many questions are being asked by my constituents and I do not want to give them false information, so I need to be clear about exactly what is happening and how far it will affect them.

Jeremy Corbyn (Islington North, Labour)
I urge a degree of caution before we rush down the road of fracking all over the country, particularly the north-west, which will have environmental consequences. Many different organisations hold briefing sessions in this House—it is a form of lobbying and there is nothing wrong with that—and I was astonished at the large attendance at yesterday evening’s Friends of the Earth briefing on fracking and its consequences. A very interesting speaker from Australia, where there has been much fracking with apparently limited controls, explained what has happened there. She pointed out that a vast amount of water is used for fracking and that it causes pollution when it is pumped up to ground level. Storage ponds are needed to allow the water to settle and the process has longer-term environmental consequences.

Indeed, the first line of fracking has caused earth tremors in Lancashire, and there has also been a significant number of earth tremors in the United States as a result of fracking. Although it is presented as a cheap form of energy—any cheap form of energy sounds attractive when we first hear of it, and there is all kind of talk about Klondike and the new gold rush—there are two problems. One is the congestion caused by extra traffic and the noise and other pollution caused by the process itself, and the other is the clean-up phase afterwards. Are we not building in potentially huge costs to the public sector in having to clean up all the environmental pollution that will result from the process?

Surely we should be thinking even more strongly than we have up to now about energy sustainability and security, by which I mean not necessarily producing vast amounts more, but using a lot less through better conservation, better insulation and more efficient forms of transport, as well as, increasingly, the use of renewable energy. It is populist to attack wind farms, but they make a significant contribution to our electricity supply and will continue to do so. They do not, of course, create the pollution problems of fracking or any other fossil energy. There will be a huge debate about fracking and I would be very cautious about going down that road, because of the pollution problems it causes.

Albert Owen (Ynys Môn, Labour)
We must bring communities with us to enjoy the benefits of shale gas together, and there should be local benefits. I am certainly not a nimby and I represent a constituency that has a nuclear power station, offshore wind farms in close proximity, too many onshore wind farms—they need to be moved as new development takes place—and tidal power. I think we should look at the bigger picture, and find local but also national benefits from a gas and oil bonanza, whether it be in the North sea or from shale. We should be putting aside money and ring-fencing some of those profits for local communities and for national benefit, and that could help to fund extension of the gas mains that are causing problems for many of our communities.

Robert Walter (North Dorset, Conservative)
Shale gas—I mention this because it was also mentioned in the Queen’s Speech—is a valuable resource that we should be considering, but when fracking takes place in our communities it, too, should come under the control of our democratically elected councillors and local communities, because they are essential to the decision-making process. Our future energy supply and security must remain at the top of this country’s agenda, but that should not mean sacrificing our natural environment or the quality of life of local communities, whether in Dorset or elsewhere.

Kate Green (Shadow Minister (Work and Pensions); Stretford and Urmston, Labour)
The north-west has been identified as having significant shale gas and coal-bed methane fields and drilling has already begun, for example just over the border from my constituency in the constituency of my hon. Friend Barbara Keeley. There are also live proposals for a coal-bed methane site in Trafford. There is deep local fear that fracking will start happening in our community, and there is a particular worry about fracking starting in Davyhulme where air quality standards are already being breached. It is a built-up area that is next to the M60 and close to an airport, and the site is right by the proposed biomass plant. There is, at the very least, real concern that the air quality will worsen substantially if there is fracking and exploratory drilling, not least because of the additional traffic flows, which the Secretary of State acknowledged was one of the unfortunate by-products of fracking exploration.

The core issue, however, is a lack of transparency and of genuinely honest and open dialogue with local communities about the implications for them. For example, it took the local press to reveal that radioactive waste water had been placed into the Manchester ship canal by United Utilities a couple of years ago. That waste water had been brought to our neighbourhood with the purpose of disposing of it. The public should have been informed about that, and if the view was that that was done entirely safely, that, too, should have been explained to local people. It does nothing for people’s confidence in new energy sources if we have such cover-ups.

Friends of the Earth reports that Trafford council failed properly to consider the climate change impacts and did not therefore require an environmental impact assessment for the IGas application for coal-bed methane testing and production at Davyhulme. Therefore, we have not had a full environmental impact assessment of the likely consequences of such activity. Moreover, the Environment Agency has allowed exploratory drilling at Barton Moss next door, in the constituency of my hon. Friend the Member for Worsley and Eccles South. It seems to be quite untroubled by the fact that the IGas application to undertake such activity made it clear that it would be storing hazardous waste extracts on site. That is not covered by the Environment Agency permit, yet nothing appears to have been done to prevent it from carrying on with the activity. There needs to be more transparency and the regulatory regime needs to be much more effective if people are to have any confidence in this form of exploration. My constituents are very sceptical about whether they are being given all the facts.

Huw Irranca-Davies (Shadow Minister (Environment, Food and Rural Affairs); Ogmore, Labour)
My hon. Friend is making a very good contribution on hydraulic fracturing. Last year I visited Pau in southern France where for a couple of decades work has been carried out on carbon capture and storage underground. There is extensive seismic monitoring and monitoring of gas and so forth. It would be helpful if Ministers explained to us what long-term monitoring there would be of any sites where hydraulic fracturing is used.

Kate Green
I agree. There must be both the monitoring and the publication of the outcome of that monitoring and absolute openness and transparency about the impact.

My constituents are also anxious about the Government’s proposals to allow fracking companies to drill under people’s homes or properties without permission. I am pleased there is to be a consultation. The Secretary of State said this morning that there would be a full 12-week consultation on this, but I am puzzled as to where the Government are coming from because yesterday, in response to a question from Caroline Lucas, the Prime Minister said it would not be legal to go on to someone’s property and frack against their will, but I am not sure I got such a firm assurance from the Secretary of State this morning.

As my right hon. Friend Caroline Flint pointed out, the coal and water and sewerage industries already have a right of access to underground land. It is important to have clarity as to whether Ministers intend there to be a comparable right in relation to shale gas and if that is the case whether the costs of any damage and any clean-up and so forth will fall to the industry, not to the taxpayer or property owners. As my hon. Friend Huw Irranca-Davies suggested, there is also significant concern about assessing baseline data in relation to, for example, seismic activity or methane in groundwater, and maintaining the monitoring of any impact on that baseline data as a result of any fracking activity.

Finally, there is significant worry about the long-term impact of investing substantially in further fossil fuel technology at the expense of renewables investment. We are very clear that any investment in fracking and other gas-based technologies must be accompanied by rigorous and tough adherence to decarbonisation targets. Ministers have not said much yet to explain why they are so enthusiastic about investing in a fuel source that can only increase our fossil fuel footprint, and which will not deliver much in the way of energy security for a good 10 to 15 years—time that could be used to develop alternative sources of energy. There is real concern about the climate impact being rather underplayed.

I think my constituents would prefer a greener energy strategy, and at the very least they deserve absolute openness about decisions to engage in the exploitation of coal-bed methane and shale gas. I echo calls made in this Chamber today for the Government to proceed with caution, and I very much hope they will be heeded.

Dominic Raab (Esher and Walton, Conservative)
I am delighted by the proposed reforms to speed up infrastructure projects and to allow fracking firms to run shale gas pipelines. I should like to comment on a couple of the points that the hon. Member for Stretford and Urmston made about shale gas. Ofgem has made it clear that our back-up energy stocks will fall to 2% by 2015. The chances of blackouts will increase from one in 47 years to one in 12 years. The previous Government allowed this stark energy crisis to creep up on us, and we must address it now. The renaissance in nuclear power will play an important role in achieving that; it will be good for meeting our energy demands and for decarbonisation.

We must also bear in mind our unique national comparative advantage in relation to shale gas. In 2013, the British Geological Survey—hardly a Thatcherite body by disposition—estimated that there were 1,300 trillion cubic feet of shale gas in the Bowland-Hodder basin alone. The reserves equate to 47 years of total UK gas consumption or 90 years of the UK’s North sea gas production. Of course, not all of it will be extracted, and it will take time to develop the right regulatory regime. That is important, but the opportunities over the medium term are immense. The Institute of Directors has estimated that shale gas could meet one third of UK gas demand and support 74,000 jobs, not to mention boosting manufacturing and helping us sustainably to rejuvenate the economy of the northern region.

I understand the concerns about fracking, but the Royal Academy of Engineering and the Royal Society—again, not Thatcherite bodies by any stretch of the imagination—have looked at the risks to aquifers and the risk of earthquakes and concluded that the risks are very, very low. They have concluded that, with a decent set of regulations, the process could be properly managed and monitored. Frankly, the spectres of polluted drinking water and of earthquakes have been massively exaggerated by ideologically driven activists. We ought to get cracking with fracking, and I am delighted that this Queen’s Speech will bring that about. It will also help us to wean ourselves off energy dependence on places such as the middle east and Russia; we need to consider that given the stability in those regions.

Nia Griffith (Shadow Minister (Wales); Llanelli, Labour)
On fracking, there seems to be a bit of stampede, as if it is the be-all and end-all and the answer to all our energy needs. I am worried that there has been an overestimation of how easy fracking might be and how great the profits might be. I think that fracking will prove considerably more difficult in our country than it has been in the United States. When the Welsh Affairs Committee visited Lancashire to see what is happening there, I was struck by just how little we get from one well. It is like squeezing a tiny drop of something out of a stone. The hundreds of thousands of wells that would have to be sunk seem absolutely disproportionate to the amounts we would get.

The real question is this: why are we making such a huge effort to try to get something that we know is difficult to get—otherwise, we would have got it years ago—when really we should be trying to wean ourselves off fossil fuels altogether? We should be moving towards much greater investment in renewables. I am greatly disappointed that the Queen’s Speech included no mention of climate change or meeting our renewables targets. The renewables industry seems to have been left in limbo, whether it is wind energy being attacked or the Solar Trade Association, which is very worried about the current consultation. Will subsidies be reduced in the same way that feed-in tariffs have been? What is the situation with solar panels on rooftops? There is a lack of certainty, understanding and commitment to getting it right to ensure that we have the best possible uptake in the right places for solar energy.

Marine renewables also seem to have been pushed to one side and sadly neglected. Again, much more could be done to look at how subsidies work and to consider the opportunities to promote technologies that are more expensive and more difficult to develop, such as marine technologies, but that have such huge potential for our island.

As for the latest confusion about who can go on to whose land to undertake exploration for fracking sites, we need urgent clarification, because there seem to be conflicting stories. The Prime Minister has said, “No, nobody will be able to do that”, but that follows a letter to MPs from the Minister concerned stating that that is precisely what they are proposing. The situation is not clear and people have major concerns as a result.

 

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